Natural gas supply and demand in Brazil has dropped significantly in the last five years, according to a mines and energy ministry (MME) report, underscoring the challenges in developing the market, including limited gas availability and rising prices.
Total gas supply in 2023 — a combination of domestic production and imports — averaged 64.7mn m³/d, down by 22.4pc from 2019. While 2023 supply included a 22.4pc domestic production increase, gas available to the market was lower because of flaring, reinjection of produced gas and less LNG imports. Gas available fell by nearly 16pc from 2019 to its lowest in five years, averaging 47.7mn m³/d in 2023.
This drop in available supply was due in part to a 37pc decline in imports from 2019-2023, including a decline in Bolivian pipeline imports to 15.4mn m³/d from 18.7mn m³/d in 2019, and LNG imports falling from 8.23mn m³/d in 2019 to 1.3mn m³/d in 2023. This is largely due to depleted hydropower reservoirs recovering from a severe drought, since LNG largely supports gas-fired power generation.
Overall gas demand in Brazil was 62.3mn m³/d in 2023, down by 20pc from 2019. Gas demand from the industrial sector fell below 40mn m³/d in 2023 — its lowest level since 2020 but above the 37mn m³/d in 2019. While much of that drop was from hydropower recovery, there appears to be limited demand growth outside those areas. That runs counter to expectations the 2021 gas law would create a more robust market.
Prices have also increased steadily since 2020, when they hovered below $8,000/mmBtu. They rose to $9,000/mmBtu in 2021, $10,000/mmBtu in mid-July 2021 and peaked at $17,705/mmBtu on 8 March 2022. Prices are currently near $12,000/mmBtu, a 50pc increase over 2020.
Rather than spurring competition the opening of the gas market has brought complexity, legal uncertainty, and penalties, large energy consumers association Abrace's chief executive Adrianno Lorenzoni said.
