Page 5 - LatAmOil Week 50 2021

LatAmOil COMMENTARY LatAmOil

Petrobras has been trying for some time to lease short term, as well as the long term, as it has been
the Bahia facility out to a third party. However, importing record levels of LNG to compensate
none of the nine companies that were invited for reduced hydropower production in the
to submit bids made valid offers, and the NOC midst of a drought.
opted earlier this year to stage another bidding Meanwhile, the boom in LNG imports is
contest. In February, it said it would only accept set to gain even more momentum as a conse-
offers from the same nine companies that had quence of market reforms and the enactment of
already been pre-qualified to bid for the lease as a new natural gas law that ended state-owned
of late 2019. Petrobras’ monopoly earlier this year. But it will
According to previous reports, the pre-qual- take time for the full impact of these reforms to
ification list included nine companies. Three of become clear, as CADE agreed last month to
them were domestic firms – namely, Compass postpone the implementation of certain pro-
Gas and Energy, a new Brazilian gas transport visions in light of tight supply conditions on
and distribution company set up by the Cosan domestic gas markets.
industrial group, and two Brazilian gas distribu-
tors, Bahiagas and Naturgy. Four were vertically New supply deals
integrated international oil companies (IOCs) Even so, new supply deals point to rising imports
– BP (UK), Repsol (Spain), Royal Dutch Shell in the future, as various buyers seek to decarbon- Brazil has been
(UK/Netherlands) and Total (France). The other ise their energy supplies. For example, New For- importing record
two were international firms that specialise in tress Energy (NFE) announced on December 13
LNG – Bermuda-registered Golar LNG and that it had executed a 15-year gas supply agree- levels of LNG
Excelerate. ment (GSA) with a Norsk Hydro subsidiary to
As the eventual winner of the tender, Excel- supply the Alunorte alumina refinery in Pará. to compensate
erate negotiated a lease contract for the Bahia The deal covers the supply of gas from NFE’s
LNG terminal, which Petrobras has described Barcarena LNG regasification terminal, which is for reduced
as “an island-type pier with all the necessary currently under construction and also located in hydropower
facilities for mooring a FSRU (floating storage Pará. NFE has agreed to supply Hydro with 1mn
and regasification unit) ship directly to the pier gallons (3,785 cubic metres) per day of LNG. production in
and a supply ship on the port side of the FSRU.” While the deal is comparatively small in scale,
The lease also covers assets associated with the it will allow the refinery to switch from petrole- the midst of a
terminal – a 45-km pipeline that runs from ter- um-based fuels to natural gas. The conversion is
minal facilities in the port of Bahia to exit points anticipated to reduce the refinery’s annual car- drought
in São Francisco do Conde and São Sebastião bon dioxide (CO2) emissions by an estimated
do Passé, along with the power-generating facil- 700,000 tonnes per year (tpy) as Hydro works to
ities in the Madre de Deus Waterway Terminal cut its global greenhouse gas (GHG) emissions
(TEMADRE). by 30% by 2030.
“Supply of natural gas from NFE’s Barcarena
Strong domestic gas demand LNG terminal will support Hydro in shifting
Bahia is just one of Brazil’s five LNG import ter- Alunorte to cleaner fuels and will significantly
minals; the others are Pecem, Porto de Sergipe, advance Brazil’s energy transition,” stated Wes
Gas Natural Açu (GNA) and Guanabara. Mean- Edens, NFE’s chairman and CEO.
while, another three are under construction and The Barcarena terminal is due to be com-
anticipated to start up by 2025. pleted in 2022 and is currently set to be the sole
This increase in regasification capacity is a point of LNG shipments to Pará and Brazil’s
positive development, given that Brazilian gas other northern states more broadly. NFE aims
demand is very strong. However, it will take sev- to support industrial development in the region,
eral years to bring the new terminals on stream. which contains the Brazilian portion of the
As such, the fact that Excelerate has begun tak- environmentally sensitive Amazon River basin,
ing delivery of LNG at Bahia, which has been while also reducing emissions and pollution. It
operating under capacity for some time, is good hopes to achieve the latter target by offering a
news. Brazil is looking to buy more gas in the cleaner alternative to petroleum products. ™

Alunorte refinery (Image: Norsk Hydro)

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