Natural Gas Industry in Brazil
With recent discoveries and investments, the natural gas' role in the Brazilian economy is growing. This article covers the natural gas industry in the country.
Natural gas is considered a clean source of energy, due to some advantages when compared to other fossil energy sources. Some of these benefits are the lower emission of CO₂, the lower risk offered in case of leakages, and it is also easier to stock and transport than other materials such as oil and coal.
Natural gas can be classified in two categories:
- Associated - found dissolved in oil fields, where the production of oil is privileged; the gas is used mainly to maintain the pressure on the reserves
- Non-associated - found free from oil and water, where the production of natural gas is privileged
Nearly 76% of the natural gas found in Brazil are in the associated form.
Natural Gas in Brazil
In Brazil, the main destinations of this resource are the thermoelectric industry, for residential use, and the industrial usage by petrochemical and fertilizer companies.
The natural gas is the fourth most used energy source in Brazil, representing 11.5% of all the energy produced in the country in 2013. It is only behind Petroleum and Derivatives (39.2%), Biomass of Sugar Cane (15.4%), and Hydroelectric energy (13.8%).
When it comes to electricity, natural gas is the second most used resource, generating nearly 8% of all the electricity in the country. It is only behind the hydroelectric power, responsible for almost 77% of the national supply.
The biggest explorer of natural gas in the country is the public company, Petrobras. Other global players also have business in the Brazilian industry, such as BP and Gazprom.
Main Producing Areas
Around 80% of all the Brazilian natural gases can be found in offshore reserves. Usually, natural gas reserves are located close to sedimentary basins that offer plenty of oil. The state of Rio de Janeiro is, by far, the leading producer in the country, followed by the states of Espírito Santo, Amazonas, and Bahia.
According to studies from the Ministry of Mines and Energy, the biggest amounts of natural gas that are yet to be explored in the country are located in:
- Bacia de Campos, a sedimentary basin located mainly in Rio de Janeiro coast, currently responsible for 80% of the national oil production
- Bacia de Santos, a sedimentary basin located in the coast, going from territories of states like Rio de Janeiro, São Paulo, Paraná, and Santa Catarina
Market Size
Brazil’s current production of natural gas is big, but not big enough compared to other countries. Neighbors like Argentina and Bolivia are just some examples of nations that produce a larger volume of natural gas than Brazil. In 2013, the country produced an average of 77.19 million of cubic meters per day.
Data from the Brazilian Association of Distributors of Gas — Associação Brasileira das Empresas Distribuidoras de Gás Canalizado, or Abegás — points out that only the distributing companies invested BRL 6 billion in natural gas distribution channels, through a period of four years, from 2007 to 2010.
There are, currently, more than 2 million residences consuming piped natural gas in Brazil. Many others, especially in smaller cities, buy cylinders of gas, replacing it whenever necessary.
Foreign Trade
Even though Brazil has enormous amounts of unexplored natural gas in basins like Bacia de Santos, the country is still a big importer of natural gas.
While the import and export to neighbor territories is made via gas pipelines — like Gasbol, connecting Brazil to Bolivia — transport to more distant countries is made in the form of Liquified Petroleum Gas, stored in cylinders.
Import
According to the most recent information collected and published by ANP — the National Agency of Petroleum, Natural Gas and Biofuel — and Petrobras, Brazil imported 13.1 billion cubic meters of natural gas in 2012.
The biggest amount, around 77%, is originated from Bolivia. Some of the other main exporters to Brazil were Trinidad and Tobago, Qatar and Nigeria. A total of BRL 3.6 billion were spent on natural gas importation. Some of this amount is directed to taxes: prices of natural gas in the country are directly affected by Brazilian duties like ICMS, PIS/PASEP, and COFINS, that totalize an aliquot of approximately 28%.
Export
The Brazilian production of natural gas is anything but tiny, and most of it is directed to the local market. The exported amount, however, is way smaller than what is observed in other countries.
A total amount of 312.3 million cubic meters were exported by Brazil in 2012. The main buyer was Argentina, responsible for three quarters of this amount. Japan was also an important buyer, being responsible for 23.7% of the Brazilian exports.
Forecast
Some of the biggest reserves of natural gas have yet to be fully explored. The most notable case is Bacia de Santos, since most of the resources are located in very deep waters and in the pre-salt layer, lacking viable technological options to do this exploration.
Other investment opportunities in this industry are the exploration of sedimentary basins in the northern, northeastern, and southern areas of the country. Some examples are Bacia do Acre, Bacia do São Francisco, Bacia do Paraná, Bacia do Parnaíba, and Bacia do Recôncavo.
Petrobras believes that, due to pre-salt exploration, the local supply of natural gas will grow from the current 47 million cubic meters per day to 75 million cubic meters per day in 2018.
Abegás expects that Brazil will have around 3.2 million Brazilian households consuming piped natural gas until 2020. The association states that the distributors will have contributed BRL 4.41 billion in taxes until then, and the total investment from these companies will have reached BRL 18 billion.