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Taking advantage of the natural gas potential in Brazil, international investors are already turning their attention to this segment in the country
Brazil's natural gas sector is preparing for profound changes. In addition to Petrobras being in the process of radically withdrawing from its gas portfolio, a series of government reforms are aimed at greater participation and investments in the sector, such as the proposal for the Novo Mercado de Gás.
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But while Petrobras' sales of gas pipelines and infrastructure are not consolidated, foreign investors are already looking at alternatives to explore the country's significant gas potential.
Golar Power, a Brazilian supplier focused on LNG, signed an agreement in early July with Galileo Technologies to commercialize and distribute 30 million t/year of gas through the Brazilian road network.
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A Galileo aims to combat the country's lack of pipeline capacity and adequate infrastructure through the use of tanker trucks.
In an interview with Petroleum Economist, Galileo's CEO, Osvaldo del Campo, spoke about the project and other growth prospects for the natural gas sector in Brazil. Check it out in full.
How will Galileo technologies help to promote LNG supply in Brazil?
Del Campo: Our Gas 3.0 technologies make it possible to deliver gas anywhere, regardless of scale. We can treat and liquefy the gas at source, transport it by road as LNG and transfer it to vehicles or regasify it with less complexity and at a lower cost compared to current practices. This brings greater efficiencies that can serve new customers at greater distances than those served by conventional pipeline infrastructure. Galileo is making alliances around the world with other companies to enable the development of these innovative concepts.
The Brazilian government is in the process of liberalizing the domestic gas sector. What opportunities does this present for companies?
Del Campo: A few years ago, the Brazilian government established that road transport of natural gas, where Galileo has great experience, is a free and unregulated market. Brazil is a market with significant industrial development, but paradoxically, conventional pipeline coverage is relatively low. This is a huge opportunity for both companies.
How much of a limitation is the lack of domestic gas infrastructure in Brazil?
Del Campo: More than a limitation, it's an opportunity. The lack of pipeline infrastructure makes transporting gas through virtual pipelines [by road] the most efficient and least costly alternative for the vast Brazilian territory. Thanks to virtual pipeline technology, the deforestation involved in pipeline construction can be avoided as we can use the existing road network. This is an important environmental benefit for Brazil and for the entire planet.
What are your expectations for the growth of LNG in energy in Brazil?
Del Campo: We understand that the countries of southern South America, given the availability of natural gas in Brazil and Argentina, have great potential for distributed LNG generation, since costs and environmental impact are reduced compared to the use of conventional fossil fuels. This is also true of LNG for industrial consumers. There is a significant opportunity for converting freight transport to LNG: distances within the subcontinent are long and the current cost of transport is very high. The use of an abundant and cheap fuel, such as LNG, will contribute to the economies of cargo handling in the Mercosur region. This massive reach will be especially relevant in southern Brazil and central Argentina, centers of agricultural, livestock and industrial activity in the region.
What role can LNG and other gas sources play in decarbonizing the Brazilian economy?
Del Campo: LNG reduces emissions and facilitates the energy transition. Furthermore, Brazil is a key player in the biofuels business. Thanks to its bioethanol production industry, Brazil is one of the world's leading producers of biomass. Therefore, Brazil has an important biogas potential and we have the treatment and liquefaction technology to transform this resource into liquid biomethane or bio-LNG and negative emissions. At Galileo, we believe that the methane/biomethane platform is the only realistic and tested platform to reduce heavy transport system emissions at competitive costs. We have been working in this line for 30 years.
The Covid-19 pandemic has sent gasoline prices down this year, and a global glut is expected to last for years to come. How much of a long-term threat does this pose to the growth of Brazil's natural gas sector?
Del Campo: Yes, we've seen a reduction in prices, but we're thinking beyond this emergency. This is a project for the future. In this world, the consequence of Covid-19 is a deeper environmental awareness that will require technologies and solutions. The reduction in emissions over these months was evident, and we witnessed it all over the world. The issue is no longer up for debate among climate change experts. Now we must be prepared for a world returning to full activity, and societies will not be willing to forego this unexpected and benign environmental outcome.
Source: Petroleum Economist
