Regional Market Outlook on Natural Gas

  • Proven gas reserves have seen a tremendous growth since 2011, when study on the pre-salt layer, along Brazil’s offshore region was concluded; and in 2017, the proved reserves accounted for nearly 13.7 TCF
  • The natural gas market is regulated by ANP in the upstream of the value chain, and presently, there are 23 companies operating in the production sector
  • In 2017, Petrobras natural gas production reached 299.512 million cubic meters, while the total production of the country reached 110 million cubic meters per day, a 6 percent increase in production compared to 2016 and is expected to grow at CAGR of 3.26 percent
  • Natural gas production is expected to rise at a CAGR of 7-9 percent from 2016 to 2019 to meet the supply strategy devised by Petrobras in the Strategic Plan of 2030

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Supply and Demand

  • The natural gas supply in Brazil during 2017 was 38 BCM, an increase by 0.2 percent from 2016. Decrease in imports from Bolivia, Qatar and Trinidad & Tobacco has decreased overall supply from 2016
  • There was an increase in pipeline imports of LNG for 2017 average of 54 million cubic meters per day, up from 44 million cubic meters per day last year and nearly 12 percent increase in domestic production
  • The supply of natural gas in the pipeline network of Brazilian state oil company, Petroleo Brasileiro SA, grew by about 23 percent this year compared with 2016
  • High growth rates in oil and natural gas production, coupled with an increase in natural gas demand, will provide the surplus
  • According to Petrobras Strategic plan for 2030, the imports would be maintained at the same quantity as it was in 2014, and the rise in demand would be met by increasing the domestic production

Consumption Profile 

  • The major consumer of natural gas is the power generation sector, which accounted for 43 percent of the total consumption in 2017
  • Industrial consumption, including feedstock for fertilizer and chemical sector, was nearly 38 percent of the total during 2017
  • The combined demand from commercial and residential sectors for natural gas is around 4 percent, since the geographical location of the country has helped in making the seasonal variations in temperature mild
  • In 2017, natural gas consumption grew by 1.5 percent, compared to 2016, a record growth from the industrial sector by 5.9 percent compared to 2016

Industry Structure

Infrastructural Developments

  • Transportation of natural gas is almost completely owned by Petrobras and the domestic supply is mostly handled by pipeline transport. Brazil has more than 9000 Km long pipelines connecting 49 terminals ensuring supply security
  • Petrobras has a huge infrastructure development plan under study, and once online, this could expand the present pipeline coverage length by a whopping 7496 km, and will boost the capacity by 19848.7 Bcf
  • The GASBOL-Brazil Bolivia gas pipeline will also have expansions of about 2597km into various states near the GASBOL pipeline entry point in Brazil
  • Existing regasification facilities-State of Ceara in the northeast region, with a regasification capacity of 7million m3 /day, State of Rio de Janerio in the southeast region with 20 million m3 /day capacity, and State of Bahia in the northeast region with 14 million m 3 /day
  • Gas pipeline planned transportation/distribution project - 4,153.60 km, whose commercial operation will start before 2021

Value Chain of Brazilian Natural Gas Market Regulation 

  • Petrobras had been the owner and sole user of all the three LNG regasification terminals in Brazil; however, by 2016, Total agreed to acquire regasification capacity at the Bahia regasification terminal
  • Petrobras has also initiated the bidding processes by 2017 to sell its two other regasification terminals and its associated power plants, Pecém and Guanabara Bay

 Alternative Procurement Practices

In House Cogeneration

  • Industries with high heat and power requirement has an option to produce power and heat on the site based on renewable energy
  • Generation is mainly based on the biomass feedstock like bagasse, agricultural and industrial wastes
  • The fuel depends on the availability of feedstock near the consumer location