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Brazil seeks more LNG during drought

LNG Industry,

The LNG carrier WilGas is due to arrive at the Guanabara Bay LNG terminal near Rio de Janeiro this week to deliver a spot cargo of LNG that was re-exported from Europe.

Petrobras, Brazil’s state-controlled oil and gas firm and the sole importer of LNG to the country, imported a record 2.833 million tons of LNG (equivalent to 0.56 billion ft3/d of natural gas) over the first eight months of 2014, including several spot LNG cargoes that were re-exported from Europe. Petrobras does not have any long-term contracts to buy LNG and buys what it needs under spot or short-term contracts.

LNG regasification terminals

Brazil currently has three operating LNG regasification terminals with a total import capacity of 1.45 billion ft3/d. The Guanabara Bay terminal was the first to open in 2009, while the newest terminal opened in January 2014. Since 2009, LNG import levels have varied considerably. Imports spiked in the fall of 2010, as hydro levels fell and power generation from natural gas increased to meet power demand.

While LNG imports are the most important supply source in balancing demand swings, they are far from Brazil’s only supply source. Natural gas production in Brazil has grown rapidly since 2009 as Petrobras has increased production from the offshore Campos, Santos, and Espirito Santo basins. Marketed production in 2013 was double what it was in 2009, 1.57 billion ft3/d compared to 0.78 billion ft3/d. Additionally, Brazil imported 1.12 billion ft3/d of pipeline gas from Bolivia in 2013 as well as small volumes from Argentina.


Brazil is heavily reliant on hydroelectricity to meet its demand for electric power. However, it is currently experiencing the worst drought in 40 years and has turned to gas-fired power generation to compensate for the lack of hydropower. Electricity generation from natural gas and other fossil fuels was at record high levels in August, while hydroelectric generation was at its lowest level since July 2005. Petrobras’s demand for LNG has been high in both 2013 and 2014 because of these low water levels at hydroelectric facilities.

Petrobras is actively trying to buy spot LNG for delivery in October, November, and December. November to May is usually the rainy season in Brazil, and future spot purchases will depend on how much rain the country gets this season.

Source: EIA Natural Gas Weekly Update.

Edited by Katie Woodward

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