Brazilian state-controlled energy company Petroleo Brasileiro SA said it had pre-qualified nine bidders, including European-based majors Royal Dutch Shell, BP of the UK and Total of France, for the long-term lease of one of its liquefied natural gas import terminals in the northeast of the country.
The bidding is for a lease on the Bahia LNG terminal site and its associated pipeline in the northeast state of Bahia as well as access to the Brazilian gas market network.
The move by the company, known as Petrobras, is in line with an agreement made with the nation’s antitrust regulator in July 2019 to open up the Brazilian natural gas market to more competition.
“The lease bidding process is in line with the strategy of improving and building a favourable environment for new investors to enter the natural gas sector, while improving capital allocation,” Petrobras said in a statement.
The facility is located at Baía de Todos os Santos in the port city of Salvador and has regasification capacity of 14 million cubic metres per day of natural gas.
Analysts say there was still tremendous scope for increasing natural gas use in Brazil for the energy transition.
Currently natural gas is in third place in the country’s use of primary energy behind oil (46 percent) and hydropower (29 percent).
These three are followed by a growing renewables sector made up mostly of wind and bio-fuels at 8 percent. Coal use is reducing annually and is now down to about 5 percent.
Petrobras did not issue a schedule for the next stages of the bidding process for the Salvador LNG terminal.
Other companies included in the short list to lease the terminal are Spanish major Repsol, floating import terminal pioneer, Excelerate Energy of the US, and Golar Power, a joint venture project of Golar LNG and US equity fund, Stonepeak Infrastructure Partners.
Spanish utility Naturgy also pre-qualified along with the local Brazilian utilities, Bahiagas and Compass Gas and Energy.
Any final lease agreement will not include the 173,400 cubic metres capacity floating storage and regasification unit “Excelerate Experience”, which is currently deployed at Salvador.
However, other infrastructure included in any deal will be the 45-kilometre associated pipeline. It originates at the LNG terminal landfall and has two gas exit points at Sao Francisco do Conde and Sao Sebastiao do Passe.
The Bahia terminal in Salvador is one of three controlled by Petrobras in Brazil.
The two others at Pecem in the northeast state of Ceara and at Guanabara in the state of Rio de Janeiro, which has been idle since 2018.
While Brazil’s three terminals have been significantly under-utilized, Petrobras and the government are just now making efforts to allow third-party access.
In March 2020, the 170,000 cubic metres capacity FSRU “Golar Nanook” became the first independent terminal to begin operating in Brazil for Golar Power in a private project.
The FSRU is deployed in the small northeast Brazilian state of Sergipe as part of gas-fired power plant venture that will enable Brazil to increase its energy security and natural gas use while continuing to expand its development of renewables.
