Petrobras to lease out LNG terminal

Brazilian state-controlled Petrobras has started pre-qualifying bidders for a long-term lease of its 20mn m³/d Bahia LNG import terminal and associated pipeline, opening the company's lock on Brazil's LNG imports.

Petrobras said the planned terminal lease aligns with its July 2019 agreement with anti-trust regulator Cade to exit natural gas distribution and transport and open third-party access to its infrastructure.

The lease agreement will not include the 138,000m³ Golar Winter floating storage and regasification unit (FSRU) that is currently installed at the site.

According to Norwegian LNG company Golar's 2018 annual report, Petrobras began its 10-year charter of the Golar Winter in early September 2009, but in return for vessel modifications made at the request of Petrobras, the charter was extended to 2024.

The terminal is located in the Bahia state capital of Salvador. The associated 45km gas pipeline, which originates at the LNG terminal, has two gas exit points at Sao Francisco do Conde and Sao Sebastiao do Passe.

Petrobras has three LNG regasification terminals, but only two are currently operational – Bahia and the Pecem port terminal in Ceara state, where the 20mn m³/d Excelerate Experience FSRU is currently moored. A third terminal located in Rio de Janeiro state has been idle since September 2018.

Petrobras' LNG regasification terminals have operated with significant volumes of unused capacity. According to hydrocarbons regulator ANP, the average utilization for the three terminals reached just 36.4pc between 2009 and 2018. Use of the terminals peaked at 54.1pc in 2014 but has since fallen to 15.7pc in the past three years.

This year, the Bahia terminal has had the largest LNG send-out volumes, reaching an average of nearly 8mn m³/d in the first nine months of the year, according to the mines and energy ministry's monthly gas report. Pecem send-out averaged just 1.64mn m³/d in the same period.

Despite significant unused volumes, Petrobras has not allowed third-party access to the terminals.

A recent tender offer for a combined 9.4mn m³/d of gas supply by seven gas distributors in the northeast region was dominated by Petrobras. Ceara state gas company Cegas told Argus that competition was hampered by lack of access to LNG terminals and gas pipelines.

Petrobras' monopoly on LNG imports, which started in 2009, was close to ending even before today's lease announcement.

Golar is in the final stages of commissioning a greenfield LNG terminal in Sergipe state, and will begin commercial operations in early 2020. The 163,000m³ FSRU Golar Nanook is already moored at the site.

The company said it will announce the final deadline for pre-qualification at a future date.