Brazil - Country Commercial Guide
Energy

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-01-21

Overview

The Brazilian Energy Planning Agency´s (EPE) Energy Expansion Plan (PDE) for  2019-2029 indicates that renewable sources will remain a high priority, targeting  48% of Brazil´s energy matrix by 2029. Nuclear energy is expected to grow with the Angra 3 power plant’s entry into operation, estimated for 2026. Within the non-renewable sources, oil and gas will continue to play a key role in energy supply for the country.

Domestic Energy Supply Evolution in 10-year Period

 

2019

 

2024

 

2029

 

Thousand Tep*

%

Thousand Tep*

%

Thousand. Tep*

%

Non-Renewable Energy

157.293

53

171,778

52

196,652

52

Oil and Gas Products

191,439

34

110,256

33

122,323

32

Natural Gas

34,709

12

38,679

12

46,842

12

Coal and Derivatives

15,454

5

17,022

5

18,404

5

Uranium (U308) and Derivatives

4,071

1

3,974

1

6,959

2

Other Non-Renewable Sources

1,620

1

1,847

1

2,124

1

Renewable Energy

138,150

47

160,051

48

183,844

48

Hydraulic Energy and Electricity

36,180

12

44,572

13

46,896

12

Firewood and Charcoal

24,591

8

26,251

8

28,311

7

Sugar Cane Derivatives

55,019

19

56,384

17

64,719

17

Other Renewable Sources

22,360

8

32,844

10

43,919

12

Total

29,444

100

331,829

100

380,496

100

*Tons equivalent of petroleum

Source:  Brazilian Energy Planning Agency (EPE).

​    Primary Energy Matrix of Brazil  ​for 2018 and 2029
​ Primary Energy Matrix of Brazil ​

Source: EPE February 2020 presentation.

Leading Sub-Sectors

Oil and Gas

Brazil is Latin America´s top oil producer. The country owns the largest recoverable ultra-deep oil reserves in the world, with 94% of Brazil’s oil production produced offshore. In 2019, total annual oil production was 1,018 billion barrels, an increase of 7.78% from 2018. Deep pre-salt fields are responsible for more than 60% of national production. From 2014 to 2019 the country experienced a 61% drop in well lifting costs (from US$15.3 per barrel to US$6).

Brazil’s natural gas production increased 9.46% in 2019, totaling 44,724 billion cubic meters. Associated gas currently represents approximately 80% of Brazil’s natural gas production, which is expected to reach 253 million m³/day by 2029. Common challenges facing the Brazilian gas market include high CO2 content, distances from the offshore gas fields to the coast, limited gas pipeline infrastructure, and the need to boost domestic demand.

Significant energy reforms, frequent oil field finds, and opening of oil bidding rounds have been attracting International Oil Companies (IOCs) from around the world.  IOCs have acquired oil field concessions, gas pipeline networks, and are developing liquified natural gas (LNG) terminals.    

The EPE 2019-2029 Energy Expansion Plan summary forecasts exploration and production (E&P) investments of US$424 billion to US$472 billion in aggregate over the next 10 years.   However, the drastic drop in oil prices and adverse impact of COVID-19 prompted  Petrobras to cut its 2020 investments by 30%, down to US$8.5 billion from  US$12 billion.  While that is still a significant investment from Petrobras, investments from other oil companies are also expected to drop by up to 30%.

Nuclear 

Brazil has a promising civil nuclear energy market. Through regulatory changes that will allow for private sector investment, Brazil is planning to more than quadruple ts nuclear power generation by 2050.  Currently, two nuclear reactors supply nearly  2% of Brazil’s energy. Construction of a third nuclear power reactor (Angra 3) is pending implementation of a new business model that will call for an Engineering, Procurement, and Construction (EPC) company to finalize the plant´s construction.  A strategic partner is no longer mandatory (although welcome) as  Eletrobras Holding and Brazil´s Social Economic and Development Bank are expected to solve current Angra 3  debts.  Studies are under progress to revise the final costs to conclude the plant.  Government-owned  Eletronuclear (ETN)´s strategic plan for the 2020-2024 period will be of R$ 32.4 billion reais (approximately $7.2 billion). 

Electric Power Systems  

Brazil is the largest electricity market in Latin America and the 7th largest in electricity generation capacity in the world, with 173.2 GW.  Brazil generates and distributes electricity to over 85 million residential, commercial, and industrial consumers, more than all the combined power produced by other  South American nations.  Investment into the Brazilian electricity sector is expected to reach $94 billion by 2029, including utility-scale generation, distributed generation, and transmission projects.  

Generation

Brazil has a total of 173.2 GW in installed capacity, 84% of which is renewable resources, mainly hydropower. The thermal (coal, gas, oil and nuclear) represent 16% of the Brazilian electricity matrix. According to the Ministry of Mines and Energy (MME), Brazil is expected to add 15 GW of centralized power generation capacity by 2025. Investments in utilized-scale power generation are estimated to reach $62 billion by 2029, while distributed generation should see investment of $10 billion in the same period.

