RIO DE JANEIRO, Feb. 3 (Xinhua) -- Brazilian President Luiz Inacio Lula da Silva on Wednesday inaugurated the largest gas pipeline in South America.

The 1.38-billion-U.S. dollar Cabiunas-Reduc III pipeline was built and will be operated by state-owned oil and gas giant Petrobras.

According to the company, the 179-km pipeline can transport 40 million cubic meters of natural gas a day, the highest capacity among the gas pipelines in the country and higher than that of the Bolivia-Brazil gas pipeline, which can deliver 30 million cubic meters per day.

In order to avoid damage to vegetation, Petrobras built a 3.5-km tunnel under the Santana Mountain.

Petrobras said the new pipeline boosts both the country's supply flexibility and transportation capacity to meet the needs of the southeastern region, which has the biggest demand for natural gas in Brazil.

With the pipeline, Brazil's natural gas transportation network reaches 9,217 km in length, up from 5,398 km at the beginning of the Lula administration in 2003.