OREANDA-NEWS. Logistics firm Prumo has shelved preliminary plans with Brazilian engineering firm Bolognesi for a natural gas hub at the A?u port that is under construction in Rio de Janeiro state.

"The company…continues moving forward with studies and negotiations related to the A?u gas hub, especially given the competitive advantages of the A?u Port due to its location and its existing infrastructure," Prumo said last night in a securities filing.

In April, Prumo and Bolognesi signed a preliminary agreement to jointly develop a gas-fired power plant and an LNG floating storage and regasification unit at A?u.

The offshore terminal at A?u, with a capacity to handle 1.2mn b/d of oil, is designed to meet Brazil?s growing need for crude export facilities. In June, Prumo signed a 20-year ship-to-ship oil transfer agreement with BG.

The offshore terminal at the port has started iron ore export operations. In October 2014, the first cargo of iron ore produced by Prumo's iron ore terminal partner, the UK's Anglo American, was shipped to China.

A?u also includes an onshore terminal designed to handle cargo, containers, bauxite, grains, vehicles, bulk liquids and solids, general cargo and oil.

In October 2013, US investment fund EIG paid 1.3bn reals ($596mn) for a controlling stake in Prumo, then known as LLX.

A Bolognesi spokesperson told Argus the decision to suspend the project was made together with Prumo and was based on the difficulties of selling the power generated by the plants because of a lack of power transmission infrastructure.

Rio Grande do Sul-based Bolognesi Group still plans to install two LNG receiving terminals with integrated power plants, one in northeastern Pernambuco state and another in Rio Grande do Sul state.

Both plants are awaiting environmental licenses, but remain on track to begin delivering power to the grid in January 2018.

In May, Bolognesi signed a €800mn ($911mn) turnkey contract with Spanish industrial group Duro Felguera and US industrial giant GE for the installation of the two 1,500MW thermoelectric plants.