Corrects national LPG demand in fifth paragraph.
Brazil's LPG distribution business will change significantly and look toward alternatives such as compressed natural gas (CNG) and biomethane in the near future thanks to a growing number of industry mergers and an expected surge in demand from new federal laws.
In March, Copa Energia, Brazil's largest LPG distributor with 25pc the market share, acquired small-scale CNG distributor Companhia de Transporte de Gas (CTG) as part of its strategy to expand distribution of natural gas and biomethane. Copa is looking to acquire at least three other companies, including biomethane producers, to increase margins as biomolecule prices are still higher.
Ultragaz — which has 17pc of Brazil's LPG market share — acquired Neogas, another CNG distributor, in 2022 and progressed on to biomethane distribution. Essencis Biometano, a southeastern Sao Paulo state partnership between renewable energy companies MDC and Solvi Essencis Ambiental, will supply 68,000m³/d of biomethane to Ultragaz, and Rio de Janeiro GNR Dois Arcos' biomethane plant will supply 10,000 m³/d to Ultragaz.
"This is a rush to capitalize on an opportunity to offer a mix of energy products to the market, hence not only securing one's clients portfolio but also moving ahead of the market and perhaps growing the clientele," one LPG market executive said. The trend of looking into other markets is especially strong in Sao Paulo as well as in southern and central-western states.
The federal government's Gas for All social program — expected to deliver one 13kg cylinder/month to 20mn families by the end of 2025 — will also change the LPG market's dynamics by driving demand while including new consumers into the LPG market. Some participants say it will help decrease usage of firewood for cooking, which is still prominent in the countryside and unlikely to be replaced entirely. Delivered cylinders could replace up to 40pc of wood consumption, a consultant told Argus, thus increasing national demand for LPG by 216,000-312,000 metric tonnes (t)/yr, up from about 7.6mn t/yr currently used nationwide.
The program is most likely to increase LPG use in rural areas, helping major distributors in those areas increase their market shares even further.
