Brazil expects international impact on gas prices

International markets should have more of an influence on Brazil's domestic natural gas prices throughout the next decade, as the country's demand for LNG rises and its market shifts away from monopoly.

The Brazilian government expects gas prices to become more influenced by the Henry Hub in the short term, according to its 10-year plan for the energy sector (PDE 2031). The plan is organized by the Energy Research Bureau (EPE) with contributions from governmental entities and state agencies and has now been submitted to the market for evaluation.

Brazil expects to increase total gas production to 136mn m³/d (4.8 Bcf/d) in 2031, from 64mn m³/d in 2021. The amount of gas available is supposed to increase to 91mn m³/d in 2031, from 2021's 45mn m³/d.

Pre-salt gas should represent 63pc of the country's national offer by 2031, making investments in new transportation structures necessary from 2028 forward.

Changes in the regulatory framework arising from the new gas market initiative, with the entry of new agents and the increase of investments in the sector, may alter the dynamics of the regional natural gas market and access from the domestic market to the LNG market in the decade.

The potential of LNG imports by 2031 should correspond to the installed capacity of existing integrated pipeline terminals to the regasification terminals of 57mn m³/d.

The government expects R137.86bn ($25.55bn) in natural gas infrastructure investments during the next 10 years, with R8.8bn in projects estimated to be build and R128.99bn in projects that EPE indicates as necessary for the development of the market.

By Rebecca Gompertz