Brazilian Gas Producer PGN Plans $500 Million Output Growth

Updated on
PGN Natural Gas Facility
Parnaiba Gas Natural SA (PGN) natural gas facility in Brazil's northeastern state of Maranhao. Source: PGN via Bloomberg

Parnaiba Gas Natural SA, Brazil’s biggest independent natural gas producer, is investing 1.5 billion reais ($500 million) in projects including developing five fields in the country’s northeast.

The producer backed by Cambuhy Investimentos, which counts Brazilian billionaire Pedro Moreira Salles as an investor, expects the plan to increase gas output 71 percent to 8.4 million cubic meters (297 million cubic feet) a day by July 2016, said Henrique Rzezinski, institutional relations vice president of the company known as PGN.

“The potential for natural gas production in the region has been proven by our analysis,” Rzezinski said by e-mail.

PGN, based in Rio de Janeiro, emerged from the collapse of Eike Batista’s mining and energy conglomerate when Cambuhy agreed to buy the venture from the Brazilian entrepreneur hours before his oil company filed for bankruptcy protection in October 2013.

The company, which is Brazil’s fourth-largest operator of oil and gas fields, has a long-term agreement to supply the fossil fuel to four Eneva SA thermoelectric plants in the Maranhao state.

PGN earlier this month received an environmental license to build a 40-kilometer (25-mile) pipeline connecting the Gaviao Branco field to a gas treatment plant in Maranhao. The company, which generated net sales of 582 million reais in 2014, currently operates in the Gaviao Real field.

Sao Paulo-based Cambuhy controls PGN with a 73 percent stake. Eneva holds 18 percent and the remaining 9 percent belongs to EON SE, Germany’s largest utility. Moreira Salles is the chairman of Sao Paulo-based Itau Unibanco Holding SA, Latin America’s largest bank by market value.

(A previous version of this story corrected the vice president’s company in second paragraph.)

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