Sinopec will build the 900-km Cacimbas-Catu and the 200-km Cabiunas-Vitoria sections of the line, the estimated budget for which is put at around US$1bn. The Gasene pipeline will run from the SE state of Rio de Janeiro, where most of Brazil's natural gas is produced, across the state of Espirito Santo to join the existing gas pipeline in the NE state of Bahia, where there is a gas shortage. The project will be made up of three sections, of which the 100-km length between the city of Vitoria and Cacimbas (both in Espirito Santo) will be built by the Spanish Masa Consortium. The tender for the acquisition of services and equipment for the section linking Cabiúnas in Rio de Janeiro with Vitoria is being reissued because of the higher prices submitted than those expected in the first domestic tender, Mr Gabrielli said. "We have asked our partner Sinopec to hold an international tender for suppliers of equipment and materials," he said. "The initial price obtained reflected higher costs of steel and equipment because of the heated market." Declining to give a detailed schedule, Mr Gabrielli said the two smaller sections – Cabiunas-Vitoria and Vitoria-Cacimbas – should be completed by the end of 2006. The investment in the Gasene project is included in Petrobras' $4.5-billion budget for gas pipeline projects in its revised $56bn 2006-2010 strategic plan, unveiled at the end of August. Other projects are the Urucu-Manaus gas pipeline in northern Brazil, the expansion of the Brazil-Bolivia gas pipeline capacity by 13% to 34 million cum/d, the expansion of the SE and NE pipeline networks, and the construction of a network to expand the transport of fuel from offshore platforms in the Campos basin. "In 2010 we will have a totally different situation to what we have now," Mr Gabrielli said. According to the strategic plan, the aim is to guarantee distribution of gas throughout the country to allow the country's 2,800-MW thermoelectric installed capacity to operate at maximum potential, something currently not possible because of the lack of gas supplies. The company projects the demand for natural gas in the country to reach 99.3million cum/d in 2010 from the current 40million cum/d: the increase will be mainly taken up by thermoelectric generators, which should account for 46.4million cum/d in 2010, up from 9.6million cum/ in 2004, while industrial usage is expected to rise to 39.1million cum/d in 2010 from 22.9million cum/d in 2004. "Other types of [gas] use are not expected to rise as fast," Mr Gabrielli said, adding that the government will not give incentives for residential, commercial, or vehicular gas usage to ensure there are enough gas supplies for power generation projects. The demand projection in the 2006-2010 investment plan is higher than the 77million cum/d previously projected for 2010. As a result, Petrobras has raised total investments in gas and power to $6.5billion in the five-year period from the $2.6billion previously budgeted. The company also plans to expand natural gas production in the Santos and Espirito Santo basins to increase supply. It currently supplies around 60million cum/d of gas in Brazil, 24million cum/d of which comes from neighbouring Bolivia with the rest produced domestically.