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Brazil hydro demand dip may drive gas usage

  • Märkte: Electricity, Natural gas
  • 09.06.25

Increased LNG import capacity and steady natural gas prices should help Brazil manage electricity supplies even as it faces less hydropower generation this year because of a lack of rainfall.

Brazil's hydroelectric reservoir levels have dipped below seasonal expectations, increasing the potential daily dispatch needed from thermal plants this year by 25pc, according to the Brazilian center for infrastructure CBIE.

The average thermoelectric dispatch in Brazil of 8 GW/d requires around 10mn m³/d of gas. Brazil may need an additional 2 GW/d of dispatch in its May-November dry season this year, pushing gas demand for power up to 13mn m³/d.

Brazil's natural gas prices have been at historic lows from May-June this year, some of the lowest levels since 2023. Argus' calculated prices for the natural gas network daily average were at $11.52/mnBtu on 5 June, similar to last year's price during the dry season of $11.58/mnBtu, but down from the peak prices from the start of 2025, at $14.11/mnBtu average in January.

Gas supplies available to the market were up by 25pc in April, according to hydrocarbons regulator ANP's latest data. The increase comes despite state-controlled Petrobras' new Rota 3 pipeline running from the offshore Campos basin to the Boaventura energy complex in Rio de Janeiro operating at 10mn m³/d instead of the expected 18mn m³/d, according to market participants.

The most depleted hydropower reservoirs in Brazil are in the south, where they are operating at 36pc of capacity, requiring increased power transfers from the southeast. Reservoirs in the southeast, often referred to as Brazil's "hydro battery," are at 68pc capacity. While not critically low, it below expectations, according to the national grid operator ONS. But federal weather agency Inmet expects heavy rains this year because of neutral La Nina and El Nino weather patterns.

Brazil relied on imported LNG for power generation in 2024, especially in the second half when drought curbed hydroelectric generation. But LNG imports are expected to fall this year.

LNG infrastructure since 2020 has grown driven in part a 2021 law that promoted gas-fired power of fuels with higher emissions, mandating 8GW of new gas-fired capacity. But now there is an oversupply of offshore LNG terminals, said Bruno Pascon, an oil and gas specialist at the Brazilian center for infrastructure CBIE.


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