Brazilian state-led oil company Petrobras more than tripled LNG imports in 2021 to a fresh record high in a bid to counter the country's worst drought in 20 years as typically cheaper hydropower was in short supply, according to the company.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Petrobras imported a record 23 million cu m/d of LNG in 2021, up from 7.5 million cu m/d in 2020, the company said Jan. 12. That topped the previous record of 20 million cu m/d set in 2014.
LNG imports peaked at 40 million cu m Oct. 1, 2021, Petrobras said.
The surge in LNG imports was expected after lackluster rainfall in 2020-21 caused reservoir levels in Brazil's vaunted hydroelectric dam system to fall to record lows. Brazil generates about 70% of its electricity consumption from the dam system. The drought, which raised the specter of energy rationing and blackouts for the first time since 2001, forced Brazil to turn to more-expensive electricity generated by fuel oil and gas-fired thermal power plants.
In addition to the drought, LNG imports were also supported by a 30-day maintenance shutdown at the offshore Mexilhao Field platform, which acts as an export hub for offshore natural gas production, and Route 1 pipeline. The maintenance work started Aug. 29 and ended in late-September 2021. The Route 1 pipeline has installed capacity to transport about 10 million cu m/d.
Petrobras said it expected to import 101 LNG cargos in 2021, up from 44 in 2020, to meet demand. In addition, Brazil's National Petroleum Agency, or ANP, also approved an import-capacity increase at the Petrobras-operated Guanabara Bay LNG terminal to 30 million cu m/d from 20 million cu m/d previously.
The increase in LNG imports is likely to continue across Brazil in the next two-three years, according to government officials. Brazil is in the process of adopting a more-liberal regulatory regime under the New Gas Market signed into law by President Jair Bolsonaro in 2021, with the aim to increase gas supplies, expand consumption and reduce prices.
That will likely include new LNG terminals in the near future, according to Mines and Energy Minister Bento Albuquerque. In November 2021, Albuquerque said Brazil will likely see the number of LNG terminals in operation rise to eight in the next few years. Brazil currently has five LNG import terminals in operation, with Petrobras operating two of the facilities.
US-based operator Excelerate Energy assumed control of Petrobras' LNG terminal in Bahia state, called TR-Bahia in December 2021. Excelerate will pay $18.8 million to operate the terminal at Baia de Todos os Santos and related infrastructure until December 2023. The Bahia terminal can import 14 million cu m/d, according to Petrobras.
The deal also allowed Petrobras to relocate its leased floating storage and regasification unit, the FSRU Golar Winter, to the LNG terminal at Pecem in Ceara state. In September 2021, Petrobras had opened access to the Pecem terminal, called TR-PECEM, under an emergency procedure to counter any gas supply shortfalls during the Mexilhao and Route 1 pipeline maintenance project.
Eventual LNG exporter?
The import peak, however, is expected to be short-lived, according to Albuquerque. Brazil expects natural gas production to about double to 260 million cu m/d by 2030, which should lead to the country becoming an LNG exporter in five to eight years, the minister said. In November 2021, Brazil produced 136.6 million cu m/d.
Much of Brazil's natural gas production, however, is currently reinjected rather than sold into the domestic market. That is because Brazil lacks extensive offshore gas export infrastructure, especially at subsalt fields that are located more than 200 km off the coast.
Additional export capacity, however, is on the way in early-2022, according to Petrobras.
Petrobras and its subsalt partners were completing work on the Route 3 offshore pipeline, which is expected to start operations in the first quarter of 2022. The pipeline will have installed export capacity of about 18 million cu m/d, linking subsalt fields in the Santos Basin to a new gas-processing plant at the Complexo Petroquimico do Estado do Rio de Janeiro in Rio de Janeiro state.