Brazil's Petrobras More Than Tripled LNG Imports In 2021 Despite Drought And Pipeline Work
Brazil state-led giant oil company Petrobras tripled up LNG imports in 2021 to counter the effects of the country's worst drought ever experienced in 20 years. The state-led company imported a record high volume of LNG to fill in the deficit created by an acute shortage of cheap hydropower.
On Wednesday, January 12, Petrobras, which operates two out of the five operational LNG terminals, said the company imported a record-breaking 23 million cubic meters per day of LNG in 2021, an enormous increment from the 7.5 million cubic meters per day imported in 2020.
The 2021 record is the highest, breaking the 20 million cubic meters per day in 2014. LNG imports peaked at 40 million cubic meters per day on October 1, 2021.
Drought and Shutdown Played a Role
The prolonged drought, which plunged the country into an energy deficit led to a series of energy rationing and power blackouts for the first time since 2001, prompting the country to rely on high-cost electricity generated using gas-powered and fuel oil-powered thermal plants to meet the country's energy needs.
In addition to the drought, high LNG imports were attributed to the 30-day Shutdown due to maintenance operations of the Mexilhao Field platform, which began on August 29 and lasted until late September.
The Mexilhao platform serves as an export hub for natural gas production, and the Route 1 pipeline transporting an estimated 10 million cubic meters per day of LNG.
Petrobras expected to import at least 101 LNG cargos in 2021 alone, 57 more from the 44 LNG cargo imported in 2020, with Brazil's National Petroleum Agency approving import capacity increase at the Guanabara Bay LNG terminal to 30 million cubic meters per day from the previous 20 million cubic meters per day.
Increasing LNG imports in Brazil is likely to continue for about two to three years, according to government officials. But the trend may not last longer, said Bento Albuquerque, Brazil's Mines and Energy Minister.
Brazil aims to implement a more liberal regulatory regime that would aim to increase LNG supplies, increase consumption, and lower gas prices under the new Gas Market regulation signed into law by the country's president in 2021.
The new law would potentially cover additional new LNG terminals, said Albuquerque. Eight operational terminals are expected in a few years, a significant increase from the present five terminals the country already has.
Meanwhile, Petrobras and its partners are working on an 18 million cubic-meters-per-day-capacity Route 3 offshore pipeline connecting subsalt fields in the Santos Basin to a new processing plant located at Complexo Petroquimico do Estado do Rio de Janeiro, Rio de Janeiro state.
Route 3 pipeline is expected to be operation in Q1 of 2022.