* Floating LNG faces challenge from falling world gas costs
* Pipelines gain force over floating LNG as Brazil demand grows
By Jeb Blount
RIO DE JANEIRO, April 5 (Reuters) - 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 petrochemical feedstock.
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 added.
Gas prices may fall further in the region if the United States allows more exports of its growing shale gas output, he said.
Petrobras officials were not immediately available for comment. (Reporting by Jeb Blount; Editing by David Gregorio)