Brazil LNG demand heading for record year

Spanish Market: Electricity, Natural gas
10/05/21

Brazil is on track to import a record volume of LNG this year because of persistent dry weather coupled with the commissioning of new LNG-to-power projects.

As arid conditions dragged on into April, the electricity sector monitoring committee (CMSE) cleared the dispatch of thermoelectric plants and electricity imports. Hydroelectric reservoirs in the strategic southeast/center-west grid ended April at the lowest average level since 2015. September-April rainfall was the lowest since government records began in 1931.

With dry season underway, LNG-linked thermoelectric plants were dispatched ahead of schedule last month to slow the decline of the reservoirs.

LNG demand started the year at above-normal levels, with send-out of 18.25mn m³/d in the first two months of the year, according to mines and energy ministry data. This compares to just 4.94mn m³/d in the same period of 2020 and 18.17mn m³/d in the first two months of 2015, when full-year send-out hit a record 17.94mn m³/d.

All of the January-February send-out came from two terminals operated by state-controlled Petrobras — Guanabara with 15.33mn m³/d, and Pecem 2.93mn m³/d. Petrobras recently reported total send-out of 19mn m³/d in the first quarter, up nearly 175pc on the year.

In April, thermoelectric generation soared by 37pc to 11,613MW, up from 8,492MW in April 2020, according to preliminary data from the electricity clearinghouse CCEE. Nearly all of the increase came from gas-fired power plants, with an average of 5,837MW, more than double the year-earlier average.

Shrinking role for Petrobras

Petrobras' leading role in LNG imports is starting to shrink, in line with its anti-trust commitments. The company is currently in the process of leasing its Bahia LNG terminal. Private-sector Gas Natural Acu's (GNA) 1.33GW GNA1 LNG-to-power project in Rio de Janeiro state is scheduled to begin commercial operations on 31 May. The 1.5GW Porto de Sergipe LNG-to-power project is expected to begin operating by June.

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05/11/24

Latin America mulls nuclear power revival

New York, 5 November (Argus) — Nuclear power is gaining traction in Latin America as countries see small modular reactors (SMRs) as options for remote regions that are not connected to power grids. "The advent of SMRs are behind Latin America's new interest in nuclear energy, because they do not need to be large and do not require large investments," said Modesto Montoya, a nuclear physicist and former president of the Peruvian Institute for Nuclear Energy. Nuclear power is not a prevalent source of electricity in Latin America, producing around 2pc of the region's power consumption. There are seven nuclear power plants with a total capacity of 5.07GW in operation in the region, located in Argentina, Mexico and Brazil. Argentina has a 32MW SMR plant under construction. But the role of nuclear could increase in the region. Argentina, Brazil and Mexico are providing technical advice to countries that are considering including the technology in their power systems. Earlier this month, El Salvador approved a nuclear energy law and signed a memorandum with the Argentinian government for scientific and technology cooperation for nuclear power. Daniel Alvarez, director of the Agency for Implementation of the Nuclear Energy Program in El Salvador, told Argus that the country was "following the book to develop nuclear power. We want to convert El Salvador into a nuclear country." The country needs to replace fossil fuels as half of the country's power capacity is fueled by bunker fuel. It has 204MW of geothermal capacity installed and, while solar energy is possible, the country's size limits the amount of physical space to add large solar plants. The government's plan is to have a research reactor and 400 people trained to manage a nuclear plant within seven years. The next step would be the construction of SMR. "We have to include alternatives for power generation and SMRs are a very good option. We want to include them in our transition to 2050,"Alvarez said. SMRs are also seen as a solution to the energy problem in the northern jungle city of Iquitos, in Peru, energy and mines minister Romulo Mucho said. It is one of the world's largest cities that is not accessible by road and not connected to the national grid, relying primarily on fuel oil for power generation. Peru has had experience with nuclear technology since 1988, when it opened the nuclear research facility, RASCO. Neighboring Bolivia has been working on a small nuclear program since the previous decade with Russia's Rosatom. It has a center for nuclear medicine and is finishing a small research reactor. Ronald Veizaga, deputy minister of electricity and renewable energies, said Bolivia began the program to improve medical treatment for cancer, but has changed gears. "Critics claim SMRs are expensive, but it is more expensive to have blackouts affecting your population and industry," he said. Traditional nuclear Paraguay is considering a more ambitious path, looking at a traditional nuclear plant. "We need to make political decisions if we want to explore a SMR or a large-scale plant to generate 1GW or more," said Jorge Molina, executive secretary of Paraguay's Radiology and Nuclear Authority. Paraguay could work with Argentina and Brazil to create a regional platform. "Our idea is part of regional integration. Our neighbors are already helping us develop our regulations," he said. But the construction of nuclear plants comes with challenges including high costs, time, labor and materials. Brazil began work on the 1.4GW Angra 3 nuclear plant in 1984 but works have been halted and resumed several times since then. The plant is roughly 67pc complete and has been in limbo since 2015. The country's Bndes development bank recently concluded that abandoning the construction of the project would be less costly than completing it. By Lucien Chauvin Countries with installed nuclear capacity in Latin America GW Country Capacity Argentina 1.64 Brazil 1.88 Mexico 1.55 — Ons, Cammesa, Cenace Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s 53MW Chokai Minami biomass plant comes on line

