February 20, 2006
Petrobras defends Amazon pipeline

(Financial Times) - "The president of Petrobras, the Brazilian government-controlled oil group, has defended the controversial idea of a $23bn pipeline between Venezuela and Argentina, hinting at a big expansion of ambitious investment plans over the next five years.

Sergio Gabrielli spoke to the Financial Times shortly after announcing record profits in 2005 of R$23.7bn ($11.2bn), the biggest in Latin American corporate history.

He said production had reached 2.2m barrels per day in 2005, a 12.8 per cent increase over 2004. 'No other oil company has our capacity for growth,' he said, adding that Petrobras would continue to expand production from its existing reserves, without the need for acquisitions.

Petrobras is preparing to launch a R$37m advertising campaign to publicise the achievement of Brazilian self-sufficiency in oil production, probably from April. Production has exceeded consumption since December, but industry executives say self-sufficiency will become 'sustainable' only after a 180,000 bpd offshore platform comes into production that month.

The proposed 8,000km pipeline would deliver gas to countries across South America. Critics say it is driven more by political than commercial considerations and that over the distances involved, it would be more economic to liquefy gas for delivery by ship.

(...) But he said that, if concluded, it would have 'an enormous impact on the energy matrix in Latin America', making possible a range of energy-dependent activities such as production of steel and fertilisers.

'It would also release more than 1m bpd equivalent of oil for export,' he added. 'Gas networks are fundamental to economic growth. Look at what is happening in Ukraine, western Europe and the US. The world needs these veins.' (...)

The company plans to invest $53.6bn between 2004 and 2010, not including the proposed pipeline".