Brazil’s gas market forecast to be in balance next year

Brazil’s gas market in 2023 is expected to be in balance, considering favorable hydrological conditions and limited industrial consumption growth, Rivaldo Moreira Neto (pictured), CEO of consulting firm Gas Energy, told BNamericas. 

“The weather condition is good, the hydroelectric reservoirs are doing well. We’re in the middle of the humid period, with lots of rain yet to fall,” he said. 

With more than 80% of its electricity matrix based on hydro power, the country is forced to dispatch expensive gas-fired plants during droughts, like the one in 2021. 

Meanwhile, the industrial sector, which is Brazil’s main non-thermal gas demand source, has not exceeded the 40Mm3/d (million cubic meters per day) consumption mark in recent months and will hardly surpass this level, considering current market conditions 

“A market that still can’t guarantee more competitive access to gas, more predictable in terms of price, volume. So, the industry still has difficulties in making decisions on large, long-term investments,” Moreira Neto said.  

“So I don't see a significant change in this outlook. It seems that we will have a much more comfortable 2023 than 2021,” he added. 

OVERVIEW

Brazil’s imported gas volumes averaged 26.5Mm3/d in the first eight months of 2022, down 40% from the year-ago period, according to the latest monthly gas industry report by the mines and energy ministry (MME). 

The country imported on average 17.8Mm3/d from Bolivia, compared with 20Mm3/d in 2021, and regasified 8.68Mm3/d of imported liquefied natural gas (LNG), down from last year’s 22.4Mm3/d. 

Meanwhile, no gas imports from Argentina were registered, as in 2021.

The sharp import reduction is mainly related to improved hydrological conditions, resulting in lower need for thermal power. 

Between January and August, gas-fired generation averaged 17.5Mm3/d, down more than 50% from the 39.9Mm3/d in the same period of 2021. 

The other demand sources were the industrial (39.8Mm3/d), automotive (6.56Mm3/d), co-generation (2.36Mm3/d), residential (1.23Mm3/d) and commercial (0.83Mm3/d) sectors, and others, including compressed natural gas (0.32Mm3/d) segments, for a national average consumption of 69.1Mm3/d – down 24%. 

Average natural gas production in the first eight months reached 135Mm3/d, in line with a year earlier (134Mm3/d). 

The domestic offer – excluding gas reinjection, flaring and losses, consumption by production platforms and absorption at gas processing units – averaged 46.7Mm3/d, a reduction of 10%.

Brazil’s main gas producing field is Tupi, operated by state firm Petrobras, in the Santos basin pre-salt, whose output in October was 42.4Mm3/d, according to latest data by watchdog ANP.