05/11/24

Japan’s 53MW Chokai Minami biomass plant comes on line

Tokyo, 5 November (Argus) — A joint venture led by Japanese utility Tohoku Electric Power has started commercial operations at the 53MW Chokai Minami biomass-fired power plant in Japan's Yamagata prefecture. Operations started on 2 November. The plant burns a combined 200,000 t/yr of imported wood pellets and palm kernel shells (PKS) to generate around 330 GWh/yr of electricity, which will be sold under the country's feed in tariff (FiT) scheme, the joint-venture company announced on 5 November. The plant is operated by Chokai Minami Biomass Power, which is 75pc owned by Tohoku Electric Power, 15pc by renewable energy developer Olympia and 10pc by a subsidiary of Japanese gas supplier Shizuoka Gas. Chokai Minami is Tohoku's first biomass-only combustion project. The company has also invested in the 50MW Niigata Higashikou biomass plant, which is planning to start operations in mid-November, later than October as initially scheduled. Tohoku has two other planned biomass projects, the 2MW Yokote and the 2MW Yuzawa plants. These facilities are scheduled to come on line in June 2026 and October 2026 respectively. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump unlikely to fully end US clean energy policies

04/11/24

Trump unlikely to fully end US clean energy policies

Houston, 4 November (Argus) — Although former US president Donald Trump has promised to end climate policies enacted during the administration of President Joe Biden, the political complications of reversing course make a full change of direction unlikely should Trump return to the White House. Trump has frequently criticized Inflation Reduction Act (IRA), promising to terminate the " Green New Scam " and rescind all unspent funds in the Biden administration's climate policy suite, if he is elected to a second term. But fulfilling that pledge may be difficult for many reasons, not least of which is whether Republicans have control of both chambers of Congress after Tuesday's election, including the unlikely outcome of a 60-seat majority needed to bypass a Senate filibuster. Beyond the math, Republican districts are benefiting from IRA funding, with some lawmakers from Trump's party already opposing the turmoil that could arise from an about-face on tax policy. "There's no way they're going to be able to replace and repeal the IRA, in large part because so many of the dollars are flowing to [Republican] states," said David Shepheard, a partner at consultant Baringa who specializes in energy and resources. "I think the pieces of the IRA that are most at risk are the [electric vehicle] tax credits, potentially some of the stimulative pieces around offshore wind." The IRA established a host of federal incentives to support clean electricity growth and the associated domestic supply chain. Those include technology-agnostic production and investment tax credits for electricity generators based on their emissions intensities. But the law went well beyond the power sector and also established credits for hydrogen production, electric vehicles and the manufacture of components needed by clean electricity systems. Project developers are counting on a policy trajectory that does not match Trump's rhetoric, which would allow some incentives to stay on the books. Companies expect market forces, such as corporate demand, and state mandates to continue to drive growth for solar and onshore wind and energy storage, rather than national politics. But there is more trepidation around offshore wind, a less mature sector for which the federal government is effectively the landlord for project sites. "There is no doubt that the trajectory of the US offshore wind industry will be impacted by the November election," Liz Burdock, chief executive of offshore wind industry group Oceantic Network, said. "Its outcome will influence how we maintain our momentum." Uncertainty around the US presidential election has dampened private investment in the sector this year, according to Oceantic. At the same time, companies say the industry has come a long way since 2016, with a handful of projects now operating, while recent macroeconomic challenges are subsiding. Furthermore, demand for offshore wind would continue at the state level, and these factors could make the industry more resilient to headwinds. Executive decisions Trump still could use the executive branch to "stonewall" sectors helped by the IRA in the absence of a repeal, including by influence the timing or distribution of IRA funds, according to Shepheard. He could shift regulators' priorities to new oil and gas development, which, along with other actions, could make resources such as combined-cycle natural gas plants more attractive than renewables. "The extent that renewables and other cleaner energy assets are competing with gas, that'll be the big change from a Trump administration," Shepheard said. At the same time, funding for onshore wind and solar is "relatively safe", and tax credits for hydrogen and carbon capture are on comparably firm ground because of support from the oil and gas industry, Shepheard said. Some companies have expressed cautious optimism that some elements of the IRA, such as the advanced manufacturing tax credit, will survive. The incentive is not only important for the solar supply chain but also offshore wind, as state-level solicitations often require developers to invest in local manufacturing. Republican states in the US southeast have already benefited from new factories springing up on the back of the credits. For example, Enel chose Oklahoma for a new new module plant , First Solar located a factory in Alabama and Qcells has expanded production in Georgia. Moreover, removing that carrot could leave the US solar industry reliant on Chinese companies, which could run afoul of Trump's protectionist trade instincts. Trump's campaign did not respond to multiple requests to elaborate on his policy plans. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Oil services upturn takes a pause for breath

