Corrects company name throughout.
Macaw Energy, a subsidiary of Golar LNG, will enter Brazil's natural gas market, offering offgrid consumers an alternative to diesel and LPG for motor fuel and industrial needs. Chairman Eduardo Antonello talked to Argus about the logistics to send to Brazil gas in trucks and vessels that would otherise be flared in the US. Edited highlights follow.
What is Macaw Energy's plan?
We are a midstream startup aiming at capturing new gas clients in Brazil to sell part of the 35mn m³/d of flared gas from the US, that is burned to keep oil production constant.
We have in-house know-how on to capture, treat and sell this gas by trucks and boats offgrid. We also want to do a similar solution for biomethane. Our partners own the gas but do not have means to transport it.
Also, we add portfolio management to this industry, since small gas and biomethane producers are not able to supply to an industrial consumer, as they need steady supply.
Currently, we have some small gas projects with 20,000 m³/d each that will be implemented within 12 months. Some other bigger projects, from 200,000 m³/d to 2mn m³/d, will be operating within 5 years.
We come with the earned intelligence for a variety of contracts and models and technology for liquefaction and digital expertise.
There is an entire Brazil waiting for gas to, such as the agropecuary and mining sectors, just to name two.
Why invest in importing LNG to Brazil now, as the Ukrainian conflict has raised prices and reduced supply?
Our focus is to sell a molecule that is currently being flared by creating a midstream platform. This will allow us to help regional natural gas distribution companies structure their projects, but also supply to offgrid producers and consumers, with LNG, compressed gas, biomethane.
The objective is to create new demand offgrid, that currently is being supplied by diesel and LPG, that Brazil needs to import. We can help reduce the import need and create new demand, making it possible to develop the production of Brazilian offshore gas.
Are you installing new LNG terminals in Brazil?
Brazil currently has surplus regasification capacity, and we can use this capacity at close to eight terminals along the coast side. It is important that the new Brazilian government works to open access to these terminals to third parties and they must be connected to the gas pipeline grid.
The new administration must work to reduce the gas price, which can be achieved with more competition.
Brazilian gas consumers need plenty of gas with low prices. Connecting more terminals to the pipeline grid and new demand from replacing diesel and LPG creates firm demand for gas at the base of the energy matrix, independent on thermal power generation.
We also must have a well-structured supply chain. Industrial consumers often do not want to burn wood for heat, but find no alternative. Natural gas cannot cost $20mnBtu in Brazil. That is too high. With cheaper gas, you have more industrial activity and lower prices in general.
Will Macaw be able to sell gas at competitive prices, despite high LNG prices abroad?
Brazil can be independent in gas, depending less on imports, and this can tie us to the marginal price of LNG abroad. We need to bring the third outflow pipeline from pre-salt areas, Route 3, online.
I believe gas prices will take about four years to stabilize. The international demand is still very large. But prices tend to fall.
But we have a very large potential to compete with diesel and LPG, because it is much cheaper to produce natural gas than other fuels. The lifting cost to produce gas is marginal in comparison with diesel costs. The problem in Brazil is that we do not have demand at the base of the energy matrix and gas producers cannot invest depending on thermal power demand for gas demand.
How can Brazil develop that?
Brazil has an unique road market and this industry has a great potential to demand natural gas.
The diesel market in Brazil is twice as big as the natural gas one, which can reduce freight costs and carbon emission levels. But this also requires the new administration to take actions to incentivize this shift.
There is no reason for trucks fueled by gas to be more expensive than diesel trucks, and if this happens it is because of the lack of competition. The government could also consider this and reduce taxes for gas trucks, with lower import taxes and road use taxes.
What are the perspectives for biomethane?
Purifying biomethane at the highest level is very expensive, so it is best fit for industrial consumption. We can use natural gas to fuel motor vehicles, such as trucks.
