This report provides an overview of the Brazilian natural gas market, including statistics on domestic supply and imports by gas pipeline and LNG terminals. New gas-fired power plants may boost gas consumption. The domestic gas from Brazil’s prolific pre-salt fields is considered a potential future competitor for LNG imports. However, until Brazil finds a way to bring its pre-salt associated gas to the market, industry contacts believe there are opportunities for LNG exports to Brazil.
Last Published: 5/24/2018

NATURAL GAS SUPPLIES UP:  The Brazilian Ministry of Mines and Energy (MME) Gas Statistics Report shows that the average Brazilian domestic natural gas (NG) supply in 2017 reached 60.46 million m3/day, up from an average of 52.40 mm3/d in the previous year. 

LNG EXPORTS TO BRAZIL: To complement the domestic NG consumption of 85.56 mm3/d in 2017, Brazil imported 24.33 mm3/d from Bolivia and 5.05 mm3/d from LNG through the three existing LNG regasification terminals. The U.S. was the third largest LNG exporter to Brazil in 2017 with an 18% market share (US$ 88.84 FOB), following Nigeria (46%) and Angola (19%). Other suppliers included Qatar (7.4%), France (5.6%), and Trinidad Tobago (3.7%).

IMPORT TRENDS: The domestic gas from Brazil’s prolific pre-salt fields (PSF) is considered a potential future competitor for LNG imports; however, there is additional upside to the PSF oil in that the acreage includes vast volumes of associated NG, but current and planned infrastructure to get that NG to the market would still require massive reinjection of PSF NG. Until Brazil finds a way to bring its gas to the market, industry contacts believe there are opportunities for LNG exports to Brazil. They forecast that LNG imports are expected to rise again in the early 2020s, when the country's first long-term sale and purchase agreement to supply the CELSE LNG-to-wire project starts. Additionally, recent energy auctions and NG fired power plants under construction suggest a need for LNG over the next years.

DEMAND TRENDS: An EIA analysis based on IHS Energy, "Brazil: LNG Market Profile" report, indicates that LNG demand grew significantly in Brazil between 2012 and 2015 due to increased gas power generation.  Robust economic growth contributed to industrial demand growth, as well as overall power demand increase. However, the second consecutive year of economic recession reversed these trends sharply in 2016, cutting deeply into NG demand. With gradually increasing domestic production and limited demand growth, LNG imports are likely to remain relatively low.

LONG TERM FORECAST: Although Brazil’s NG consumption slightly increased in 2017 over 2016, it has not yet returned to 2014 and 2015 levels when consumption topped 99.26mm3/d and 98.5 mm3/d, respectively. Looking ahead, the International  Energy Outlook 2017 report issued by the U.S. EIA forecasts that Brazil’s NG consumption will grow at an annual average rate of 1.4% between 2015-2050.

PLANT INFORMATION:  There are currently 35 NG-fired power plants in Brazil, of which 15 are dual-fuel.  In December 2017, a power auction awarded two large gas-fired plants totaling 2,138.9 MW: one from project sponsor Prumo, to be built at the Açu Port Gas Hub, and the other one (Vale Azul Energia), from the EBTE group. The latter will be located near a Gas Processing Terminal, where a new Port (TEPOR) will be built, in Macaé.  Both plants need to be operational not later than 2023.

OTHER ENERGY SOURCES:  Along 2017, the MME "Gas to Grow" Committee studied changes in the electricity market to improve integration of gas and electricity industries. One such change was to allow a 50% inflexible operation of the new gas-fired power plants, in contrast with the current flexible dispatch regime that inhibits long-term NG or LNG supply contracts. The MME is also evaluating if additional NG-fired power plants will be added as base load power complementing Brazil’s hydropower and the intermittent wind power plants. The key factor is to determine how much and when the PSF gas will be available in Brazil.

US companies with expertise in NG related equipment and services are encouraged to explore business opportunities in Brazil.  Consider joining the U.S. and Americas LNG Forum May 23 and the September 2018 Oil and Gas Trade Mission to Brazil.

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Brazil Oil and Gas Export Potential