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Brazil's Vale digs into wholesale gas market

  • Märkte: Natural gas
  • 02.12.24

Brazilian mining giant Vale has made sizable inroads in Brazil's wholesale gas market, forging a path for other energy-intensive industries to follow.

Following a series of deals, the company will supply over 90pc of its gas consumption from the wholesale market in 2025, up from 20pc this year when Vale purchased most of its gas from retail suppliers.

Vale started testing the waters of the wholesale market in 2023, signing a series of small-volume, short-term contracts to better evaluate its potential. Positive results from these initial contracts cleared the way for it to expand its footprint, according to strategic supply director Mariana Rosas.

Vale recently concluded a tender offer for gas supplies, requesting bids from 21 potential suppliers. It received seven, ultimately selecting a proposal submitted by gas-trading company Edge. The one-year contract starts on 1 January and is valued at R101mn ($17.4mn), stipulating that Vale receive 90pc of the contracted volumes under take-or-pay terms.

The deal comes on the heels of other contracts Vale signed on the wholesale market earlier this month, including one with independent oil producer Origem, which was its first wholesale contract and is for domestically produced gas. Vale also signed a contract with Eneva, which is the energy company's first wholesale deal from its Sergipe LNG hub. Both contracts will supply Vale's Tubarao pellet and briquette plants in Espirito Santo state.

Prior to these contracts, Vale signed another deal with Eneva, which was the first large-scale wholesale contract for a small-scale LNG project, underscoring Vale's willingness to test alternative supply agreements to expand gas supplies.

The deal, signed in 2022, is for natural gas from Eneva's Parnaiba basin, which is liquefied and transported by truck to the state capital Sao Luis, where it will be used at Vale's pellet plant. The five-year contract will help Vale reduce the plant's CO2 emissions by 28pc by replacing fuel oil usage.

Vale began to slowly build its wholesale portfolio after legislation was approved in the 2021 gas regulation law, which aims to increase competition in the market by boosting the number of suppliers and facilitating access to midstream infrastructure.

Other large energy consumers are following suit, including steelmaker Gerdau, petrochemicals manufacturer Braskem and pulp and paper giant Suzano.


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