Alvopetro breaks Petrobras gas monopoly in Bahia

Canadian independent Alvopetro secured regulatory approval to begin operating a gas treatment facility and 11km (6.8mi) pipeline, making it Brazil's first private-sector company with gas-processing capacity.

The pipeline and treatment unit will connect to the Alvopetro-operated Cabure and Cabure Leste fields, as well as the Cardeal do Nordeste and Cardeal do Nordeste Leste fields operated by Brazilian independent Imetame. The four fields, located in the onshore Reconcavo basin in Bahia state, produce a peak of just 140,000 m3/d because of a lack of local infrastructure.

The new $19mn installations, which begin commercial operations today, will significantly expand gas supply in the region. The pipeline will allow production from the fields to triple, according to hydrocarbons regulator ANP.

The midstream project comes as Brazil seeks to diversify natural gas supply away from state-controlled Petrobras, which has dominated the industry for decades. Last year, the company reached an agreement with antitrust watchdog Cade to exit gas distribution and transport.

Alvopetro has a long-term supply agreement with distributor Bahiagas, which has extended its distribution network by 15km and installed a citygate, allowing Alvopetro to double its gas supply contract to 300,000 m3/d.

The new pipeline will also pave the way for Imetame to supply its 28MW Prosperidade 1 reserve-to-wire thermoelectric plant, which began operating in 2018.

The company's 37.4MW Prosperidade 2 plant was awarded long-term power purchase agreements in last year's new energy auction. The generating complex will also use gas from the Cardeal do Nordeste and Cardeal Amarelo fields.

Bahiagas is currently building a 306km pipeline from the Reconcavo basin that will traverse 12 municipalities, allowing the company to supply gas to new corners of the state.

Bahia state hosts one of two regasification terminals controlled by Petrobras. But the 20mn m3/d Bahia terminal is underutilized because of the lack of a clear regulatory framework for third-party access to midstream infrastructure. Last year, Petrobras started pre-qualifying bidders to lease the terminal.