Brazil prepares for a new phase of investments in LNG terminals

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Investments in LNG terminals in Brazil will undergo radical changes in the coming years.

The three operating terminals in the country were built by state-run oil company Petrobras, but new projects from private sector firms are emerging as the NOC reduces its participation in the oil and gas midstream and downstream markets to focus on deepwater exploration and production.

According to a study by federal energy planning company EPE, there are plans for at least 23 new LNG terminals in Brazil, of which two are in the construction phase, another 10 are in the licensing phase and 11 are the subject of initial studies.

The three operating terminals are in Bahia, Rio de Janeiro and Ceará states, and were built to provide flexibility for natural gas supply. The new projects, however, should seize the opportunity of competitiveness gains related to the integration with thermopower plants.

Investors have been securing firm LNG supply contracts with thermo units to anchor investments in new terminals. This model is seen as positive since it offers the possibility of later integrating the terminals with gas distribution pipelines as a way to monetize excess capacity.

In Brazil’s latest tender to buy energy supply from new projects, LNG-fired plants won major contracts and the expectation is for such projects to gain even more competitiveness as the country increases gas production in pre-salt areas and opens its natural gas market to private investors, which is expected to cut gas prices.

The regulatory changes currently being discussed for the natural gas market should also help guarantee better financing conditions for the new terminals, since they will allow for the optimization of installed capacity.

According to EPE, LNG is important to give the country not only flexibility but also resiliency in the natural gas transport system. Recently, during an event in Rio de Janeiro, the head of oil and gas regulator ANP, Décio Oddone, said the expectation is that new projects for the integration of Brazil’s gas markets with other countries, such as Argentina, will probably prioritize LNG transportation instead of the construction of big pipelines.

“The gas coming from Argentina’s Vaca Muerta areas should be transported more as LNG than through pipelines. We will see fewer projects such as the Gasbol line connecting Brazil and Bolivia,” Oddone said.

BNamericas takes a look at the LNG terminal projects that are more advanced:

Terminal Gás Sul: Located in Babitonga bay, in Santa Catarina state, the project is being developed by Golar Power. It involves the installation of a 15Mm3/d floating storage and regasification unit located 300m off the coast with storage capacity of 160Mm3 of LNG. It includes a 31km pipeline that would connect the terminal to the Gasbol pipeline and a connection with a 2.5km line dedicated to supplying a 600MW thermopower plant operated by Engie, which is expected to participate in the country’s next power auction in October. The project has already received a prior environmental license.

Pontal do Paraná: Paraná state power firm Copel, in collaboration with Shell, is studying the construction of a 14Mm3/d terminal. The project could be located in Pontal do Paraná or Paranaguá. There are also plans for a pipeline, either 90km or 127km long, depending on which city is chosen. The terminal would be able to supply the Araucária thermoplant, which is operating, and other thermo projects being studied by Copel, in addition to supplying around 1.5Mm3/d to other consumers in Paraná and exporting up to 4Mm3/d to other states, such as São Paulo.

Santos: Private company Cosan expects to invest US$120mn to build a terminal in Santos city in São Paulo state to diversify gas supply in the region and replace part of the imports from Bolivia. The project includes a floating storage and regasification unit with capacity to deliver 14Mm3/d, in addition to an 8.5km pipeline connected to local distributor Comgás’ network. Initial licenses have already been granted.

Macaé: EBTE Engenharia has been studying the construction of a port in Macaé, in Rio de Janeiro state. The port would have a terminal dedicated to offshore support, including a multi-use terminal and a regasification one, and another focused on oil operations. It could also have a tanking area, a fuels terminal and a gas processing unit. Brazil’s first thermopower plant fired with natural gas from pre-salt areas, UTE Marlim Azul, will be built at this port. The power generation unit is being developed by Shell, Pátria Investimentos and Mitsubishi Hitachi Power Systems.

Açu port: Gás Natural Açu, a joint venture between Prumo Logística, BP and Siemens, is building a terminal in Açú port, in São João da Barra in Rio de Janeiro state. The project includes the regasification unit FSRU BW Magna with capacity to deliver 21Mm3/d, which is due to arrive by 2020. The terminal will be dedicated to supplying two thermopower plants, the 1.3GW UTE GNA I, which is due to come online by 2021, and the 1.6GW UTE GNA II, expected to start operations by 2023. Together, the two will be Latin America’s largest gas-fired power complex. Gás Natural Açú is also studying integration of the terminal with local pipelines.

Presidente Kennedy: TPK Logística and Rotterdam port are studying the construction of a port in Espírito Santo state. The expectation is that the project will include an LNG terminal with a 20Mm3/d regasification vessel, in addition to an area dedicated to LNG tanking. The terminal could see construction works starting in 2020, but the operators are still seeking consumers and investors. Two thermopower plants in the region, the 3.9GW UTE Sudeste and the 920MW UTE Presidente Kennedy da Gera, could be supplied by the natural gas from this terminal. Both are in the licensing phase.

Barra do Riacho: Local firm Imetame has a project to build a port in Espírito Santo state that includes a regasification terminal. However, it depends on the construction of the UTE Energia I plant, with 1.5GW capacity, also operated by Imetame. The power generation unit is already in the licensing phase. Other potential clients for the LNG terminal include pulp, steel and ceramics factories.

Barra dos Coqueiros: The most advanced regasification project in the country is the terminal in Sergipe state. Operated by Celse, a partnership with Golar Power and EBrasil, it will be Brazil’s first LNG-to-power project operated by a private sector company, in addition to hosting Latin America’s largest thermopower plant, with capacity of 1.5GW and due to come online in January 2020. The 21Mm3/d regasification vessel, FSRU Golar Nanook, was connected to the terminal in March and is in the commissioning phase.

São Luís: Gera Maranhão is seeking to make the 1.7GW UTE Geramar thermo project viable, combined with an LNG regasification terminal in the capital of Maranhão state, São Luís. The licensing request for the power plant has already been submitted and the company plans to participate in upcoming auctions.

São Marcos bay: Golar Power is also studying the feasibility of building a terminal in the capital of Maranhão state. The 21Mm3/d project would help supply thermopower plants São Marcos I and II, which each have installed capacity of 2.1GW. The company has already started the licensing process.

Barcarena: The same companies responsible for the Barra dos Coqueiros project are studying the construction of a similar project in Pará state. The project consists of a regasification vessel with capacity to deliver 15Mm3/d in the Pará river, near Vila do Conde port. The terminal would be connected through a pipeline to aluminum company Hydro Alunorte and to a 1.6GW thermo plant, UTE Novo Tempo Barcarena. The investors also envision supplying natural gas to other neighboring industries, replacing fuels used in the region that are more expensive and polluting, such as diesel, oil and coal. Another objective is to provide LNG for internal regions of Pará and Amazonas states through cabotage using smaller vessels. The project is in the licensing phase.



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