* Floating LNG faces challenge from falling world gas costs
* Pipelines gain force over floating LNG as Brazil demand
By Jeb Blount
RIO DE JANEIRO, April 5 Brazil's
state-controlled oil company Petrobras and partners in remote
offshore energy projects are likely to use pipelines to ship
natural gas to market, dumping elaborate plans to develop
floating factories to liquefy the gas for export, a key
Petrobras contractor said Friday.
Falling natural gas prices in the United States, soaring
costs for building offshore oil equipment, rising natural gas
demand in Brazil and a need to develop giant new offshore assets
quickly are among the factors making offshore liquefied natural
gas (LNG) plans less attractive, said Roberto Ramos, president
of Odebrecht Oil and Gas, one of Petrobras' largest offshore
engineering and equipment suppliers.
Ramos spoke to reporters at an event swearing him in as the
new president of the Brazil-United States Chamber of Commerce in
Rio de Janeiro.
Petroleo Brasileiro SA as Petrobras is formally
known, BG Group Plc., Repsol SA and Galp Energia
SGPS SA hired three engineering groups in 2009 to
design potential offshore floating LNG projects for fields in
the Santos Basin south of Rio de Janeiro.
The companies are partners in several so-called subsalt
fields in the Santos Basin.
In addition to avoiding the need for expensive undersea
pipelines in deep waters that are as far as 360 kilometers (225
miles) from shore, floating LNG plants would allow gas to be
chilled and compressed for direct loading onto LNG carriers for
transport to gas markets around the world.
Petrobras and its partners have already opted to build three
gas pipelines from the Santos basin area. Some of the gas will
be shipped to a new refinery being built by Petrobras near Rio
de Janeiro and be used to make petrochemicals.
The gas is rich in ethane, a higher-value compound than
methane, the main component of natural gas. Ethane is a key
Additional natural gas output from Santos will also likely
be moved by pipeline, Ramos said.
The cost of gas in markets on the Atlantic ocean is falling,
making the production of LNG and its export less attractive, he
Gas prices may fall further in the region if the United
States allows more exports of its growing shale gas output, he
Petrobras officials were not immediately available for
(Reporting by Jeb Blount; Editing by David Gregorio)