THE NEED FOR FLEXIBILITY IN THE SUPPLY OF NATURAL GAS IN BRAZIL: THE LNG OPTION

摘要

The brazilian natural gas industry is in its infancy. The diffusion of natural gas as an energy source started in the 90s, propelled by the desire of the government to expand and diversify the national energy grid. Among the challenges faced by the industry is the need to import the commodity. Brazil has only the fourth largest natural gas reserves among South American countries, and most of these reserves are located offshore and associated with oil fields, which raises costs and makes their economic exploration more difficult. For this reason, almost half of the natural gas consumed in Brazil comes from Bolivia, through the Boliva-Brazil Pipeline (GasBol). The need for a flexible supply of natural gas comes from the peculiarities of the brazilian electric grid. Hydroelectric plants provide around 90% of all the energy consumed in the country, with thermoelectric plants – the ones that employ natural gas as fuel – being activated only if adverse climate conditions reduce water reserves. The demand for thermoelectric power becomes then dependent on erratic variations on rainfall and demand peeks. The objective of the paper is to analyze the possibility of the importation of LNG being capable of increasing supply flexibility and reducing transaction costs in the brazilian natural gas industry.