Drought conditions in Brazil's Southeast-Central West region are putting pressure on state-owned oil and gas company Petrobras to seek out prompt and near-term LNG cargoes to supplement the country's power supply, sources said Monday.
Petrobras was recently heard in the market lifting an FOB cargo from Qatar for an undisclosed price. The 157,000 cubic meter Wilpride, currently under Petrobras' control, loaded the cargo Friday from the port of Ras Laffan, Qatar. The vessel is currently in the Gulf of Oman and is expected to arrive at the Bay of All Saints terminal in Salvador, Bahia, by late August.
Petrobras has also been heard in the market looking for cargoes for FOB lifting or delivery in September, October and possibly November, ahead of the rainy season which runs from December through April.
The recent push to shore up the country's power supply comes as reservoir levels in Brazil's Southeast-Central West region fell to a 19-month low in July, averaging just 34.36% of capacity, the lowest since December 2012, according to Brazil's National Electric System Operator.
The critical Southeast-Central West contains upward of 70% of the country's installed hydropower and serves nearly 50% of Brazil's population. The tropical nation relies on hydropower for 75-80% of its electricity supply.
Over the next two weeks, through August 24, the region is expected to receive less than 20 mm (0.79 inch) of rainfall, according to forecasts from the US National Oceanic and Atmospheric Administration.
Through July, Brazil has imported a record 7,800,574 cu m of LNG, up 21% from the same period in 2013, according to data from Bentek Energy, a unit of Platts. In March, Brazil's monthly LNG imports hit a monthly record at 1,504,459 cu m.
The surge in imports during early 2014 came in the run-up the World Cup. As host of the games, Brazil faced the prospect of a short-term surge in demand for electricity. At the same time, the country's hydroelectric reservoirs have been hovering near historic lows as the El Nino weather phenomenon has contributed to higher-than-average temperatures and lower-than-average rainfall in the southeastern states of Rio de Janeiro and Sao Paulo.
