Petrobras offering spare regasification capacity

OREANDA-NEWS. October 21, 2015. Brazilian state-controlled Petrobras is offering spare regasification capacity at its three LNG terminals as part of a broader plan to boost cash flow.

Petrobras confirmed that is offering capacity in its LNG regasification terminals to "interested clients."

Petrobras owns Brazil's only regasification terminals -- 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 bulk of the LNG imported by Petrobras supplies thermoelectric plants, which have played a growing role in Brazil?s electricity matrix because of extended drought conditions, particularly in the northeast.

Precipitation in the strategic southeast/center-west subsystem has improved following a severe drought last year, replenishing hydroelectric reservoirs and leaving the Guanabara terminal idle last month.

The Bahia terminal received 300,959 t (13.84mn m3/d) of LNG and the Pecem terminal in Ceara state another 117,303 t. Both terminals are located in the arid northeast.

Natural gas distribution companies, which have been unable to grow their markets because of limited domestic supplies, are the most likely candidates to utilize the spare regasification capacity in the near term.

In early October, Parana-based gas distributor Compagas received authorization from the mines and energy ministry to import up to 1.9mn m3/d. The LNG can be delivered to any of Petrobras' three regasification terminals. Compagas confirmed that it is in negotiations with Petrobras, but declined to offer any details about a possible deal.

Other local distributors could sign similar agreements with Petrobras. But the deals may not happen right away, because Brazil?s economic slump has thwarted industrial appetite for gas.

In August, gas sales to industry declined by 5pc compared to the same period of 2014, according to the Brazilian gas distribution company association (Abegas).

Petrobras has already offered capacity in its LNG terminals to power generation projects that have participated in government-sponsored new energy auctions, but none of these projects has moved forward.

The government has modified terms for a February 2016 auction for power generation projects that will deliver energy to the grid in 2020 in an attempt to attract LNG-based proposals.

In previous auctions, companies needed to present 25-year gas supply contracts, but the government has reduced this requirement to 15 years.

The new rules will also exempt LNG-based plants from buying power on the spot market during periods of maintenance, as long as the plants meet minimum operational requirements.

Likewise, the new rules allow the project developer to indicate which gas price index the project will use.