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Petrobras LNG Imports Seen Up 31% as Power Shortage Looms

By Rodrigo Orihuela Feb. 28 (Bloomberg) -- Petroleo Brasileiro SA, South America’s second-largest buyer of liquefied natural gas, is set to boost imports as much as 31 percent to supply thermal plants as Brazil’s record drought causes hydro-dams to dry out. Rising consumption at gas-fired plants means the country’s average daily LNG import needs will rise to 21 million cubic meters (742 million cubic feet) this year from 16 million last year, said Marco Tavares, chairman of Rio de Janeiro-based research firm Gas Energy. Faced with the worst drought since at least 1972 in parts of Brazil, the government has ordered utilities to switch on gas-fired plants that are more expensive to operate as dams that account for more than 70 percent of the country’s generation capacity run short of water. Petrobras, as the state-run crude producer is known, is the only Brazilian importer of LNG, which it processes at three plants before supplying power producers. The company acquires LNG on the spot market based on domestic demand, rather than through long-term contracts. Petrobras is buying LNG at about $18 to $19 per million British Thermal Unit and selling it in Brazil at subsidized prices of $11 to $12, said Tavares, who was the head of gas marketing at Repsol SA’s Brazil unit before co-founding Gas Energy in 2005. Last year, LNG accounted for 14.5 percent of Petrobras’s total gas supplies, up from 8.4 percent the previous year, according to company earnings reports published Feb. 25. The company imported 64 shipments of LNG in 2013. Press officers at Petrobras didn’t have an immediate comment when contacted by e-mail. Petrobras acquires gas on the spot market during the year based on domestic demand, Jose Alcides Santoro, the company’s director for gas, said in a Feb. 26 press conference. YPF SA is South America’s largest buyer of LNG. For Related News and Information: World Cup Blackouts Ruled Out by Brazil in Heat Relief Bet (1) NSN N0KT0U6KLVRS Brazil Dry Spell Pushes Up Power Price and Dims Crop Outlook (1) NSN N0AAF66TTDT8 Petrobras Loses From Sale of Cheap Natural Gas: Corporate Brazil NSN MG3SND6JIJWC Petrobras News: PETR4 BZ CN Petrobras financial analysis by product:PETR4 BZ FA PROD --Editors: Carlos Caminada, Stephen Cunningham To contact the reporter on this story: Rodrigo Orihuela in Rio de Janeiro at +55-21-2125-2517 or rorihuela@bloomberg.net To contact the editor responsible for this story: James Attwood at +56-2-2487-4019 or jattwood3@bloomberg.net

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