04/11/24

Oil services upturn takes a pause for breath

New York, 4 November (Argus) — The boom in demand for oil field services is showing signs of wavering in the short term as international customers signal greater caution around spending and the outlook for US shale remains challenged. Upstream spending growth in the North American onshore market is expected to be flat in 2025, with low natural gas prices, drilling efficiencies and further consolidation among producers in the shale patch all exerting downward pressure. Given a mixed international outlook, one bright spot will be offshore markets, and deepwater in particular, according to investment management firm Evercore ISI. "The solid growth years of 2023 and 2024 are over as the cycle resets," senior managing director James West says. "We view 2025 as an aberration in a long-term, albeit slower, growth cycle." In the near term, the sector's attention will be focused on spending plans by top producers including state-run Saudi Aramco and Brazil's Petrobras, as well as any signs of a potential recovery in Chinese oil demand given the government's latest stimulus efforts to kick-start growth. The sector has had to contend with more than $200bn of shale mergers and acquisitions over the past year, which has shrunk the pool of available customers, and led to oil field services providers beginning their own round of consolidation. Moreover, with capital discipline remaining the rallying cry, significant productivity gains have enabled producers to do more with less. Its immediate challenges were put into stark contrast this week by oil's renewed plunge, this time on the back of Israel's decision to spare Iran's energy infrastructure from retaliatory strikes. SLB, the biggest oil field services contractor, has attributed recent price volatility to concerns over an oversupplied market owing to higher output from non-Opec producers, as well as questions over when the cartel will return barrels to the market and weak economic growth. That spurred some customers to adopt a "cautionary approach" when it came to activity and spending in the third quarter. Gas to the rescue But SLB remains upbeat over the long-term outlook, given the current emphasis on energy security, a key role for natural gas in the energy transition, and expectations that oil will remain a "large part" of the energy mix for decades to come. Gas investment remains robust in international markets, particularly in Asia, the Middle East and the North Sea. "While short-cycle oil investments have been more challenged, long-cycle deepwater projects globally and most capacity expansion projects in the Middle East remain economically and strategically favourable," SLB chief executive Olivier Le Peuch says. Exploration successes in frontier regions from Namibia to Suriname are also unlocking vast reserves that only serve to bolster confidence in the offshore market. Global offshore investment decisions will approach $100bn this year and in the next 2-3 years, adding up to more than $500bn for 2023-26, according to Le Peuch, representing a "growth engine for the industry going forward". Meanwhile, Baker Hughes expects to capitalise on a growing market for gas infrastructure equipment. The company forecasts natural gas demand will grow by almost 20pc by 2040, with global LNG demand increasing at a faster rate of 75pc. "This is the age of gas," chief executive Lorenzo Simonelli says. The top services firms see limited short-term growth prospects for North America, with the exception of the Gulf of Mexico. Hydraulic fracturing services provider Liberty Energy plans a temporary reduction in its fleet in response to slower customer activity and market pressures. And SLB says any potential pick-up in gas rigs could be offset by a further decline in oil rigs owing to efficiencies. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexican hydrogen regulatory efforts gain ground

