LNG investment rises despite infrastructural challenges | Business

However, it remains concentrated among a few key players, including Petrobras, Eneva (BTG), and New Fortress Energy, as well as investors like Carlos Suarez (Termogás). Some companies, such as Cosan (Rubens Ometto) and J&F (the parent company of JBS), are expanding their operations across various links in the chain, strengthening a more vertical model.

Decarbonization could be an ally in this scenario. Industrial sectors where reducing emissions through electrification is considered difficult would benefit from adopting LNG, which is cleaner than diesel, coal, and LPG.

Demétrio Magalhães, CEO of Edge–a Compass company–states that LNG’s share in Brazil’s energy mix has been gradually increasing, serving distributors and industries in the so-called open gas market. In this segment, clients negotiate purchases according to their consumption profile, manage their portfolios based on market fluctuations, and conduct short-term market transactions without penalties. Companies like Gerdau and CSN, among others, are investing in this.

Mr. Magalhães notes that the São Paulo Regasification Terminal (TRSP), operated by Edge, received eight LNG ships in 2024 to meet various demands in Brazil and displace more polluting fuels. “All the LNG we brought was to supply the industrial market… Since last year, we have been delivering [gas] from Bolivia, the pre-salt, soon we will have biomethane, and we have signed contracts in Argentina.”

Brazil has seven regasification terminals along its coast. Most operate with idle capacity due to market volatility and limited demand. An eighth terminal is expected to start operations in 2026 at the Port of Suape (Rio de Janeiro), managed by Oncorp, known for operating diesel-powered thermoelectric plants.

João Guilherme Mattos, the company’s CEO, explains that the decision to diversify businesses came in 2019, as a bet on the port’s strategic potential to become a gas hub. The Termopernambuco plant, owned by Neoenergia, is the terminal’s first customer through a contract with Shell. Oncorp is eyeing the energy security auction (capacity reserve) for thermoelectric plants and the industrial sector’s demand driving the terminal’s activity.

“For the auction, we have several thermal projects tied to the terminal competing. We have the industrial demand from gas distributors that Shell is developing. There are R$320 million in capex [capital expenditures] and R$2 billion over 15 years of operation,” states the executive.

The company is negotiating an agreement with the pipeline operator TAG to distribute gas to other regions. Ovídio Quintana, TAG’s commercial and regulatory director, believes that industrial demand is price-sensitive, needing a competitive environment

“Access to pipelines is a driver of competition, as it enables the meeting of gas supply and demand agents. For this ‘exchange hub’ environment to occur, it is crucial that all supply sources are connected to the national transportation network,” he says.

According to him, the company’s operations in the Northeast led, in 2022 and 2023, to a 20% reduction in the price of the natural gas molecule compared to the Southeast: “About R$4 billion in savings for users.”

Today, LNG consumption in Brazil focuses on servicing thermoelectric plants. Of the 45 LNG ships that docked in the country in 2024, most arrived starting in September, a period of higher thermal dispatch. But expanding industrial demand remains a challenge as its consumption has stagnated at 50 million cubic meters per day.

Beyond the free market, initiatives such as the integration of new suppliers, new coastal regasification terminals, and relying on trucks to deliver LNG to areas without pipeline infrastructure could boost industrial consumption. The market’s most recent move involved asset-management firm Perfin, which in early February acquired 50% of VirtuGNL for R$450 million through an equity deal.

On the same day, Virtu updated its contract with Eneva to take the entire capacity of the Parnaíba complex’ natural gas liquefaction plants in Maranhão. The plan is to supply the heavy truck fleet with gas to transport Vibra’s diesel to Vale.

The idea is to create a sort of “green corridor”–a network of LNG fueling stations for freight transport. The company already has contracts in operation, such as the one signed with Yara Brasil for fertilizer distribution, for example. However, the company’s executive director, José de Moura Jr., says startup costs are still high.

“Barriers to entry remain a challenge. First, [LNG-powered] trucks are still more expensive than diesel ones. Second, building a fueling station requires specific technology and takes a year to complete. Third, there is the issue of accessing the gas. It’s not enough to have a ship available; many are anchored offshore without economic viability for transportation. It’s essential that the ship be near the port,” Mr. Moura said.

According to him, each LNG station for trucks, dubbed Road Decarbonization Center (CDR), costs an average of R$20 million. Virtu plans to inaugurate the first four CDRs by early April, and another four by the end of the year. The goal is to reach 35 units by 2027.

Currently, Petrobras, GNA, and Eneva have facilitated access to LNG due to having terminals connected to their thermal plants. Âmbar will soon gain this independence as well. Fluxus, a company from the same group, is expanding its presence in Argentina and Bolivia, exploring gas after acquiring assets from Pluspetrol.

“Âmbar is in a privileged position, as it directly accesses the main gas basins on the continent: Brazil, Argentina, and Bolivia,” stated the company’s CEO, Marcelo Zanatta. The acquisition of MGás allowed entry into the gas trading market, ensuring involvement in both the purchase and sale of the product.

On the foreign investment side, Pan American Energy (PAE), which operates in Brazil in renewable energy generation, sees great potential for the Brazilian industry to diversify its business. The Argentine oil company’s plan is to double natural gas production at the Vaca Muerta megafield in Argentina to serve Brazil.

PAE’s general director in Brazil, Alejandro Catalano, emphasizes that investments aim to create greater regional integration in South America for the energy transition: “We believe energy must be harnessed regionally. In this sense, Brazil needs more gas to grow and meet the rising demand of new industries. As a resource, we have the Vaca Muerta region, which has enough to supply Argentina and the entire region for the next 20 years.”

Regarding challenges, Mr. Catalano points to the lack of infrastructure connecting Argentina to Brazil. Initially, transportation will be carried out through existing pipelines in Bolivia. As an alternative, PAE ordered an LNG carrier. The vessel is expected to be ready by 2027, the same year PAE plans to begin gas commercialization in Brazil.

Price swings in international oil and gas markets raise several concerns. The war in Ukraine has led Europe to increase LNG demand, which could change with negotiations to end the conflict. Instability in the Middle East, particularly involving Iran and the transit of ships in the Red Sea, is another driver of uncertainty.

Additionally, changes in U.S. energy policy with the return of Donald Trump to the presidency are likely to impact American exports, potentially sparking competition in the long term, explains Rivaldo Moreira Neto, infrastructure director at A&M Infra

“The world’s leading LNG producers and exporters, the U.S. and Qatar, are practically doubling their sales and export capacity for this fuel. Looking towards 2030, I’m certain the supply will increase. With Trump, you’re likely to see an accelerated movement,” he says.