BNDES WANTS TO ATTRACT INVESTORS FOR PIPELINES FOR THE PRE-SALT GAS

Oct 15, 2019

The National Bank for Economic and Social Development (BNDES) intends to lead the structuring of a model that enables the construction of gas pipelines to drain future gas production from pre-salt fields, which in addition to financing the works will include the search for investors for the ventures, a bank superintendent told Reuters.

The state-owned Energy Research Company (EPE) has conducted a study according to which at least seven alternatives are being evaluated for three pipeline routes seen as necessary to bring gas to shore after 2026, when it is estimated that supply will exceed the capacity of the existing infrastructure.

EPE-listed projects would require more than R$ 9 billion, but experts have raised questions about who would make the contributions, amid a view that oil and gas companies would probably prefer to focus resources and efforts on the oil and gas exploration. .

In addition, other potential investors would be unlikely to commit to such large disbursements without any guarantee of revenue or even a market for all of the expected gas volume.

“We are discussing with various players so that we can come up with an ideal model. The profile of this investor is exactly what is at stake, ”said BNDES energy superintendent Carla Primavera.

“ This type of infrastructure has always been built by Petrobras, and we understand that, with the opening of the market, it is pertinent for us to encourage the structuring of a project that has a shared gas infrastructure,” she added, referring to the Novo Mercado de Gas program. , of the federal government, which aims to foster supply and competition in the sector to reduce prices.

At the moment, the development bank has been discussing the idea with several players, including oil and gas companies, institutional investors and other companies, such as major fuel consumers.

BNDES hopes to reach the composition of a group that can build and operate the pipelines, through a Special Purpose Company (SPE).

“Our idea is to attract private capital and multiple investors to these projects,” said Carla.

“We understand that if the study is done well, funding can come not only from BNDES, but from several other sources. It is a large investment, so we understand that it has the ability to attract private investors to finance this infrastructure, and the bank can anchor this financing, ”she explained.

She did not indicate how many pipelines are planned or the investment estimated amounts, but said that the EPE study on runoff alternatives is among the materials taken into consideration in the discussions.

According to Carla Primavera, the reception of sector agents to BNDES plans has been good.

“ I think the gas market has attracted a lot of interest and this is a great opportunity to boost investments in the country, ”she said, without detailing any interested parties.

The pipelines needed to drain the gas supply from fields in the Santos and Campos basin pre-salt areas would be between 120 km and 370 km each, according to the routes indicated in the EPE study.

The bank’s superintendent declined to detail the planned schedule for structuring the pipeline project.

ANCHORS

One of the crucial points in defining the ideal pipeline route and making it viable is the proper destination for natural gas, as it will be necessary to create markets for the expected huge supply of the input in order to attract investors to the transport infrastructure. .

Many analysts have argued that the construction of gas-fired power plants would be a necessary anchor as the plants could close the purchase of fuel on long-term contracts, but this output would need to be in line with the country’s energy planning, Carla said.

“This thermal theme is a potential demand, but we understand it will fit very well with the country’s energy policy and all the regulator’s planning in this regard,” he said.

In parallel, BNDES has also studied other sectors that could absorb the gas supply.

“There is a demand already well mapped by the bank, which is industrial and vehicular,” said the superintendent, who cited as an example the chemical, petrochemical, fertilizer and steel segments.

Mining  giant Vale, for example, could invest in a project to manufacture a steel product that would reduce emissions if the government’s gas plan significantly reduces input costs, sources with knowledge of the strategy told Reuters.

Source: Época Negócios

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