Drought leaves Brazil in search of more LNG: press

Historic drought in Brazil, which depends heavily on hydroelectric power, has pushed the energy-rich country to look for more LNG to make up the difference, the Bloomberg news service reported June 3.

Brazil relies on hydroelectric power to meet about 70% of its electric power. But an unseasonably dry year prompted Brazil to look to the LNG market as a stop-gap measure.

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“South America is running out of hydropower because of dry weather, and I wouldn’t be surprised if buyers all across the region were buying more LNG,” Henning Gloystein, global director of energy and natural resources at consultants Eurasia Group, was quoted as saying.

The top US LNG exporter to Brazil, Cheniere Energy, has sent a combined 22 cargoes from its facilities since December. Two others came from Trinidad & Tobago and another from Angola during the same period.

Traders familiar with the agreement told Bloomberg that Brazilian energy company Petróleo Brasileiro, known also as Petrobras, is searching for two cargoes of LNG for July and two more for August.

US-based energy company New Fortress Energy (NFE) already made moves in the Brazilian market with its $5bn acquisition of Hygo Energy Transition, a joint-venture between Golar LNG and Stonepeak Infrastructure Partners.

With the purchase, NFE acquired an operating floating storage and regasification unit (FSRU) terminal and a 50% interest in a 1.5-GW power plant in Sergipe as well as two other FSRU terminals with 1.2 GW of power in advanced stages in the South America country.

LNG imports started in late 2009 and are an important component of the country's gas supply LNG plays an important role in the country's gas supply as it provides flexibility and security of supply, in particular to the power sector.