August 05, 2020 [S&P Global Platts] – Petrobras on Aug. 3 announced the start of bidding for lease of its LNG regasification terminal and associated facilities in the northeast state of Bahia – a move that comes as the state-led producer continues to diversify away from midstream and downstream oil and gas operations in Brazil.

 
“The lease aligns with the company’s strategy to improve its capital allocation and create a favorable environment for new investors to enter the natural gas sector,” Petrobras said in a statement.
The leasing process also comes in accordance with a June 2019 agreement signed between Petrobras and Brazil’s antitrust market regulator, Conselho Administrativo de Defesa Econômica, or Cade.

The move is the latest in a series of asset divestitures made by the company.

Most recently, Petrobras and Brazil’s government have been considering reforms to the state-led company’s complex and costly concession agreements offered in bid rounds and production-sharing auctions in an effort to attract more international competition for the country’s offshore assets.

As part of Brazil’s New Gas Market reform, launched in June 2019, Petrobras in late May announced the opening of its natural gas processing facilities to rival producers and interested third parties. Last year, the company sold a large chunk of its downstream gas distribution business and agreed to lease transmission capacity on the Bolivia-Brazil Gasbol pipeline – the country’s largest gas import system.
 

Bahia Terminal

The lease of Petrobras’ Bahia Regas terminal marks a significant step in fomenting competition in Brazil’s gas market. The terminal’s location in the state of Bahia gives potential importers access to northeast Brazil’s largest municipal gas market with proximity to heavily populated neighboring states, all of which are severely under-serviced by gas pipelines.

The Bahia import terminal, recently Brazil’s most active, uses Floating Storage and Regasification Unit, or FSRU, technology to make ship-to-ship LNG transfers that can be later regasified for sendout.

The terminal’s capacity allows for regasification of up to 700 MMcf/d and includes a 28-mile, 28-inch diameter pipeline with connections to two onshore delivery points in the city of Salvador.

The lease agreement exclude Petrobras’ FSRU, but does include power generation and electric-supply equipment at an onshore gas-fired power plant, located at the Madre de Deus Waterway Terminal.
 

Gas Market Competition

One year on, Brazil’s New Gas Market reform continues to mark key milestones.

In July, Brazil’s National Petroleum Agency, or ANP, relaunched its open season for capacity on Gasbol – its third attempt to carry out the process after previous setbacks caused by Petrobras’ involvement in the bidding and later by concerns related to the coronavirus pandemic.

ANP was scheduled to publish a list of approved shippers by July 27 but has yet to provide any official updates on the process. According to local media reports, though, at least two companies have been named as approved shippers, including Compass of Cosan Group and Gas Bridge. The open season is scheduled to conclude by mid-August with the startup of new gas import contracts by September.

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