US$ 8 billion to increase internal gas production

An announcement has been made by Petrobras indicating the company has approved capital projects expenditures of US$ 8 billion in offshore projects in the Southeast region of the country. The purpose is to expand their local natural gas production and overall transportation capabilities. This will include an offshore production platform, nine gas pipelines, seven compression stations, five gas processing units, among other projects.

Most of these projects will be executed between now and 2009. The overall Petrobras “Plangas” – Gas Production Anticipation Plan, forecasts an advanced additional offer of 24 million cubic meters a day of natural gas until the end of 2008, and more 15 million no later than 2010. Most of this 15 million will be produced in the Santos basin.

The overall Plan has been made under the assumption of a 17% annual natural gas demand growth. The total gas offer is expected to be 121 million cubic meters a day, in 2011. Although most of the worldwide gas equipment suppliers are extremely busy today, Plangas claims they have already placed critical item orders, mainly from Brazilian suppliers. It is also part of the planned supplying infrastructure, to build 4 LNG regas units, located in Rio de Janeiro, Ceará, Santa Catarina and Pernambuco. These projects will require a capex of US$ 1.5 billion until 2010, and additional US$ 2.5 billion from 2011. Those new units will contribute to minimize risks from the nationalization of the Bolivian natural gas reserves and will improve the Brazilian energy security.

GNV Indicators| YR. End 2005 | 4TH QTR. 2005 | 4TH QTR 2006

NGV Conversions: 216 336 | 51 871 | 72 660

Total NGV Fleet: 1 052 295 | 1 000 424 | 1 324 905

Refueling Stations: 1192 | 1192 | 1356

NG Avge.Cons. m3/day: 5 302 000 | 5 302 000 | 6 877 366

NG Avge.Price, US$/m3: 0.57 | 0.57 | 0.56

Gasoline Avge Price, US$/ltr: 1.16 | 1.16 | 1.18

Ethanol Avge.Price, US$/liter: 0.73 | 0.73| 0.75

*Sources: ANP, Abegás, IBP - US$=R$2.14

2006: NGVs continuing progress - By the end of last year, the national NGV fleet totalled - 1,324,905 units. And 1,356 refueling stations were in service to meet the needs of those customers. Natural gas has demonstrated to be an attractive clean and economical alternative, to replace conventional automotive fuels. Customers recognize the benefits of natural gas, when oil prices are keeping “floating” up and down, as a result of uncertainties in the world markets.

By the other hand, the use of natural gas in flexfuel engines has demonstrated to be more efficient, in comparison with “gasoline” (with 25% ethanol). In addition to that, the fact natural gas is a cleaner fuel, resulting in considerable environmental improvement, it is also a relevant fact to be considered.

Ford Ranger prepared for natural gas conversion is available from automaker - Early this year, Ford has made available to the market, their well know Ranger pickup model, prepared to receive an NGV kit, with the most advanced fifth generation system, that includes a sequential multi-point injection. The automaker has indicated they plan to follow a market trend and customer demand for alternative fuels, in special natural gas, that has achieved a significant stage with an average of 200,000 annual conversions, in Brazil.

The automaker has promoted some changes in their 2.3-16v engine, to permit a better performance running that unit with natural gas. The air flow to the cylinders has been increased and the valves have been changed to more resistant types. With those modifications, Ford believes the engine life, working with natural gas becomes very similar to a gasoline engine.

The natural gas kit is managed by an electronic gas module, working in conjunction with the original engine module. The starting is carried out with gasoline in any circumstance, regardless the position the manual operating switch is. The turnover to natural gas only occurs when the engine is at the ideal operating temperature. The conversion kit installation may take four to five days to be accomplished, and has a warranty of two years or 50,000 km, given by Ford. All 2007 pickup Ranger model in the market, when converted by Ford to natural gas, regardless of the time in use, are also entitled to the same warranty from the OEM.

Ford objective is to convert 20% of total Ranger 2.3-16v pickup sales, which amounts to approximately 90 vehicles on a monthly basis. Based upon Ford warranty, and using an efficient natural gas conversion kit, the Ranger becomes a good option for those that need a resistant vehicle, fuel savings, environmentally friendly unit.

Expo GNV 2007 - The third edition of the Expo GNV is scheduled for May 3 to 5, in the Expo Center Norte, São Paulo, Brazil. The event is organized by IBP – Brazilian Petroleum and Gas Institute, in alliance with NGV Communication Group. The 2007 version of the Expo GNV will be arranged in an area of 8,000 square meters, covering exhibition and conference needs. The objective is to show the latest technology developments incorporated into advanced, economical and environmental friendly products for the NGV industry. The segment has shown a significant growth last year, and the national fleet with 1.3 million vehicles, has 1,350 refueling stations to meet their natural gas needs. By the other hand, São Paulo is a pioneer state, showing one third of refueling stations of the whole country. More information is available at www.expognv.com.GNV. GNV Committee Of The IBP- Brazilian Petroleum and Gas Institute • Av. Almirante Barroso, 52, 26th floor - Centro - CEP 20031-000 - Rio de Janeiro, RJ - Phone: (55) (21) 2112-9000 - www.ibp.org.br