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Petrobras mulls investing in offshore wind power

Petrobras CEO said company joined forces with Equinor to develop the 4-gigawatt offshore wind project Aracatu, in the Campos Basin — Foto: Brennan Linsley/AP
Petrobras CEO said company joined forces with Equinor to develop the 4-gigawatt offshore wind project Aracatu, in the Campos Basin — Foto: Brennan Linsley/AP

Offshore wind power generation is one alternative studied by Petrobras in the long run, considering the energy transition context, CEO José Mauro Coelho said.

“Offshore wind power has great potential in Brazil and synergies with Petrobras’s operations. This is one alternative under study. There are others,” he said.

In an event about the global carbon market in Rio de Janeiro, Mr. Coelho said that the Brazilian state-owned oil company joined forces with Norway’s oil company Equinor to develop the 4-gigawatt offshore wind project Aracatu, in the Campos Basin.

Energy transition will require cooperation, he said. “Challenges of this magnitude require broad dialogue and cooperation to seek a fair transition that protects the most vulnerable ones and safeguards energy security. The achievement of climate goals is key for social welfare, economic development, and for our own competitiveness,” he said.

The executive pointed out, however, that even in the most accelerated energy transition scenarios, there will be demand for oil around the world “for decades.” “We believe that the transition will be slow and that the world will demand oil for many years.”

In this sense, Mr. Coelho pointed out that pre-salt production, in ultradeep waters, is among those with the lowest emissions and highlighted the importance of Petrobras continuing to reduce carbon emissions in oil production to be competitive.

“Our oil is produced with 40% lower emissions per barrel than the world average. Producing oil with greater efficiency and lower carbon intensity is an immediate, relevant contribution to the reduction of global emissions,” he said.

Mr. Coelho pointed out that the company also has initiatives to reduce emissions in refining. “Petrobras will have one of the most modern and sustainable refining complexes in the world,” he added.

Source: Valor International

https://valorinternational.globo.com

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Offshore wind power decree expected to unlock investments

The potential of offshore wind energy – Magnus Commodities

A decree published by the federal government on the main guidelines for offshore wind projects in Brazil was well received by players in the electricity sector, who said it may unlock investments.

The main point is related with the assignment of the use of physical spaces and natural resources for this type of renewable generation. As previously reported by Valor, giant companies like Shell and Iberdrola are looking to Brazil because of its power generation potential but were waiting for a more secure regulatory environment.

The decree 10,946/2022 says that the Ministry of Mines and Energy must issue complementary rules by June 15, 2022. Experts and international entities say that the measure removes the legal and regulatory risk and helps projects in the Brazilian seas to get off the drawing board.

In a note, the ministry said the decree aims to fill the gap identified by public institutions, companies, experts and organizations of a regulatory framework for the exploration of offshore electric potential in Brazil, especially related to issues about the deployment and the concession model.

For Abeeólica, the trade group that represents the sector, the decree is a crucial advance so that Brazil can unlock investments and deploy offshore wind farms with security for investors, government and society.

“In a sector that is taking its first steps, this security is key, so that companies, society and government know what the technical criteria, requirements, study obligations are, and the agencies that will be responsible for analyzing, approving and formalizing the progress of each stage of the projects, which are more complex than onshore wind farms,” said Elbia Gannoum, head of the association.

Ben Backwell, CEO of the Global Wind Energy Council, said Brazil has virtually unlimited offshore wind resources and wind power companies have already filed for permits for projects totaling 46 gigawatts. This represents an opportunity to meet the growing demand for energy, develop green hydrogen projects, and create large amounts of investment and skilled jobs.

“This decree brings clarity and certainty that the wind power industry needs to move forward and continue to develop large-scale projects off the coast of Brazil, while the authorities prepare a comprehensive system for licensing areas, as well as competitive auctions and other mechanisms for capturing offshore wind power,” he said.

The forecast is that by 2050 Brazil will reach an installed capacity of electricity generation by offshore wind of nearly 16 GW, if there is a 20% reduction in capex from this source, according to the National Energy Plan 2050.

Although the decree is considered an advance for legal and regulatory security, the energy partner of law firm Lefosse, Pedro Dante, questions the feasibility of these projects in the short term and considers it premature to say that all issues are properly addressed and resolved.

“Due to the still high costs of offshore plants, it is still not possible to say that this type of energy source will be competitive in the short term, there is a natural competition in relation to price with renewable energy sources that are already in the consolidation phase in the country, such as solar power and onshore wind power itself,” says Mr. Dante.

Lawyer Rodrigo Machado Santos, a partner at Madrona Advogados, said that the decree was the right choice, since the legislation already deals with the assignment of areas and commercialization of electricity.

“It seems there is no need for a legal framework for additional regulation, especially because offshore generation does not mean a new type of generation, but simply involves issues such as ownership over the areas – which is already provided for in law.”

Source: Valor international

https://valorinternational.globo.com/

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Auction for offshore wind power to be held next year

Potential investors in the offshore wind power segment are waiting for regulatory definitions from the federal government to start the race for new projects in Brazil’s waters with the usual legal certainty of the electricity sector.

The Brazilian Wind Power Association (Abeeólica) says it is eager to see the regulatory guidelines for offshore wind contracting, as investors in the international market are interested in Brazil. The entity helps in the economic and regulatory structuring to receive the investments and believes that in 2023 it will be possible to make the first competition viable.

“What we did in 2021 and will continue to do in 2022 is to arrange the economic and regulatory structure to receive the offshore investments. We already have companies in Brazil and 46 GW of projects under analysis by [federal environmental agency] Ibama. We will provide structure so to hold auctions in the near future, which I imagine will be in 2023,” said Elbia Gannoum, head of Abeeólica.

The Ministry of Mines and Energy (MME) is working with the Chief of Staff Office to consolidate contributions for the establishment of the first offshore wind power regulation in Brazil. “The work is likely to be concluded by the end of this month,” the ministry informed.

Some companies have actively collaborated in the discussions for the definition of the legislation to be adopted in the country, such as Neoenergia, whose majority shareholder is the Spanish company Iberdrola. With a defined legal framework, the expectation is that projects will move forward.

“We have three projects in the initial phase of licensing studies with the possibility of reaching a capacity of up to 9,000 MW,” the company said in a note.

Even big oil companies are looking to Brazil. Shell Energy has been evaluating the country’s offshore wind potential using its knowledge of the sea environment and with the deployment of those plants outside Brazil, and is also waiting for the regulation of the sector.

“Shell expects to soon report the start of environmental licensing of offshore wind complexes with Ibama, a field in which regulation is already known to entrepreneurs,” said Gabriela Oliveira, renewable energy generation project development manager at Shell Energy.

Ibama has 23 requests for environmental permits under analysis, totaling more than 46 GW of power. However, the institute confirmed that only two have presented Environmental Impact Studies and Environmental Impact Reports (EIA/Rima). The agency has requested further information for the others.

Ana Karina Souza, partner for energy at law firm Machado Meyer Advogados, adds that the projects would have many challenges to be implemented without a stronger intention of the federal government to hold auctions in the regulated market. This gives room to doubts whether the projects would be viable in the free market.

“We have a technology that cannot be developed because of a void, of a regulatory gray area,” she said.

Other structural conditions still need to be overcome. Brazil needs to fix the infrastructure of ports and transmission, since the projects have a very large scale, and the recovery of the economy needs to come with strength so that investments accelerate.

Source: Valor international

https://valorinternational.globo.com/

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