Sao Paulo – The price of imports of liquefied pure gasoline (LNG) by Brazil elevated by greater than 85% this yr, pushed by a surge in costs on worldwide markets with the power disaster in Europe, though the quantity of gasoline demand for thermoelectric crops has decreased considerably.
For analysts, the tightening within the worldwide gasoline market, which can proceed within the coming years, will increase the dangers related to Brazil’s dependence on LNG imports, along with exposing the nation’s difficulties in benefiting from its considerable gasoline provide because of an absence of gasoline provide. infrastructure.
Information from consultancy Wooden Mackenzie exhibits that the price of LNG imports by Brazil reached US$2.99 billion between January and August 2022, on high of the US$1.60 billion verified whole in the identical interval in 2021.
This enhance is expounded to the sharp enhance in gasoline costs not too long ago, particularly with the power disaster in Europe, following the decline in gasoline provides from Russia.
The value enhance overlaps with a decline within the quantity of LNG imported by Brazil this yr, averaging 15 million cubic meters per day between January and August, in comparison with 22 million cubic meters per day in the identical interval in 2021, in response to the info. .by Wooden Mackenzie.
“The issue is that Brazil is hit by spot costs, which at the moment replicate the spot in Europe… At the moment (costs) are above US$ 50.60 per million BTU, as much as 10 instances in comparison with the start of the yr. final yr”, explains Mauro Chavez, head of European gasoline market research at Wooden Mackenzie.
A survey by consultancy Vitality Gasoline confirmed that activation of thermoelectric crops – a serious client of LNG in Brazil – has fallen sharply since March, when the federal government determined to droop so-called “out of order deliveries”, triggered final yr amid a severe water disaster.
Brazil’s demand for power from thermoelectric crops has decreased considerably this yr, because the monsoon season brings favorable monsoons, which assist enhance the extent of hydroelectric reservoirs, the nation’s principal supply of electrical energy.
The electrical energy system operator ONS predicts that Brazil will attain the top of September with 49.4% capability in hydroelectric reservoirs within the Southeast/Center West. In September final yr, the extent reached 15%.
Brazil nonetheless has a number of linked LNG thermal crops, which function as rigid, that are activated across the clock by the ONS, explains PSR consultancy president Luiz Barroso.
“At this time Brazil is in a a lot better state of affairs (than in 2021), a full reservoir provides us lungs so we do not have to activate this thermal. And that locations a really robust duty on ONS to handle these water reserves properly,” stated Barroso.
Elevated habit danger
The state of affairs of larger gasoline demand and reorganization of provide to Europe ought to see Brazil see larger competitors for gasoline from the US, the world’s high producer and largest provider to the Brazilian market.
Bruno Pascon, director of the Brazilian Infrastructure Heart (CBIE), stated that spot reference costs in Europe are extra engaging to LNG suppliers than reference costs on the Brazilian market.
“We’ll now not rely on the US, the common LNG worth for Brazil is at US$ 32, half of the promoting worth for Europe, it’s clear that the US will outperform its historic companion, specifically Europe, to the detriment of Brazil and the South. America”, evaluates Pascon.
Energi Gasoline CEO Rivaldo Moreira Neto stated the perceived danger of Brazil’s dependence on imports was rising, because the world noticed LNG as a much-needed gas for a very long time.
“If we do not have a positive moist interval (for hydropower)… we must compete for this LNG with European and Asian markets, and never a lot growth on the provision aspect.”
Specialists notice that, on this new state of affairs, the US has signed long-term contracts with European nations, that are necessary to make investments in new LNG capability possible. Within the case of Brazil, the contracts negotiated are normally short-term.
For them, it’s important for Brazil to proceed the gasoline movement infrastructure challenge, to cut back the speed of re-injection within the properly and make the most of the upcoming enhance in manufacturing volumes from the pre-salt layer.
“Brazil can grow to be self-sufficient in pure gasoline at a a lot decrease value than imports… If we do not resolve the bottlenecks we have now, construct movement routes, we are going to proceed to dump gasoline which has very strategic worth”, stated Pascon.
In response to state-owned EPE, internet pure gasoline manufacturing in Brazil is predicted to extend from 64 million cubic meters per day to 136 million by 2031, with an acceleration from 2026 onwards because of expectations of serious post-salt manufacturing. SEAL Basin layer ( Sergipe-Alagoas) and pre-salt within the Campos and Santos Basins.
The CBIE director highlighted the delay in start-up operations of Route 3, the Petrobras gasoline pipeline that may ship gasoline from the pre-salt seam of the Santos Basin, with a capability of round 18 million cubic meters per day.
“EPE already foresees at the very least three extra routes simply to ship pre-salt gasoline by the top of the last decade. However it takes time… so we must always have moved ahead with these tasks”, he stated.
On the demand aspect, he stated that the important thing anchor sector for gasoline has gone forward with the challenge, mentioning the 8 GW thermoelectric plant regulated within the Eletrobra privatization legislation and the fertilizer plan not too long ago launched by the federal government.