RIO DE JANEIRO (Dow Jones) -- Brazilian oil company OGX Petroleo e Gas Participacoes S/A (OGXP3.BR, OGXPY), part of billionaire Eike Batista's EBX Group, is planning to supply natural gas to Latin American steelmaker Ternium SA's (TX) steel mill project in Brazil's Acu port, a spokeswoman for OGX said.
"OGX is assessing its natural gas discoveries in Santos Basin, in order to obtain the necessary data to ensure the best way of supplying natural gas to the businesses in Acu port," OGX said in an e-mailed statement. The businesses cited include the Ternium steel mill, the spokeswoman said.
Ternium has a preliminary environment permit to set up a steel mill with a capacity to produce up to 8.4 million metric tons a year of crude steel at Acu, which is in Rio de Janeiro state in southeast Brazil. However, the company has had difficulty in securing competitive supplies of natural gas for the project, which would use this as a major raw material instead of coal, Rio de Janeiro state economic development secretary, Julio Bueno, said in a recent interview.
According to Brazil-based analysts, state-controlled oil and gas producer Petroleo Brasileiro SA (PBR, PETR4.BR) is offering gas at nearly six times the price Ternium sources gas for its operations in other countries including Mexico. High-priced gas would make the Ternium project at Acu unviable, analysts said this month.
Petrobras had no comment on gas supplies to Ternium when approached on the subject by Dow Jones Newswires.
Acu port is being developed by LLX Logistica SA (LLXL3.BR), another company within the EBX group.
-By Diana Kinch, Dow Jones Newswires, Tel: 55 21 7564 4495, email@example.com