EPE hikes Brazil gas demand forecast

Market: Natural gas
07/10/24

Power plant demand should help increase Brazilian natural gas consumption by 5.4pc/yr through 2034, according to a study from state-controlled energy research firm EPE. Its previous estimate was for 2.3pc/yr growth.

Brazil's gas demand should rise to 221mn m3/d in 2034 from 131mn m3/d this year, the EPE study said.

Gas supplied by the national interconnected network and isolated pipelines and the distribution of LNG and compressed natural gas, including imported volumes, will contribute to the surge, EPE said.

The study expects a significant rise in thermoelectric demand starting in 2028, caused mainly by the high rate of contract inflexibility of thermal plants at the time of the sale of state-owned power company Eletrobras in June 2022. A law that privatized the company included requirements for the construction of 8GW of new gas power plants to meet political demands.

EPE expects non-thermal demand — including industrial, commercial, residential and transport demand — to grow by 3.2pc/yr compared with a 2.5pc/yr rate previously forecast, hitting 56mn m3/d by 2034.

Sao Paulo, Rio de Janeiro, and Minas Gerais, in southeastern Brazil, and Bahia state, in the northeast, remain the largest gas consumers, with demand growing by 38pc over the next 10 years. Petroleum facilities in Sao Paulo keep the state in the demand lead, with EPE expecting demand to reach 20mn m3/d by 2034, up from 15mn m3/d.

Gas associated with crude production, largely from offshore pre-salt facilities, should make up 77pc of total output, declining from 85pc. The share of onshore gas production not associated with crude wells should rise over that time, EPE said.

Pre-salt gas production itself should rise to 77pc of the total in 2030 from 66pc, before dipping to 71pc in 2034 because of offshore associated and non-associated production coming on line from the Raia and Sergipe-Alagoas deepwater projects. Both fields should be directly connected to the grid.

The survey did not include forecast demand for biomethane in Sao Paulo, with current capacity of 400,000 m3/d. Oil regulator ANP expects that to grow with new plants coming on stream.

National supply of natural gas projected in the integrated pipeline network may double over the next 10 years, while import capacity grows by 20pc.

The study assumes a drop in imported Bolivian gas and an increase of LNG imported through new terminals. Argentina exports to Brazil are uncertain.

The EPE study also assumes Brazil reduces imports of liquid fuel, notably diesel, and nitrogen fertilizer.

By Betina Moura

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