Brazil is importing so much liquefied natural gas (LNG) this year that volumes are close to levels usually seen in countries in Europe and Asia, as the South American country's electricity system grapples with the worst drought in nearly a century.
Brazil's electricity mix is heavily dependent on hydroelectric power, which accounted for more than 75 percent of electricity generation in 2020, according to data from the International Energy Agency (IEA).
Brazil has the largest installed hydropower capacity in South America and accounts for two-thirds of the continent's total hydropower capacity.
But this year, Brazil, the most populous country in South America, is experiencing its worst drought in 91 years and is struggling to keep the lights on with hydropower.
Last year, natural gas accounted for just 6.2 percent of the electricity generation mix, as per the IEA data, but amid the drought not seen in decades, Brazil is now turning to more gas-fired power units. This has led to record imports of LNG.
Over the past six months, Brazil has imported as many as 34 LNG cargoes from the United States, according to shipping data compiled by Bloomberg. U.S. export volumes to Brazil started setting monthly records after September 2020, EIA data shows.
Rainfall in Brazil during the period September 2020 to April 2021 was the lowest since government records began in 1931, Argus noted.
In 2021, Brazil will likely import a record amount of LNG due to the drought and new LNG-to-power projects becoming operational in the country, according to Argus estimates.
Brazil has outstripped other countries in the region, such as Chile and even Mexico, in LNG imports so far this year, Bloomberg's data showed.
Demand continues to be strong as Brazilian state-controlled oil giant Petrobras is looking to buy on the spot market two LNG cargoes for July and another two for August, traders with knowledge of the tender told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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