RIO DE JANEIRO—Brazil’s natural gas industry is going through a transformation due to the great potential of the country’s presalt reserves.
The Brazilian government is working hard to attract new players to grow natural gas production, allowing companies to take advantage of opportunities ahead. This was discussed Sept. 25 in Rio de Janeiro during the 18th Natural Gas Seminar organized by the Brazilian Institute of Petroleum.
Currently, natural gas accounts for only 10% of Brazil’s energy matrix. Yet, Brazil’s natural gas market is expecting a boom over the next years with new players and more investments as the government works to change policies.
According to Brazil’s Energy Research Co. (EPE), a state-owned think tank, the natural gas market supply in Brazil will grow from 57 million cubic meters a day in 2016 to 95 million cubic meters in 2026. Most of that amount will come from the presalt. The Santos Basin, located in Brazil’s southeastern region, will account for 70% of the total natural gas output to be delivered to the Brazilian energy market.
For EPE, presalt gas will be competitive against gas imported from Bolivia and LNG, with prices in the range of US $5 to US $11 per million BTU.
Brazil’s Oil and Gas Secretary Marcio Felix said the government is also working to prepare for less participation from Petrobras as the operator carries out a huge divestment plan. “The Ministry of Energy is designing new policies and guidelines for the natural gas sector by November,” Felix said.
Among the government’s proposals is the creation of a natural gas regulator to help develop the country’s natural gas sector, Felix added.
Jorge Camargo, president of the Brazilian Institute of Petroleum, said the current scenario, with the reduction of Petrobras’ share and the oil price crisis, is allowing the private sector to experience greater improvement since the opening of the oil and gas industry in 1997 when Petrobras ruled the monopoly of E&P in the country. “This is a new cycle that is starting now,” Camargo said.
Launched in 2016, the Gas for Growth program—a government plan designed to boost the country’s natural gas supply—was also mentioned during the event. The plan establishes:
- A set of business-oriented measures such as a free-trade negotiation process among operators, pipelines and gas storage terminal owners;
- Tax reform for players;
- More flexible licensing procedures for the construction and operation of gas pipelines; and
- The creation of gas consumption rules based on efficiency and competitiveness.
“Three pillars are fundamental for the development of the gas market: improvement of the tax framework, integration of the electric and natural gas sectors, and new regulatory design, based on legislative changes that will be proposed,” Brazil’s Natural Gas Secretary Simone Araújo added.
Economic Scenario, Demand
During the event, some executives expressed some optimism about the future of the natural gas industry in Brazil.
Carlos Zanardo, executive manager for state-owned energy company Cosan, said more natural gas development is important to make the industry more competitive.
For the executive, the entry of new players is also fundamental to strengthen investments in the natural gas segment. “We need investment incentives by the government to attract more players. It is not worth [it] to change Petrobras’ monopoly for just three or four operators. We need to have multiple players in the market to ensure competitiveness,” Zanardo said.
Repsol-Sinopec Brasil CEO Leonardo Junqueira said it is necessary to work to develop gas consumption by the industry in the country to bring “stability” to the sector. The executive, like other speakers, also stressed the importance of including gas thermoelectric plants to generate demand.
“Natural gas is [a] clean and efficient energy source. It can compete with solar and wind power plants and even future hydroelectric plants,” Junqueira said.
Recommended Reading
Permian’s LandBridge Prices IPO Below Range at $17/Share, Raising $247MM
2024-06-30 - Houston-based LandBridge, which manages some 220,000 surface acres in the Permian Basin, kicked off trading at $19 per share, more than 10% above its listing price.
LandBridge Chair: In-basin Data Centers Coming for Permian NatGas
2024-06-28 - Newly public Delaware Basin surface-owner LandBridge Co. has a 100-year lease agreement with one developer that could result in ground-breaking in two years and 1 GW in demand.
Scott Sheffield Among Investors in Australian Shale Gas IPO
2024-06-27 - The operator who sold Pioneer Natural Resources Co. to Exxon Mobil in May for $59.5 billion joins his son Bryan Sheffield in shale gas investment Down Under.
BPX’s Koontz: The Rise of a Shale Man
2024-07-02 - CEO Kyle Koontz takes the reins of BPX Energy’s rapid onshore growth amid big changes at BP.
Solaris Stock Jumps 40% On $200MM Acquisition of Distributed Power Provider
2024-07-11 - With the acquisition of distributed power provider Mobile Energy Rentals, oilfield services player Solaris sees opportunity to grow in industries outside of the oil patch—data centers, in particular.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.