Oct 17, 2019
The electricity sector has entered the radar of major global oil companies, eager to consolidate in Brazil a consumer market for their respective natural gas production, whether from pre-salt or from abroad, through the importation of liquefied natural gas (LNG). ). Encouraged by the process of opening the Brazilian gas market, companies such as Shell, Equinor and BP, as well as Petrobras, are looking for business opportunities in power generation, but will face an environment of strong competition. The new energy auction A-6 this Friday (18) will be a sample of this dispute, which involves not only oil companies, but large generators with expertise in the area, such as Engie and Eneva.
The bidding promises to be quite fierce. Valor learned from government and market sources that, due to the low demand from energy distributors, only one or two thermal plants should be contracted in the auction, among the 26 gas-fired thermoelectric projects. In the list of competitors are companies such as Shell, GNA (BP / Siemens / Prumo Logística) and Golar, who own the three largest private power generation projects under construction in the country, currently seeking new contracts, in an attempt to extend their respective thermoelectric complexes.
Amid the opening of the gas sector, the auction will be an opportunity for oil companies to find a market for their volumes. This is the case, for example, of Shell, which will participate in the bidding with a project to expand the Marlim Azul (565 megawatts) thermoelectric power plant, in Macaé (RJ), where the multinational has a 29.9% stake, in partnership with Patria Investimentos (50.1%) and Mitsubishi (20%). The plant, scheduled for 2023, was the oil company’s first attempt to monetize its share of pre-salt gas.
A partner of Petrobras in the Lula and Sapinhoá fields, Shell is the second largest producer in Brazil, with volumes of 15 million cubic meters per day (m³ / day) – equivalent to 11% of all the volume produced in the country. Today, these funds are sold to the state company, but the Brazilian oil company has pledged to the Administrative Council for Economic Defense (Cade) not to renew its contracts to purchase gas from third parties. The move opens up opportunities for companies like Shell to consolidate as suppliers. For the expansion of Marlim Azul, for example, the idea is to supply the plant with part of the gas that Petrobras will stop buying from the multinational.
At least two other major oil companies are trying to replicate Shell’s strategy. Last week, Norwegian Equinor and Petrobras, partners in the discovery of Pao de Acucar gas in the Campos Basin, signed a memorandum of understanding for joint business development in the gas industry, including thermoelectric generation projects. The Brazilian state-owned company is seeking opportunities in the energy sector, not only as a generator, but also as a supplier to third-party plants, and is expected to be able to compete on Friday. “We do look at [the A-6 auction],” said the company’s refining and gas director Anelise Lara in August.
The British BP, one of the partners of Gás Natural Açu (GNA), is also looking at the A-6 auction for a market for its imported LNG cargo. The company will be the supplier of the two plants under construction by GNA at Açu Port, in São João da Barra (RJ), for a total of 3,000 MW. Gás Natural Açu has entered two more projects, totaling 2,200 MW, for the bidding on Friday.
Third largest natural gas producer in the Brazilian market, behind only Petrobras and Shell, Eneva is another example of a gas producer that has been seeking opportunities to expand its business in the power generation sector. Largest private thermoelectric generator in the country, the company currently has 1,400 MW of installed capacity of natural gas plants in the Parnaíba Complex, Maranhão, and another 500 MW under construction. However, the company is still active in the exploration and production of terrestrial gas and has entered, for this Friday’s auction, a 270 MW project in Parnaíba. With low production costs compared to pre-salt gas and LNG, Eneva emerges as a favorite in Friday’s auction.
The A-6 auction will be disputed by large LNG companies. Golar, Ebrasil’s partner at Celse, responsible for the construction of the Porto de Sergipe (1,500 MW) plant in Barra dos Coqueiros (SE), will participate in the auction with three more projects, in Sergipe and Pará, all in partnership. with distinct partners, totaling 2,400 MW. One is the expansion of Sergipe thermal. French Engie Brasil Energia (EBE), controlled by French Engie, also intends to participate in the auction with a 600 MW project, LNG, in Santa Catarina.
The auction should contract between 500 and 600 average megawatts (MW), estimates the consultancy Thymos Energy. According to the company, the expected volume is lower than the auctions held in previous years.
“Modest demand is partly due to uncertainty about the economic recovery. Still, there are distributors who need to adjust the portfolio, have had an increase in demand or have close-to-maturity contracts and need to rehire suppliers, ”says Sami Grynwald, manager at Thymos Energia, in a statement.
The expectation, therefore, is that there is a fierce dispute between the gas-fired thermoelectric projects at the auction. For the president of consultancy PSR and former president of the Energy Research Company (EPE), Luiz Augusto Barroso, the competition between large investors in the sector is healthy.
“The electricity sector can undoubtedly be an anchor for producing demand for the gas sector, but the volume to be absorbed will depend on the statement of the distributors in the auction, which follows an economic logic,” says Barroso.