Brazil to convert oil-based thermal plants to LNG

OREANDA-NEWS. Brazil is considering converting the country's most expensive thermoelectric plants that operate on fuel oil and diesel to LNG, Brazilian mines and energy minister Eduardo Braga said.

Braga estimated that there is at least 2,500MW of thermoelectric capacity that currently uses diesel and fuel oil that could be switched to imported LNG.

According to initial government estimates, the cost of running these plants could potentially decline to R210-R220/MWh (\$80.45-\$84.29/MWh) from R600-R650/MWh if they are converted.

Braga emphasized the cost of converting these plants is still under analysis as is the timeframe.

Reservoirs in the southeast/center-west subsystem, which holds roughly 70pc of Brazil's hydroelectric generation capacity, declined by 2.5 percentage points to 16.9pc on 28 January compared to 19.4pc on 1 January.

In typical years, rains are most intense in January and February, replenishing reservoirs following the dry season. But little rain has fallen so far.

The drought has forced the government to maximize thermoelectric dispatch over the past year. All thermoelectric plants are expected to continue to operate through 2015 amid the sparse precipitation.

Petrobras has three regasification terminals in Brazil: 28mn m3/d Guanabara in Rio de Janeiro state, 7mn m3/d Pecem in Ceara state and 14mn m3/d Bahia in Bahia state.

The three terminals still have spare capacity. LNG sales on the domestic market in Brazil reached an average of 20mn m3/d in 2014.

Local energy firm Bolognesi Group plans to install two LNG receiving terminals and two associated power plants with more than 2,400MW of total generating capacity.

Bolognesi said US LNG firm Excelerate Energy will provide floating storage and regasification units (FSRUs) which will deliver LNG to the Rio Grande and Suape ports. Each FSRU will have regasification capacity of 14mn m3/d, of which 6mn m3/d will be used to fuel the plants. The remainder of the LNG will be sold to local industries, but could potentially be used for other thermoelectric plants.

Bolognesi should complete construction of the power plants by 2019.