Petrobras delays pipeline construction as Sinopec raises cost

Petrobras intends to use the Gasene line to bring gas from SE Brazil to its heavily-populated NE. Petrobras said that while Gasene remains part of its five-year strategic plan, with work on its southern portion to go ahead this year, the finish date for the project may be pushed beyond 2007, its earlier-estimated finish date. Petrobras said it will seek to boost gas production in Brazil’s NE over the next few years in order to make up for the shortfall in supply if Gasene doesn’t reach that region.

While Petrobras entered an agreement worth about $1.1-billion this year with China’s Eximbank for financing the project, Sinopec has raised the cost of construction of the pipeline to $2.2-billion from $1.4-billion, citing higher steel prices, according to local press reports, thereby making it less feasible for Petrobras.

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