Oil giant studies offshore liquefied natural gas facilities as proposed gas market reforms could require it to sell part of domestic output to rivals
Petrobras will begin studying the feasibility of investing in offshore liquefied natural gas (LNG) facilities to export part of Brazil’s natural gas production, according to sources familiar with the matter.
The move comes amid discussions over the Gas Release program, provided for under Brazil’s New Gas Law, which aims to expand private companies’ access to the natural gas market. The initiative, which still requires regulation by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), would require a dominant market player to sell part of its natural gas production to competitors in an effort to increase competition. The proposal is on the agenda for the agency’s next board meeting on Friday (7).
If those restrictions on Petrobras’s market position are adopted, the oil giant is considering directing investments abroad. “As the Gas Release program is currently designed, it does not create a single additional molecule of gas. It simply shifts market share from the state-owned company to private players,” a source close to Petrobras told Valor.
Petrobras announced on Monday (3) its third natural gas discovery in Colombia. If all three discoveries produce the expected volumes, the Brazilian company’s Colombian output will be comparable to production from the main phase of the Sergipe Deepwater Project (SEAP) in Brazil’s Sergipe-Alagoas Basin.
The project in northeastern Brazil is considered key to expanding Petrobras’s gas production. It includes two offshore platforms and a 134-kilometer gas pipeline. SEAP I will have the capacity to process 10 million cubic meters of natural gas per day, while SEAP II is expected to process up to 12 million cubic meters per day.
Petrobras’s Colombian operations do not currently include plans to export gas, although that remains a future possibility. Bringing Colombian gas to Brazil, however, would require Brazil’s regulatory framework to remain unchanged, the source said. Combined, the three discoveries could supply Colombia’s domestic market for 10 years, ensuring the country’s self-sufficiency in natural gas. Petrobras has operated in Colombia for 39 years and is the operator of the GUA-OFF-0 Block consortium, holding a 44.44% stake alongside Colombia’s state-owned Ecopetrol, which holds the remaining 55.56%.
The project is expected to require investments of $1.2 billion during the exploration phase and $2.9 billion for field development. Production is projected at 13 million cubic meters of natural gas per day over 10 years. First gas is expected in 2030, subject to the issuance of all required permits and licenses.
The latest discovery, announced Monday (3), was made at the Sandia-1 exploratory well, located in the same block as the previous two discoveries. Drilling began on June 12 and reached its final depth on June 29, confirming the presence of hydrocarbons. The well is located 42 kilometers off Colombia’s coast in ultradeep waters with a water depth of 1,251 meters.
Petrobras’s expansion in Colombia’s natural gas market has been supported by regulatory reforms in that country aimed at strengthening domestic supply and reducing the risk of shortages. Among the changes was the introduction of long-term firm gas sales contracts, which made the project economically viable.
According to the source, the latest discovery also strengthens Latin American energy integration, which could enter a new phase if Colombian gas is eventually exported. Petrobras already imports natural gas from Bolivia through the Brazil-Bolivia Gas Pipeline (Gasbol) and from Argentina.
*By Kariny Leal — Rio de Janeiro
Source: Valor International
https://valorinternational.globo.com/