Brazil’s Edge leverages RNG to get ahead

Market: Natural gas
04/11/24

Brazilian natural gas trading company Edge, a subsidiary of gas trading and distribution company Compass, has expanded its influence beyond the traditional gas market.

Edge is responsible for the 14mn m³/d TRSP LNG regasification terminal, in southeastern Sao Paulo state, and the company's trading arm, including biomethane deals. Together with other companies in the Compass group — itself a unit of Cosan Group — Edge has become a dominant player in Brazil's biomethane market.

Brazil's 2021 gas market law is aimed at keeping companies — namely state-controlled Petrobras — from owning multiple links in the gas market chain. But it also explicitly forbids distributors and pipeline owners from exploring, developing, producing, importing, carrying or selling natural gas. Despite this, companies in the Cosan group have been able to expand their influence at multiple links of this chain.

Edge has successfully signed contracts to supply gas and biomethane buyers, effectively connecting supply and demand in the country. The latest example is Edge's newly announced deal with Brazilian subsidiary of French construction materials company Saint-Gobain, for 570,000 m³/d of biomethane and natural gas as of January. Prior to the deal, Edge had six clients with total contracted volumes of roughly 500,000 m³/d.

Edge also holds 51pc of one of the biggest RNG plants expected to be built in the next few years. The Biometano Verde Paulinia plant is expected to have a 225,840 m³/d production capacity and should be operational in August 2026.

Ownership of Sao Paulo distributor Comgas, as well as Compass' subsidiary Commit, Compass' gas distribution arm, complements Edge's strategy by paving the way for biomethane in the pipeline-connected regions. Commit has stakes in distribution companies in 11 different states.

Through these distributors Compass can explore options to connect biomethane plants to the grid, on the supply side, and expand its pipeline reach. By using biomethane to deliver gas into regions not yet connected to pipelines, the company can try to create demand anchors supporting future pipeline expansions.

In line with this strategy, Compass will acquire control of Parana-state distributor Compagas, which has one of the highest biomethane generation potentials in the country. Compagas aims to take advantage of the number of biogas plants in the state to include more biomethane into its gas mix, as part of its investment plan — reaching 15pc, or 100,000 m³/d of biomethane, by 2026.

By Rebecca Gompertz

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