Page 11 - LatAmOil Week 17 2020
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“Wood Mackenzie estimates Brazilian gas demand fell from 76mn cubic metres per day in February to about 54 mcm per day as the impact of coronavirus lockdowns took effect,” it said.
With consumption levels falling, the local distribution companies (LDCs) that rely on Petrobras for gas declared force majeure, saying they could not uphold their commitments to taking delivery of fuel. This move was concern- ing for the NOC, as it “had implications across the gas value chain, affecting operations along the chain, production and supply chain con- tracts,” Wood Mackenzie explained.
Petrobras therefore opted to exempt LDCs from their obligation to abide by the take-or- pay and ship-or-pay clauses in their supply contracts. It also declared force majeure on all of its own supply contracts and reduced the vol- ume of gas imported from Bolivia to 10 mcm per day, 28.6% below the contractually required minimum volume of 14 mcm per day.
At the same time, though, the NOC required gas-fired thermal power plants (TPPs) to con- tinue receiving fuel shipments in volumes
that were sufficient to sustain the integrity of upstream production operations. This move allowed it to avoid “[a] drop in gas demand [that] could potentially compromise the reser- voirs,” said Mauro Chavez, the head of Wood Mackenzie’s Latin America Gas & LNG section.
Chavez noted, though, that these actions did not offset 100% of the decline in gas consump- tion. As such, he said, Petrobras has also taken action on the supply side by opting to shut in production at higher-cost oilfields that serve as sources of associated gas.
“This is not enough to balance low demand, forcing the company to cut other sources of domestic non-associated gas,” he said. “Petro- bras is also working to maintain sustainable production rates from pre-salt [oilfields] and has negotiated with its partners to increase gas re-in- jection levels, while maintaining minimum gas production levels to preserve reservoir integrity.”
He added: “The slump in gas demand offers lessons on the need for gas storage, the urgency for a liquid gas market and the integration of the gas and power sectors.”
TWO Brazilian oil companies have asked the government to shutter 29 oilfields, which have a total production of 65,000 barrels per day (bpd).
According to Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP), the requests cover 16 offshore fields and 13 onshore sites. The national oil company (NOC)
Petrobras is looking to divest 20 of them because they have seen a decline in output, ANP said.
The agency did not identify any of the sites targeted for closure but said that one of the onshore fields was in the Reconcavo Basin. This basin, Brazil’s largest, lies along the Atlantic Coast near the city of Salvador.
Brazil has reduced pipeline gas imports from Bolivia this month (Image: Petrobras)
Oil companies ask ANP to mothball 29 fields because of pandemic
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