State oil company Petrobras may begin building a new refinery before the original start year of 2007 because Brazil's robust economic growth is increasing demand for fuel, the company's supplies director said on Wednesday.

That would make the refinery ready to run ahead of the company's latest estimate of 2012, although Supply Director Paulo Roberto Costa did not say how much sooner it would start producing mainly diesel and aviation fuel.

At the beginning of the year, Petroleo Brasileiro SA (Petrobras) had estimated growth of 2.4 percent in the South American country's consumption of oil products. But demand has actually jumped by 3.5 percent and will probably end the year with a rise of around 4 percent, according to the director.

"If in 2005 demand continues to increase, we may have to anticipate the refinery schedule," Costa told reporters. "2005 will be the key year for this decision."

Last week, Petrobras General Manager for Supplies and Refining Alan Kardec Pinto said the company expected to build and crank up a new 150,000 barrel to 200,000 barrel per day refinery by 2012.

Brazil's economy expanded 5.3 percent in the first nine months of the year from the same period of 2003. That is its swiftest pace since 1995, the government's statistics agency said on Tuesday.

Costa also said Petrobras was doing a feasibility study for a new plant that would make raw materials for the petrochemical industry such as ethene and propylene. It would cost up to $3 billion. The project evaluation should last six months.

As for the oil refinery, Petrobras, which has 11 refineries in Brazil, expects to be a minority partner in the project which has been estimated to cost between $2 billion and $2.5 billion.

Some industry experts say Brazil may face an acute shortage of oil products by around 2010 or even before and would have to import fuel heavily if the economy continues to grow.

Petrobras now refines about 1.7 million bpd in Brazil and has a total capacity of 1.9 million bpd in the country. It expects to boost its processing capacity to 2.23 million bpd by 2010 via expansions and modernizing its refineries.

(From Reuters, Dezembro 01, 2004)

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