Transmission

Brazil has a country-wide interconnected grid of over 100,000 miles of high voltage transmission lines. By 2029, an additional 32,000 miles will expand the grid significantly. Total investments in the power transmission sector over the same period are projected to reach $22 billion, representing $15 billion in transmission lines and $7 billion in substations.  

Distribution

Brazil has 102 power distribution companies, and private firms owned by foreign investors prevail in this segment. Large international companies operating in this market include Spanish Ibedrola and Italian ENEL. This segment sees annual investment of around $2.2 billion per year, 69% of which is in expansion, 19% in improvement and 12% in renewal of distribution networks.

Renewable Energy  

Brazil’s electricity matrix is one of the cleanest in the world and Brazil is committed to continuing its support for renewable energy projects. Continued investments are expected in wind, solar, and hydropower capacity.  Brazil uses auction-based renewable procurement to increase new generation capacity and contract duration is typically 15 to 30 years. As Brazil moves forward with its modernization plans for the electricity sector, which includes expansion of the deregulated market, we see use of private sector Power Purchasing Agreements (PPAs) increasing exponentially within the renewable energy sector.

Hydropower represents 63% of the Brazilian electricity matrix. Wind power is the second largest source of energy in Brazil with 15 GW of installed capacity, and with an additional 4.6 GW already contracted or under construction and expected to come online by 2023. Brazil has 601 wind farms utilizing 7,000 wind turbines.  

New solar energy developments over the long term may potentially rival investments in wind power. Solar energy in Brazil tripled in the last year and grew 45% in the past 6 months alone, despite the impact of COVID-19, reaching 3 GW in installed capacity in Brazil.  Investments in utility-scale solar energy projects, already contracted in the energy auctions, will reach over $5 billion by 2022.  Another $1 billion has been invested in solar distributed generation since 2012, and this amount is expected to increase exponentially in the next few years.  

Opportunities

Oil & Gas

As Brazil´s deep pre-salt fields have proven to be extremely prolific, most opportunities for U.S. oil and gas suppliers are expected to be related to the pre-salt projects.  Together, in the medium to long-term, the oil companies plan to drill 300 offshore wells, order 17 new production units, and build 600km (373 miles) of gas pipelines in Brazil. Most oil companies have postponed drilling activities to 2021 due to COVID-19. 

In addition to Petrobras, which is responsible for 92% of Brazil’s oil and gas production, there are  47 local and 50 foreign  companies that hold oil rights to exploration and appraisal  areas  in  Brazil (e.g.: Shell, Equinor, Chevron, Total, etc.). You can view a list of these companies on the Brazilian Oil and Gas Regulator (ANP)  website here.

Expected Petrobras investment in oil and gas between 2020 and 2024 was approximately $75.7 billion, but this number may drop by up to 30% due to COVID-19 and other influences.  About 85% of the Petrobras investments will be on exploration and production.  The June 2020 Petrobras slide below shows 13 new Floating Production Storage and Offloading (FPSO) platforms entering operation from 2020 to 2024 (Petrobras).

Energy Projects in Brazil; 2020-24
Energy Projects in Brazil; 2020-24

Source: June 2020 Petrobras presentation.

Despite the emphasis on the upstream segment, the downstream subsector is also expected to generate business opportunities mainly related to refineries and gas processing units, as noted below.

Brazil holds the 8th largest refining complex in Latin America (17 refineries) with Petrobras owning 98% of Brazil’s refining capacity. However, a divestment program is in progress and new players are expected to enter the segment. The country will continue to be a net importer of naphtha, jet fuel, and diesel.

There are three LNG terminals in operation (all owned by Petrobras); three are in the development stage; and a few others are planned for the coming years.    Recently, Petrobras has started a pre-qualification process for the long-term lease of one its owned LNG terminals and associated pipelines, located in Bahia State, with a 20mn m3/day import capacity.  Such a process will open the company´s lock on Brazil´s LNG imports.  Among the new terminals, the Port of Açu LNG-to-power project, developed by GNA, is the largest of its kind in South America. Two natural gas-fired power plants with a combined capacity of 3GW are fed by an LNG import terminal with regasification capacity of 21mm m3/day. Despite anticipated temporary lower gas consumption due to the COVID -19 pandemic, industry contacts forecast that LNG imports are expected to rise again in the late 2020s to take advantage of lower prices and an abundance of supply.  Additionally, a number of new gas-fired power projects under construction in Brazil are anchored to imported LNG.

