Nov 22, 2021
Brazilian gas-to-wire operator Eneva and local energy investment company Servtec Investimentos e Participacoes signed a cooperation agreement to study construction of an LNG terminal at Sao Luis in Maranhao state in the latest in a series of such projects in the works in Latin America’s largest economy, the companies said.
“The final investment decision on the terminal will be made after concluding the evaluations and obtaining the required licenses and authorizations to implement the project,” Eneva said in a statement Nov. 20.
The cooperation agreement expands the growing list of potential LNG projects under construction or being evaluated by oil and natural gas producers, power companies, investors and other players as Brazil implements more liberal regulations after the New Gas Market regime was signed into law earlier in 2021. The regulatory regime aims to increase domestic gas supplies, reduce prices and boost consumption ahead of a surge in offshore gas production from subsalt fields.
Brazil expects natural gas production to more than double to 260 million cu m/d by 2030, Mines and Energy Minister Bento Albuquerque said Nov. 18.
LNG imports will help Brazil meet domestic gas demand in the near term, with the number of terminals in operation in Brazil expected to rise to eight over the next few years from five currently. Brazil expects LNG imports to increase over the next two to three years amid rising demand but that Latin America’s largest economy will eventually turn into an LNG exporter in the next five to eight years, according to the minister.
Eneva is emerging as a potential key player in the sector after establishing itself as Brazil’s first gas-to-wire operator. The company is developing 10 onshore gas fields in the Parnaiba Basin, using the output from five fields already in production to generate 2.2 GW of electricity at gas-fired thermal power plants installed nearly at the wellhead. Power generation is expected to rise to 2.8 GW by end-2024, according to Eneva.
The Gaviao Real, Gaviao Vermelho, Gaviao Branco, Gaviao Caboclo and Gaviao Azul fields produce about 8.4 million cu m/d, according to Eneva. The company is also developing the Gaviao Preto, Gaviao Branco Norte, Gaviao Tesoura, Gaviao Carijo and Gaviao Belo fields.
Eneva also plans to repeat its gas-to-wire playbook in the Amazonas Basin. Eneva started production from the Azulao Field in September, producing about 9 million cu m/d, the company said. Eneva paid $54.5 million for Azulao in a 2017 deal with state-led producer Petrobras. The gas will fire a 117 MW power plant as well as be liquefied for transport via truck to Roraima state.
Under terms of the deal with Servtec, Eneva will have exclusive rights to the project until Dec. 30, 2022, which will then be followed by a right-of-first refusal to the project until Dec. 30, 2023, Eneva said. Should the deal advance, the two companies will form a joint venture company to develop the project, with Eneva retaining 51% and Servtec 49%.
The cooperation agreement also followed a similar model to a previous deal Eneva signed with Grupo Vale Azul Participacoes and Terminal Portuario de Macae, or Tepor, in September. Under that deal, Eneva agreed to evaluate its participation in GVA’s plan to expand logistics and infrastructure at the Macae port in Rio de Janeiro state. GVA has already received initial environmental and construction licenses for the project.
GVA plans to expand bulk liquid and oil handling facilities at the port, which acts as an offshore hub for oil companies operating in the Campos and Santos basins. The terminal project includes an LNG terminal capable of handling 21 million cu m/d.
Under terms of the agreement between Eneva, GVA and Tepor, Eneva has until exclusive negotiating rights to the project until Dec. 30, 2022, as well as preferential rights until Dec. 30, 2024.
“The agreement represents an important step in the company’s strategy of geographic diversification, with the development of a gas hub in the southeast that includes power plants, associated infrastructure and LNG supplies via a regasification terminal,” Eneva said at the time.