King of Latin American LNG?
Liliana Diaz, FTI Consulting, USA, Sheds Light on the Opportunities for Brazil’s Natural Gas Market
Brazil holds great promise for natural gas development. For quite some time, the largest economy in South America 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. Yet, the Brazilian gas market remains in its infancy. It is small compared to its vast resource base and demand potential. It is also highly concentrated.
Despite best efforts to enhance competition, particularly from 2009 onwards, the reality is that concentration persist hindering the chances for market expansion. Regulatory reform and specifically, effective liberalization, are seen as a requirement to unlock Brazil’s natural gas potential. While the road to liberalization has been long-winded and bumpy, the impetus for reform has finally taken hold.
On April 17, 2021, Brazil's lower house of congress approved the long-awaited Bill of Law No. 4,476/2020 (“New Gas Law“), which received presidential sanction on April 8, 2021. The New Gas Law enshrines the foundations of a competitive natural gas market while addressing current obstacles that have hampered growth. Coupled with state controlled Petrobra’s (Petróleo Brasileiro S.A.) continued divestment of strategic assets along the value chain, current conditions present a unique opportunity for investors to enter this nascent yet promising market.
Posted with permission from LNG Industry. All rights reserved.