Map of LNG terminals in Brazil
Map of LNG terminals in Brazil

While the currently unfavorable exchange rate impacts price competitiveness, there is increased potential for U.S. exports of equipment and services as Brazil has lowered local content requirements, and the US oil and gas industry enjoys an excellent reputation due its advanced and innovative technology and expertise.  Selected best sales prospects are listed below:

  • Maintenance integrity of Petrobras´ assets (113 oil platforms;  13 refineries;  4 gas process units;  and 19 power generation plants)
  • Operation Logistics optimization with view of COVID- 19 impact  
  • Oil rig decommissioning , including 62 Petrobras platforms
  • HSE  - offshore emergency response solutions and safety supervisory systems; 
  • IT and cybersecurity systems
  • Well services, including intelligent well completion services
  • Subsea systems (including power transmission and distribution)
  • Autonomous subsea inspections
  • Geophysical services (including reservoir appraisal strategy optimization)
  • Chemicals and catalysts

U.S. companies can also consider bidding during the 2021-2022 auctions for oil blocks and for the Open Acreage Permanent Oil Block Offers that the Brazilian Oil and Gas Regulator (ANP) organizes.

Since mid-2018, Petrobras has been following the new Brazilian state-owned public procurement legislation number 13,303/16.   This legislation has brought more transparency to the Petrobras bidding processes, as all tenders must be published in advance at the Petronect portal.  In the past, Petrobras would mostly only invite pre-registered suppliers to participate in its tenders.  Currently, even if a supplier is not yet registered with Petrobras, he can submit a bid, and if he wins, he will be able to pursue the supplier´s registration process during the tender process.

Interested parties may find all Petrobras tenders via its supplier’s portal PETRONECT. U.S. oil and gas suppliers are encouraged to secure a supplier’s registration to facilitate contracting procedures with Petrobras. Registration requires that foreign firms have a local legal representative.  In some tenders, this requirement may be waived, depending on the bid specifications.

Nuclear Power

Most civil nuclear opportunities relate to the Angra 1 Lifetime Operation Extension (LTO). Eletronuclear (ETN) is working with EXIM Bank on a $300M project to extend the lifespan of Angra 1.  Eximbank  has approved a guarantee for an initial Engineering Project Multiplier (EPM) loan and  ETN is in the process of selecting a lender for this loan. 

Equipment and services to be demanded for the LTO project include:

  • Design engineering
  • Replacement of cables
  • Environmental qualification of electrical equipment
  • Modernization of radiation monitoring systems
  • Reactor coolant pump seals
  • Instrumentation & control systems
  • Junction boxes
  • Cables
  • Battery bank
  • Auxiliar boiler
  • Low-pressure turbine rotor
  • Ventilation system
  • Drums and liners for waste storage
  • Waste treatment system technology
  • Filters
  • Process robotization 
  • Predictive operation and maintenance analysis
  • Mobile and artificial intelligence technologies

Brazil also plans to complete Angra 3, a 1245MW Siemens technology power plant project started in 1984.  ETN will divide the project into tranches to make it more flexible.  The Eletrobras Holding Inc.  will finance the approximately $200 million first tranche focused on construction and completion of the reactor dome.  ETN plans to release the tender by the end of 2020. 

The USDOE is working with Brazil’s energy research company (EPE) to finalize the scope of an assessment of market opportunities for small modular reactors (SMRs) and advanced microreactors in Brazil. ETN views clusters of SMRs as viable for the expansion of Brazil´s nuclear power fleet. 

You can view/follow all Eletronuclear tenders via the company’s tenders portal.

Electric Power Systems and Renewable Energy  

Brazil has one of the cleanest electricity matrixes in the world and is committed to continue pursuing clean energy sources in the future. The growth of solar and wind power in Brazil and reforms in the electricity sector that will foster a deregulated power market present great business opportunities for U.S. companies offering innovative technology and solutions to address the impact that these changes will have in the Brazilian power grid.

  • Data analytics 
  • Control and automation systems 
  • Data  loggers and  acquisition systems 
  • Monitoring/testing/inspection systems  
  • Remotely operated vehicles  
  • Digital power plants 
  • High-efficiency turbines capable of integrating with renewable resources
  • Rehabilitation/repair/maintenance/upgrading services 
  • Weather instruments and meteorological equipment 
  • Microgrid solutions
  • Residential, commercial and industrial energy efficiency solutions energy storage
  • Distributed energy resources management and control
  • Transmission and distribution automation
  • Enterprise grid management 
  • Cybersecurity and incident response solutions
  • Customer engagement solutions
  • Smart metering: smart grid software and analytical packages; advanced metering infrastructure  
  • Electric vehicle infrastructure  
  • Disruptive, emerging and innovative technologies
  • Blockchain, vehicle-to-grid, off-grid, PV + storage  

Resources

During COVID-19 pandemic there was a huge fluctuation in dollar exchange rate from about 4,20 in December 2019 to 5,59 in June 2020.  The official link to Exchange rates is World Bank.

For any additional information about Brazil’s energy sector, please contact igly.serafim@trade.gov, regina.cunha@trade.gov, rodrigo.correa@trade.gov