Oil & Gas - Brazil

Licensing problems delay Petrobras' Urucu pipeline

Licensing problems delay Petrobras' Urucu pipeline

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Plans by Brazil's federal energy company Petrobras to build a US$250mn pipeline in Amazonas state have been delayed by environmental licensing problems, according to Paulo Aruda, the project coordinator at federal environment institute Ibama.

Ibama had issued a preliminary license for the TNG pipeline, which will deliver natural gas from fields in Urucu to Porto Velho, capital of Rondonia state, where it will primarily substitute fuel oil at local thermoelectric power plants.

But in March, the Amazonas state public prosecutor persuaded the federal attorney general's so-called "fourth chamber" to suspend the preliminary license until Petrobras and its partners in the project address 14 points covering issues such as protecting endangered tribes and species, Aruda told BNamericas.

At the first meeting of the parties, two of those issues were resolved and the parties plan to meet again soon to continue talks, he said.

If those problems can be resolved then Petrobras will still have to address issues raised by Ibama when issuing the preliminary license, Aruda said. The actual processing at the institute is fairly fast, he said, adding that Petrobras is partly responsible for delays. For example, Ibama has already analyzed the basic engineering plan whic is part of the final installation license process, but determined it was not adequate and asked Petrobras to do it again, he said.

Nevertheless, Aruda predicted the project would go ahead eventually. Based on previous experiences, the next stage, the installation license, is unlikely to be issued before the end of October or the beginning of November.

Petrobras' partners in the project include US-based El Paso, Brazilian investment group CS Participacoes, and Brazilian steel tubes companies Duferco and GDK.

The pipeline will run 550km supplying 2.3 million cubic meters of natural gas a day, primarily to power a 404MW thermoelectric plant owned by El Paso and CS Participacoes. There are also plans for development of an industrial park using the natural gas.

Petrobras said it does not comment while a legal case is in progress.