Brazil's state oil company Petroleos Brasileiro SA is grappling with an environmental controversy involving a major pipeline project.
Petrobras in 1995 began laying a 956 km refined products pipeline from Paulinea refinery in Sao Paulo state to Brasilia, with start-up slated for Sept. 30.
Since April, technical reports from Petrobras' transportation and engineering departments have recommended the 206 km stretch between Paulinea and Ribeirao Preto be rebuilt, claiming pipe in this section contained welding defects that created a potential for leaks.
They claimed the flaws would reduce the life span of this leg to only 8-10 years compared with 35 years typical for a products pipeline.
Line pipe for the 206 km pipeline segment was produced by Brazilian firm Brastubo Construcoes Metalicas SA.
Leaks developed during hydrostatic tests by Petrobras.
However, Petrobras opted to save costs by replacing the problem line pipe only in the most critical places, because replacing the entire section would cost $55 million and delay project start-up.
Petrobras Chief Executive Officer Joel Mendes Renno claimed the segment that leaked "had been tested again without presenting any problems."
Legal warnings
This decision came despite a formal report by Petrobras' legal department, leaked to the press, alleging Brastubo had acted "in bad faith presenting false reports of good quality control."
In addition, Petrobras' engineering, research, and fuel oil transportation departments alleged Brastubo "simulated stress tests of the (line pipe) used in the pipelines." Petrobras' legal department warned, "The alternative chosen presents significant risks to the company's assets and image. Although Petrobras did not build the pipeline, if an environmental disaster occurs, it will be our company that will be blamed."
Petrobras is still awaiting authorization for the project from local environmental agencies.
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