Brazil invests LNG
in Paulínia city and regasification
PETROLEUM 08/23/2006
Brazilian oil company Petrobras and White Martins created a consortium
to take LNG to regions in Brazil where there aren't gas pipelines.
White Martins is going to transform natural gas, from the gaseous state
to liquid, so that it may be transported in trucks. Petrobras is also
preparing a tender process to start the operations in two LNG
regasification plants. They will allow for gas imports from Arab
countries.
São Paulo - Petrobras, the Brazilian energy company, and White
Martins, greatest company of industrial gas in South America, started
on Monday operations of a consortium in the field of Liquefied Natural
Gas (LNG). They inaugurated GasLocal, company of the consortium, which
will market and transport the LNG produced in the White Martins plant,
in Paulínia, city in the countryside of the state of São
Paulo, southeast Brazil.
The plant was also inaugurated on Monday and will liquefy 380,000 cubic
meters of natural gas per day. GasLocal will transport the gas in the
liquefied form, on trucks, to places in Brazil where there are no gas
pipes. The interior of the state of São Paulo, the north of
Paraná (southern Brazil), south of Minas Gerais (Southeast),
Goiás and the Federal District (in the Midwestern region of
Brazil) are places in the country where pipelines don't reach.
According to information from the Petrobras spokesman, this kind of
transportation for natural gas is amply used in countries like Japan,
Spain, Portugal and the United States. The consortium already has many
contracts for natural gas supply signed in these states in Brazil. The
aim, according to Petrobras, is to give more regions in the country the
possibility of using natural gas.
This is only one of the projects that Petrobras has for the gas sector.
The company is preparing a tender to start the operations in two
regasification plants, according to information published on the
Brazilian government news agency, Agência Brasil. According to
information passed to the agency by the director of the Gas department
at Petrobras, Ildo Sauer, the regasification plants will be on ships.
They should regasify up to 200 million cubic metres of LNG per day.
The vessels to be used, with options of future purchases, will be in
Guanabara Bay, in Rio de Janeiro, and in Pecém Port, in
Ceará. The liquefied gas, according to Petrobras, will be
imported, possibly from African and Arab countries. The plants should
allow for the purchase of LNG from Algeria and Qatar, great Arab
producers of natural gas. Since the distance between Brazil and the
region is too great for the gas to be transported in the gaseous state,
it has to be dislocated in the liquefied form, which is only possible
if Brazil has regasification plants, to then transform it back into gas.
Petrobras started examining the regasification project after the crisis
with Bolivia, which made the company suspend the investments foreseen
to increase the imports of natural gas from the South American country.
With this, as well as investing in Brazil's own gas production,
Petrobras should increase imports of the product from other
nations.
Natural Gas
Natural gas constitutes only a small portion of Brazil’s total energy
consumption. OGJ reported that Brazil had 11.5 trillion cubic feet
(Tcf) of proven natural gas reserves in 2006. The Campos and Santos
Basins hold the majority of reserves, but there are also sizable
reserves in the interior stretches of the country. Despite Brazil’s
sizable natural gas reserves, natural gas production has grown slowly
in recent years, mainly due to a lack of domestic transportation
capacity and partly due to low domestic prices. In the future, Brazil
hopes to that increased development of increase natural gas production
through an expansion of the domestic natural gas transport network,
ending flaring at oil-producing facilities, and increased development
of existing reserves.
Natural gas consumption is a small part of the country’s overall energy
mix, constituting only 7 percent of total energy consumption in 2004.
High oil prices have helped spur natural gas demand in Brazil: natural
gas is mostly used as a substitute for fuel oil in industrial and
power-generating applications, and domestic prices for natural gas are
much lower than international fuel oil prices. Further, the
introduction of natural gas imports has lead to a rapid growth in
domestic consumption.
Sector Organization
Petrobras is the largest producer of natural gas in Brazil. The company
reportedly controls over 90 percent of Brazil’s natural gas reserves.
Other important actors in the sector include Sulgas and Britain’s BG.
ANP has sought to attract international investment to the sector, and
its seventh licensing round (see above ) emphasized blocks thought to
contain commercial quantities of natural gas.
Petrobras is also the largest wholesale supplier of natural gas.
Brazilian law allows each state to maintain a monopoly on natural gas
distribution in their respective territory, but many states have begun
to partially privatize these distribution companies. Petrobras has
bought stakes in several of these companies. The industrial sector is
the largest consumer of natural gas in Brazil, representing about 80
percent of total domestic consumption. However, the two fastest growing
sectors are thermal electricity generation and vehicular compressed
natural gas (CNG).
Exploration and Production
In 2004, Brazil produced 340 billion cubic feet (Bcf) of natural gas.
Brazil’s largest natural gas production occurs in the Campos Basin in
Rio de Janeiro state from offshore fields. Most onshore production
occurs in Amazonas and Bahia states, though natural gas produced here
is mostly for local consumption due to the lack of transportation
infrastructure. However, several new transport infrastructure projects
hope to facilitate increased production in these regions.
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