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Brazilian Oil May Be Shipped Through New Texas Port (Update1)

By Joe Carroll

Aug. 20 (Bloomberg) -- Brazil, home to the Western Hemisphere's biggest oil discovery in three decades, may ship crude to U.S. refiners through a $1.8 billion offshore Texas port that's scheduled to open in 2010.

Enterprise Products Partners LP, Teppco Partners LP and Marquard & Bahls AG will equip the port's offloading facilities, pipelines and storage tanks to handle all types of crude, including the heavy oil that comprises most of Brazil's output, said Rick Rainey, a spokesman for Houston-based Enterprise.

Enterprise and its partners in the Texas Offshore Port Systems project seek to capitalize on new U.S. environmental rules that will make it costlier for refiners to use barges to haul crude from tankers at sea to inland terminals. About 40 percent of the port's capacity has already been booked by Exxon Mobil Corp. and Motiva Enterprises LLC.

``The refiners' various crude diets will determine the grades of crude that come across the port,'' Jerry Thompson, chief executive officer at Houston-based Teppco, said today in a telephone interview.

Brazil may need more outlets for its oil as it seeks to boost production by 79 percent in the next seven years to the equivalent of 4.2 million barrels of crude a day. Petroleo Brasileiro SA, the state-controlled oil company known as Petrobras, plans to build an $11.1 billion refinery in Brazil's northeastern Ceara state that won't open until 2014.

Shipments Increase

Brazil more than doubled its crude shipments to U.S. refiners to a record 318,000 barrels a day in May, according to the Energy Department in Washington. For now, the South American nation is a minor player in U.S. oil imports, accounting for just 3.3 percent of shipments.

Rio de Janeiro-based Petrobras may need to spend as much as $240 billion to develop offshore prospects, including Tupi, the biggest discovery in the Americas since 1976, Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd., said in a June interview.

Brazil's offshore fields may hold as much as 50 billion barrels of crude, said Wells, who is part of a Neftex team engaged in a six-year effort to map all of the world's petroleum basins. That would exceed the reserves of Libya.

Rainey said Enterprise and its partners plan to keep some of the port's capacity open for spot-market shipments. He declined to provide a specific figure. The port's owners expect Persian Gulf varieties of crude such as Arab Light to comprise the majority of shipments to the facility, Thompson said.

Biggest Oil Port

``We will be looking to add more commitments'' from shippers and refiners, Rainey said. TOPS, as the development is known, will be the largest U.S. oil-import terminal when it opens in 2010, the project partners said this week.

Irving, Texas-based Exxon Mobil, the world's biggest oil refiner, and Motiva, a joint venture of Saudi Aramco and Royal Dutch Shell Plc, have agreed to lease 725,000 barrels of daily capacity at TOPS. The port's pipeline system will be able to carry 1.8 million barrels of crude a day.

TOPS will take deliveries from tankers 36 miles (58 kilometers) offshore and pump the oil to onshore refineries through a subsea pipeline. The pipeline will cross ashore at Freeport, Texas, and extend to a 3.9-million-barrel storage facility at Texas City. A second conduit will run 75 miles from Texas City to a new storage center near Port Arthur, Texas, which will hold about 1.2 million barrels.

TOPS will be 80 percent larger than the biggest existing U.S. oil port, the Louisiana Offshore Oil Port, known as LOOP.

Enterprise is controlled by Houston billionaire Dan Duncan, ranked the 39th richest American last year by Forbes magazine. Duncan, 75, is also chairman and the biggest holder of Enterprise's general partner, Enterprise GP Holdings LP, and the largest investor in Teppco.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.

Last Updated: August 20, 2008 16:01 EDT

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