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PBR » Topics » Our strong position in Brazils potentially growing natural gas markets

This excerpt taken from the PBR 20-F filed Jun 30, 2005.

Our strong position in Brazil’s potentially growing natural gas markets

 

We participate in most aspects of the Brazilian natural gas market. At present, the demand for natural gas is limited, due in part to a distribution infrastructure that is still developing. The prices we realize for natural gas, which depend on the costs of other energy sources it can replace, are less than half of the current market price in the United States, where demand is more developed. The demand for natural gas in Brazil increased 22% in 2004, outpacing the 14% average increase in demand of the previous four years. Although we cannot be certain that natural gas demand will continue to grow at annual rates similar to previous years, we expect continued growth as significant investments in gas transportation pipelines begin operating.

 

Because of the diversity of our natural gas operations, we believe that we are well-positioned to take advantage of the opportunity to meet potentially growing energy needs in Brazil through the use of natural gas. We intend to do so through our:

 

  •   development of significant proved natural gas reserves in Bolivia and the 1,969 miles (3,150 kilometers) long Bolivia-Brazil natural gas pipeline;

 

  •   increasing production of non-associated natural gas, and natural gas associated with our domestic crude oil production, combined with the necessary investments to process such gas from recent discoveries of non-associated gas reserves, mainly in the Santos Basin of Brazil;

 

  •   planned investments in expansion of the natural gas transportation network throughout Brazil;

 

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  •   increased participation in the natural gas distribution market through investments in 20 of the 24 natural gas distribution companies in Brazil; and

 

  •   investments in thermoelectric power plants, which serve as sources of demand for our natural gas.

 

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