A group of Brazilian companies aims for a yearend 1994 start-up of a gas transmission infrastructure in southern Brazil.
Budget for the first phase of the project, involving a pipeline grid and a possible liquefied natural gas terminal in Parana or Santa Catarina states, is set at $430 million.
Infraestrutura de Gas a Regiao Sul SA (Infragas), a group of 107 companies based in the two states, was formed last August to deal with an energy shortfall expected to hit the region within 7 years. The group has focused on natural gas to allow continued expansion of the rapidly growing industrial infrastructure in the region without harming its air quality.
Group financing has come from state and federal governments and the industrial partners in the two states. In addition, Canada's government has offered technical and financial aid through the Canadian International Development Agency (CIDA).
Natural gas accounts for only 2% of Brazil's energy mix and currently supplies only northeast and southeast Brazilian states. CIDA is conducting a feasibility study of three options for implementing a gas grid in southern Brazil.
They involve importing gas via pipeline from Argentina or Bolivia, importing LNG, or using domestic offshore gas. The study is to be complete in 6 months.
Infragas said preliminary studies suggest LNG might be the most economic option. Infragas Pres. Adolar Pieske said costs of importing LNG, in terms of total installed cost of facilities, would be less than the other options. Further, LNG imports would offer a more reliable supply system than the other two options, Pieske said.
If the LNG option is chosen, supply sources likely would be Algeria, Nigeria, or Venezuela. An LNG terminal would be built at Sao Francisco, Santa Catarina, or Paranagua, Parana.
Linking LNG regasification facilities with end users would be a 380 km pipeline system.
PROJECT DETAILS
Preliminary studies of market demand support an initial phase capacity of at least 140 MMcfd just to industrial customers in the two states.
Construction would be complete by yearend 1994, coinciding with the lifting of trade barriers by the countries that make up Mercosul, a small South American version of Europe's Common Market. Members are Brazil, Argentina, Paraguay, and Uruguay.
That development is critical to the project's success because industrial customers that would use the gas cite a need for a competitively priced energy source to allow expansion.
In particular, the ceramics, agricultural, and textile industries of southern Brazil are seeking to cut energy costs.
In addition to government and business participation in Infragas, the group is applying for financing from World Bank and Interamerican Development Bank.
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