Generators seek to tap Petrobras regas capacity

OREANDA-NEWS. March 27, 2015. Brazilian state-controlled Petrobras has received 21 proposals from generators to utilize its regasification terminals for new power plants, Petrobras gas and energy marketing manager Carlos Pereira said.

The proposed projects spread across nine states have total installed capacity of 9,213MW.

Petrobras estimates that the projects would require a total of nearly 40mn m3/d (1.4bn ft3/d) of natural gas.

Despite the strong interest in using the company's three regasification terminals, no greenfield generation project has successfully participated in government-sponsored auctions up to now.

Pereira said several of the generators behind the projects are preparing to participate in upcoming government-sponsored auctions, but their success will depend on the ceiling price and other factors.

"Petrobras is a service provider and the ultimate decision of whether to include these projects in the auctions does not depend on us," he added.

To participate in the auctions, companies need to demonstrate that they have an agreement with Petrobras to use its regasification capacity and that they have long-term gas supply contracts.

Pereira warned that regulatory and tax issues need to be resolved before these projects move ahead.

Petrobras owns the 28mn m3/d Guanabara terminal in Rio de Janeiro state, 7mn m3/d Pecem in Ceara state and 14mn m3/d Bahia in Bahia state.

He said Petrobras has a fourth LNG terminal project that could be opened to partners.

Separately, Petrobras is prioritizing the sale of gas distribution and power generation assets in its \\$13.7bn asset divestiture plan.

The company says 40pc of the assets to be sold in the divestiture program will be from the gas and energy segment.

The head of gas and energy for Petrobras, Hugo Repsold, said the company?s investment in all aspects of power generation was a "strategic mistake."

Petrobras is also expected to reduce investment in its gas and energy segment in its 2015-2019 plan to be released later this year.

"There is significant room to expand natural gas distribution and consumption in Brazil, but the private sector will only invest with clear rules and transparent pricing," said Sergio Soares, the head of planning and regulation at Spain?s Gas Natural Fenosa.