Brazil's future to run on natural gas

Mar 05, 2004 01:00 AM

Gas-generated electrical plants in Brazil are reinforcing the deep transformations underway in the country's energy matrix. By the end of this decade, natural gas could cover 15 % of energy consumption -- and a 5,000 km pipeline is a key part of that future.
In the coming months, construction will begin on the National Unification Gas Pipeline, GASUN. The pipeline will carry natural gas imported from neighbouring Bolivia to a portion of the northern Amazon region and to the semi-arid and impoverished Northeast.

The project received a boost when the state-run oil giant Petrobras announced the discovery of a major natural gas deposit in the geographic basin of Santos, in Sao Paulo state. It thus became necessary to come up with a new destination for the Bolivian gas. The pipeline to southern and south-eastern Brazil is already in operation.
The first stage of construction -- the entire project is budgeted at $ 2.48 bn -- is to conclude in 2007. The first stretch of GASUN will be a branch of the existing Brazil-Bolivia pipeline.

The GASUN portion will begin in Mimoso, in the southwest state of Mato Grosso do Sul, and will join the Brazil-Bolivia pipeline. From there it will run towards Brasilia, passing through the nearby city of Goiania.
According to official figures, that stage will have a price tag of $ 634 mm and will create 1,300 jobs directly, with the potential of another 31,000 indirect jobs once construction is complete. The most costly portion will be the central-north branch, which is to connect the central state of Goias and the north-eastern Maranhao with 2,260 km of pipeline.

It is slated to cost $ 1.1 bn and will pass through the city of Palmas and reaching Belem, capital of Para. The entire natural gas pipeline should be complete by 2026, and the governments of the states involved estimate that more than 7,000 people will be involved in its construction.
Once natural gas is available in the north-eastern states, such as Para, Tocantins, Maranhao and Piaui -- amongBrazil's poorest -- it will contribute to the creation of jobs as use of this relatively clean energy source becomes more widespread. And state agencies have already been set up to distribute the gas.
"There are high expectations in this state," says Piaui's secretary of industry and commerce, Jorge Lopes.

The state's development depends on the availability of more energy resources in the future, such as natural gas, according to Lopes. After being assured that they will have reliable energy supplies, the executives of several ceramic factories expressed interest in setting up shop in Piaui, said the official.
Gas-related expectations are also high in Maranhao, especially in terms of strategic projects like a new Vale do Rio Doce plant, one of the world's leading mining companies. Another destination of the natural gas will be the Maranhao Aluminium Consortium, comprising the transnational firms Alcoa, Alcan and BHP Billiton, and one of the biggest aluminium manufacturing complexes in the world.

The complex has enormous energy needs, and is supplied by the Tucurui hydroelectric dam. Civil society groups charge that electricity is sold to multinationals and that there are no benefits for the local population. But Brazil's northern states have their eye on attracting industries from the south and southeast, where operating costs are higher than they would be in the zones to benefit from the gas pipeline.
On another front, no environmental impact studies have been conducted on establishing so much new industry in areas with fragile ecosystems like the eastern Amazon and the Northeast. But the option of natural gas for industries that are major energy consumers -- steel, chemicals, ceramics, cement, paper and cellulose -- is seen as environmental progress. Some of these industries still rely on firewood or coal. Refitting their energy systems to natural gas would significantly reduce pollutants, says Gilberto Jannuzzi, a scientist at the State University of Campinas, near Sao Paulo.

GASUN is part of an ambitious project of Petrobras, a plan for the nationwide presence of natural gas, expanding this fuel's use in the country's energy matrix. Initially, the plan was drawn up to attend to the energy demands of factories included in the Priority Programme of Thermoelectric Generators, created after the energy crisis and rationing in 2001.
The programme became an important tool for ensuring energy supplies for the industrial sector. Part of this is the expanded use of natural gas in vehicles. The aim is to connect the entire Brazilian territory to a network of gas pipelines in a relatively short time. Within a decade, this fuel could represent 15 % of Brazil's energy consumption, according to estimates cited by Ildo Sauer, director of the Petrobras division on natural gas and energy.

Source: Latin Petroleum Analytics
Alexander's Commentary

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