MercoPress. South Atlantic News Agency

Petrobras begins natural gas off shore production

Brazil's government controlled oil corporation Petrobrás announced this week the start of natural gas production offshore the state of Bahia, which should increase supply in the northeast of the country helping to reduce the strong dependency from Bolivia.

Rig PMNT-1 in the Manati field, belonging to the Camamu basin in the Baxio Sul Bahia region is currently producing three million cubic meters of natural gas per day from two wells, said Petrobras in an official release. The project also includes a gas pipeline linking Manati, 10 kilometers offshore, to the area next to the Ilha de Tinhare island with a gas treatment plant in San Francisco do Conde. The project is operated by Petrobras in association with Queiroz Galvao and Norse Energy. "When maximum potential capacity has been reached, sometime in 2007, PNMT-1 will have a daily production of six million cubic meters per day which will decisively contribute to the consolidation of the natural gas market in the northeast of Brazil", underlined the corporation. The Manati field was discovered in October 2000 with the drilling of a first well the 1-BAS-128 in the sediment basin of Camamu, a few miles offshore. PMNT-1 is located in shallow waters ranging between 35 and 50 meters deep. The 3 million cubic meters production which could reach 6 million will help Brazil in its current dispute with Bolivian president Evo Morales who last year nationalized the hydrocarbons industry and slapped higher prices and taxes on gas production. Petrobras is the leading investor in Bolivia and virtually developed the natural gas industry in the country from scratch including the financing of a gas pipeline which supplies the Sao Paulo area, the heartland of Brazil's industries. Bolivia pumps an average 26 million cubic meters per day of natural gas to Brazil and according to a 1999 contract, the million BTU is sold at 4.3 US dollars. However the Morales administration is demanding at least 5 US dollars per thousand BTU and a round of discussions is addressing the issue. Petrobras has insistently argued that Bolivia needs Brazil, --as much as Brazil needs Bolivian gas--, because natural gas has become the main source of foreign income and helps to keep the country's economy running.