(Argus, 13.Feb.2019) — Shell is making its first foray into Brazilian power generation with a ground-breaking project that will use natural gas from the country´s extensive offshore pre-salt deposits.
The European major will partner with Japan’s Mitsubishi Hitachi Power Systems (MHPS) and local private equity fund manager Patria to develop the 565MW Marlim Azul power plant that will be supplied by Shell’s Brazilian subsidiary.
Shell is the second largest gas producer in Brazil after Brazilian state-controlled Petrobras.
The $700mn project to be built in Rio de Janeiro state is scheduled to begin operating in January 2022.
The Marlim Azul plant will be an important test for the use of associated gas in power generation. Recent investment in greenfield gas-based generation in Brazil has mostly been in projects tied to imported LNG or domestic onshore dry gas.
The project will be located near the Cabiunas natural gas processing complex in Macae which is connected to the Route 2 gas pipeline from pre-salt fields.
“We were seeking an efficient way to monetize the natural gas that will be produced by pre-salt fields,” said Shell Brasil president Andre Araujo, adding that the project will allow synergies between the company’s deepwater operations, gas and electricity.
The plant is expected to operate at an average of 80pc of capacity as a complement to intermittent generation from renewable power.
The project secured long-term power purchase agreements with 25 power distributors in a December auction and also has approval from the mines and energy ministry to sell power on the non-regulated market.
Patria Investimentos will hold 50.1pc in the project, Shell will have a 29.9pc stake and MHPS 20pc.
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