Brazil's gas market draws growing competition

Brazil's natural gas market is attracting a growing number of participants as state-controlled Petrobras cedes its traditional monopoly.

In March alone, the mines and energy ministry issued seven new import authorizations, after issuing a total of 24 in 2020.

Shell secured permission to import up to 50mn m3/d including 36.5mn m3/d of LNG and an additional 14mn m3/d from Bolivia.

Shell was one of 11 companies pre-qualified to participate in a tender to lease Petrobras' underutilized 20mn m3/d Bahia LNG import terminal. A new gas law approved by the congress last week clears the way for third parties to access LNG terminal infrastructure.

Once third-party access begins, more companies are expected to use the Bahia terminal, which connects to the Engie-controlled Transportadora Associada de Gas' (TAG) 4,500km pipeline network. TAG is preparing for an open season for access to the pipeline as well.

Three other firms have been authorized to import LNG through the Bahia terminal over the past week, including trading firm Trafigura, local gas producer and broker GasBridge and Bahia state-based Panergy.

Trafigura has also been cleared to import up to 10mn m3/d from Bolivia. Both Shell and Trafigura plan to supply large consumers and power generators and distributors. The authorization comes as Transportadora Brasileira Gasoduto Bolivia-Brasil (TBG) finalizes an open season for capacity on the 2,593km Bolivia-Brasil pipeline (Gasbol).

Three companies, including Petrobras, Compass and Santa Catarina gas distributor SCGas, have qualified to participate in the process for long-term contracts in 2021-25. The results will be announced on 5 April.

TBG is also offering short-term flexible contracts. Chief executive Erick Pettendorfer said that the approval of the gas law will facilitate the development of a gas market and open the door for new market participants.

Brazilian gas transportation company NTS (Nova Transportadora do Sudeste) -- which owns roughly 2,000km of gas pipeline infrastructure in southeastern Brazil -- is holding a public consultation to gauge market interest in transport capacity. TBG and NTS also plan a joint tender offer later this year.

Generator Ambar Energia also received authorization to import Bolivian gas for its Cuiaba thermoelectric plant. The firm recently met with Bolivia's state-owned YPFB to discuss a new gas supply contract.

Large consumers are also taking advantage of the new regulations, which will allow them to purchase gas directly from producers. Over the past six months, companies in the steel, petrochemicals and pulp and paper sectors have all been granted permission to import.

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