Brazil Remains Wedded to LNG Despite Upset
December 15, 2020DownloadsDownload Article
For quite some time, Brazil has garnered the right ingredients for a robust natural gas market: a large population underpinning rising energy demand, sizable reserves and a market hungry for diversification of energy sources. However, the gas market remains small compared to its vast resource base and demand potential. It is also highly concentrated.
Through 2020, and despite current market uncertainty associated with the Pandemic, state controlled Petróleo Brasileiro S.A. (Petrobras) has continued implementing a July 2019 agreement with the Brazilian competition authority through which it agreed to provide third-party access to strategic infrastructure and to divest itself of transportation and distribution assets by 2021. As part of the divestment program, in the third quarter of 2020, Petrobras carried forward the awaited tender for the lease of the Bahia liquified natural gas (LNG) regasification terminal and its associated facilities. For investors, access to the terminal’s capacity and associated pipeline with connections to the gas grid, provides a chance to enter a market with scale and importantly, upbeat prospects for further expansion.
Despite a false start in the Bahia terminal leasing process, prospects for natural gas and LNG in Brazil remain bright. The recent incumbent’s retrenchment from well-developed and integrated assets along the natural gas value chain coupled with renewed regulatory efforts to liberalize the market are paving the way for new players. 2021 may see a once in a lifetime opportunity for private investment across the Brazilian natural gas value chain.
Reproduced from World Gas Intelligence with permission from the publisher, Energy Intelligence Group, for FTI Consulting.
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