(Bloomberg, 13.Aug.2024) — Brazil has emerged as the latest contender for global liquefied natural gas supplies as dry weather threatens its vast hydropower production.
South America’s most populous nation typically depends on hydroelectricity for the majority of its power needs but turns to gas when water levels plunge. An expected influx of LNG in coming months would further tighten the global market for the fuel just as demand grows from Asia to North Africa.
Energy suppliers in Brazil, including state-owned Petroleo Brasileiro SA, are seeking six LNG cargoes for delivery in September, according to traders with direct knowledge of the information.
While the situation isn’t as critical as in 2021, when a severe drought forced Brazil to buy record volumes of LNG, the purchases would coincide with strong demand in Asia amid a hot summer. Elsewhere, Egypt has started to import the fuel, and Europe’s needs grew after the cutoff of most piped flows from Russia.
Petrobras said it doesn’t comment on its fuel sales and purchases.
Increased gas-fueled generation in Brazil will have a direct impact on consumers and industries, driving up bills to account for heavier use of the country’s thermoelectric plants.
“Due to worse hydrology, we see a need for higher gas-fired generation in Brazil in the following months,” said Javier Toro, a senior research manager at Wood Mackenzie Ltd. “The north is facing a drought, and hydro reservoir levels are decreasing throughout the country.”
The country’s National Water and Sanitation Agency, or ANA, said July 31 that two rivers in the Amazon basin had critically low water levels following below-average rainfall during the wet season. One of these rivers, the Madeira, has two hydroelectric projects that are exposed to the dry conditions.
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By Anna Shiryaevskaya, Peter Millard and Priscila Azevedo Rocha