01/11/24

Mexican hydrogen regulatory efforts gain ground

Mexico City, 1 November (Argus) — The Mexican hydrogen association (AMH2) has made significant strides in recent discussions with regulators and officials, unveiling a comprehensive roadmap for industrial hydrogen adoption. The group's report estimates there will be demand for about 392,189 tonnes (t) of hydrogen per year across seven major industries during Mexico's pilot hydrogen development phase. This includes sector-specific hydrogen demands of 148,350 t/yr from oil refining through 10 potential applications; 107,325 t/yr for mining; 55,877 t/yr for hydrogen blending in natural gas; 23,932 t/yr in the metals industry; 35,040 t/yr tied to ammonia production; 15,265 t/yr for public transport; and 6,400 t/yr for methanol production. AMH2's strategy urges the administration of President Claudia Sheinbaum to designate a lead ministry for hydrogen development, prioritize green hydrogen production and introduce incentives for project financing, technology development and energy transition initiatives. Additionally, it calls for regulatory adaptations to facilitate hydrogen's integration into Mexico's natural gas infrastructure, including quality, transportation, distribution and safety standards, especially for industrial equipment. Legal reforms to support hydrogen development will also be needed, according to the report, targeting laws governing mining, water, hydrocarbons, nuclear energy, energy transition, environmental protection, electric power, bioenergy and geothermal power. For green hydrogen — generated with renewable energy — the focus would be on the latter five areas. These efforts align with Mexico's long-term energy plan (Prodesen 2023-2037), which envisions converting 12 combined cycle power plants, totaling 1.024GW, to operate on a 70pc natural gas and 30pc hydrogen blend between 2033 and 2036. AMH2 president Israel Hurtado said although Mexico's pipeline infrastructure could handle up to a 15pc green hydrogen blend, achieving a 30pc blend would require further technological advances expected over the next decade. Prodesen also identifies regions for hydrogen injection into pipeline networks, including Sonora, Sinaloa, Tamaulipas, Oaxaca, Veracruz, Baja California and the Yucatan peninsula. Yet new regulations will be crucial to establish a robust framework for hydrogen blending in existing infrastructure. The Sheinbaum's administration has committed to reducing carbon emissions and promoting clean energy, Hurtado said, with a $13.5bn investment pledge in renewables over six years and a target for 45pc of national power from renewables by 2030. AMH2 has built early connections with Sheinbaum's team, including Jorge Islas, her energy and climate advisor during the campaign, who now heads the energy ministry's (Sener) energy transition unit and supports green hydrogen initiatives. AMH2 leaders also recently met with energy regulator (CRE) president Leopoldo Melchi and commissioner Walter Jimenez, who expressed strong interest in hydrogen regulation. The association and CRE agreed to form a technical workgroup to develop clean hydrogen regulations collaboratively. Looking ahead, AMH2 plans to meet with energy minister Luz Elena Gonzalez and Mexico's economy ministry to further discuss the hydrogen strategy. But CRE's workgroup is on hold pending potential legislative reforms that could reorganize Mexico's energy regulators under Sener's supervision. Projects in development AMH2 has identified 16 hydrogen projects in Mexico, with eight in various development stages and eight announced. Primarily focused on green hydrogen, these projects represent an estimated $19bn investment. The largest, Helax, is a $10bn green hydrogen production facility in Oaxaca, connected to the Interoceanic Trans-Isthmus Corridor. AMH2 anticipates production to start within two years following initial permitting. The roadmap suggests that, even if only six projects are operational by 2030, the sector could generate 3.351GW and attract $1.8bn in investments. These projects are projected to bring in $2.5bn in revenue over six years and yield $1.9bn in tax contributions. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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