Spotlight: Brazil’s regional energy integration initiatives

Brazil is acting to intensify energy integration with neighboring nations. 

"Integration is a necessity for the survival of South American countries. We are aware that what we have done here is aimed at improving the quality of life of the people of Bolivia and the quality of life of the people of Brazil," Brazilian President Luiz Inácio Lula da Silva said on Tuesday during a visit to the Andean country. 

Brazil is negotiating the direct purchase of gas with Bolivia, which just became the newest member of the Mercosur trade bloc. The talks are aimed at preventing intermediation of federal oil firm Petrobras in order to reduce domestic fuel prices.  

Lula lauded the opportunity the energy transition represents for Brazil, Bolivia and other South American countries. 

"We don't have the technological wealth of other countries, but we do have wealth that nature has provided us and that the world needs. Whether in food production, extraction of critical minerals, the production of green hydrogen, wind, solar, biomass or biofuels, we have to offer the world what they don't have," he said.

During the trip to Bolivia, Brazil’s mines and energy minister Alexandre Silveira signed three energy integration agreements with Bolivian authorities. 

The agreements provide for the interconnection of the countries' electricity transmission and distribution systems, the possibility of supplying power from the Jirau hydroelectric plant (3,750MW) to Bolivia and the use of Bolivia's gas pipeline infrastructure to serve Brazil.  

The aim of the plan to make connections via the distribution system is to supply electricity to locations in northern Bolivia whose electricity grids currently operate in isolation. 

"This interconnection with Brazil will help decarbonize part of the Amazon between the two countries, as well as providing more energy security for our Bolivian neighbors," said Silveira. 

The interconnection will take place between the Guajará-Mirim (Rondônia state/Brazil) and Guayaramerin (Bolivia) substations, and between the Epitaciolândia (Acre/Brazil) and Cobija (Bolivia) substations.

According to the latest data from Brazil’s mines and energy ministry (MME), Bolivian gas imports averaged 12.2Mm³/d (million cubic meters per day) in February, which corresponded to around 20% of the country's total supply of the fuel in the period.

The idea is that Bolivia will also act as a midstream agent, letting Argentine gas pass through its infrastructure. 

In June, Bolivian state hydrocarbons company YPFB said its gas network was ready to dispatch up to 3Mm³/d of Argentine gas to Brazil. Engineers are working to boost capacity to over 10Mm³/d in the medium-term, YPFB said.

PETROBRAS BOLIVIA

During an event in Bolivia on Tuesday, Petrobras CEO Magda Chambriard said the company was interested in increasing gas production in the country and boosting gas sent to Brazil. 

With greater gas supply at more affordable prices, fertilizer and petrochemical projects mentioned in the 2024-28 strategic plan could become feasible, according to Chambriard.

"Today the Brazilian consumer market demands 50Mm³d of natural gas. We believe that this market can be tripled to 150Mm³/d. The condition is that we're able to get it to Brazil at affordable prices," she said.

Chambriard deems natural gas essential to energy integration in South America. "We’re betting a lot on this synergy between Brazil, Bolivia and also Argentina, countries interconnected by the gas pipeline," she said.

She also mentioned the prospects for increasing production in Bolivia. Petrobras, which was once responsible for 60% of Bolivia's natural gas production, now operates facilities that account for 25% of total output. 

"We look ahead and see opportunities to be developed by Petrobras or in partnerships that deserve our investment," she said.

In Tarija’s San Telmo Norte area, Petrobras Bolivia plans to drill an exploratory well in 2025 to investigate the potential of natural gas reserves. The company plans to invest around US$40 million, if it obtains an environmental license.

The area has the potential for the recovery of around 2.7Tf³ (trillion cubic feet).

ARGENTINA, PARAGUAY AND URUGUAY

As well as supplying gas to Brazil, Argentina is also receiving gas from Brazil when local demand is high. 

At the end of May, Argentine federal oil and natural gas company Enarsa made an emergency purchase of 44Mm³ of liquefied natural gas (LNG) from Petrobras to deal with a supply crisis amid low temperatures. 

The previous month, Petrobras and Enarsa had signed a three-year agreement on information exchange, the assessment of alternatives for cooperation and energy complementarity. 

The agreement also includes the coordination of actions to guarantee the supply of natural gas to Argentina during the winter, "without any impact on gas supply in Brazil or additional financial cost for Petrobras," the Brazilian firm said in a press release. 

Brazil and Argentina also exchange electricity, as do Uruguay and Paraguay, while Brazil operates the 14GW Itaipu Binacional hydroelectric power plant with the latter. 

VENEZUELA

After Lula took office in January 2023, Brazil and Venezuela began discussing resuming electricity purchases from the Guri hydroelectric plant in Venezuela to supply Brazil’s Roraima state, the only one that is still not linked to the national grid (SIN). 

Electricity purchases were interrupted in 2019 due to operational and economic problems and amid tensions between former Brazilian president Jair Bolsonaro and Venezuelan leader Nicolás Maduro.

Brazilian energy traders Âmbar Comercializadora de Energia, Bolt Energy Comercializadora de Energia and Tradener were authorized by the MME to import energy from Venezuela, but have not done so yet. 

In an email, the MME said that "the actual import depends on offers made by the agents to be analyzed and accepted (or not) by electric sector monitoring committee CMSE, based on verification of the real benefit for the consumer, through the reduction of [fuel consumption account] CCC, while also observing the guarantee of energy security." 

When contacted by BNamericas, Âmbar and Bolt did not respond, while Tradener declined to comment. 

COLOMBIA AND GUYANA 

Brazil is also eyeing opportunities in Colombia, where Petrobras is a partner of local oil company Ecopetrol in the Tayrona block. 

After a gas discovery in 2022, Petrobras decided to cancel the sale of its stake in the asset and announced new exploration plans.

After Lula’s term started, Petrobras has also repeatedly mentioned potential oil and gas investments in Guyana and Venezuela.