Brazil Will Have More Space for Competition and Natural Gas Prices Should Decrease; OnCorp Expects Investment of R$ 500 Million in LNG

Written by Fabio Lucas Carvalho

Published on 09/04/2021 at 14:57

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Natural Gas Price Increase Seen As Another Reason For Increased Competition And The Resulting Price Drop In The Future

Petrobras recently announced a 39% increase in natural gas prices. As expected, the news was not well received by the Brazilian industry and solutions to these issues in the future are being sought. Shell was the winner of the public bidding and will supply domestic natural gas to Copergás next year and also throughout 2023.

The Brazilian holding OnCorp, with U.S. shareholders, formed a partnership with Shell to try to associate with LNG. Moreover, it is responsible for the chartering of the FSRU vessel for the regasification of Liquefied Natural Gas, the terminal, and also for the marketing of Liquefied Natural Gas with other clients.

The LNG will come from the United States, Trinidad and Tobago, and South Africa. Meanwhile, the gaseous natural gas that will be marketed with Copergás will come from Rio, sourced from Shell’s portfolio, says João Mattos, director of OnCorp and Ongás. OnCorp will invest over R$ 500 million, with R$ 160 million allocated for infrastructure and the terminal. João Mattos also highlighted that LNG should bring benefits to the State, such as generating more efficiency for the industry and the economy.

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”This initiative has all the potential to be a game-changer for the State, as it will turn Pernambuco into an important LNG Hub and, at the same time, promote the attraction of new investments for the State, considering the new gas supply resulting from the Terminal.’‘ declared the executive.

Electricity generation projects could benefit from the supply of natural gas, considering the energy auctions that are expected to take place next year. Thus, natural gas should be distributed to the northeastern region, as stated in the Copergás contract. It’s 750 m3 per day in 2022 and 1 million m3 per day throughout 2023.

Additionally, LNG is good for the environment. It is less polluting compared to other fuels: ”Our group was born from expertise in energy generation, with over 500MW installed in the country and in Argentina. Therefore, we know that Natural Gas is the transitional fuel and plays an important role in maintaining the reliability of the energy matrix in the country, at a lower cost to the system and the environment. In fact, our group has a thermal project of 300 MW, powered by Natural Gas, already registered for the next auction, located in the Suape Complex”, said João Mattos.

Meanwhile, President Jair Bolsonaro signed without vetoes the new regulatory framework for natural gas. The new law ensures the vertical disintegration and independence among the companies working with distribution, production, and transport as a means to maintain competitiveness. Furthermore, the new text includes mechanisms to deconcentrate the gas market in Brazil. Today, Petrobras participates in 100% of the import projects and 80% of the production projects in the country.

The Ministry of Economy emphasized that the increased competition from the new rules will lead to a decrease in the price of gas in the country. The bill was approved in December, just before the parliamentary recess.

Brazil Will Have More Space for Competition and Natural Gas Prices Should Decrease; OnCorp Expects Investment of R$ 500 Million in LNG

Natural Gas Price Increase Seen As Another Reason For Increased Competition And The Resulting Price Drop In The Future

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