Gas storage makes first steps in Brazil

Gas storage makes first steps in Brazil

Sao Paulo, 2 May (Argus) — Natural gas storage is starting to appear more frequently in investment plans in Brazil's new gas market as a possible solution to lower reinjection, providing flexibility for thermal power generation and balancing services for pipelines or to meet take-or-pay requirements.

But unclear costs and pending regulation may hinder storage expansion. And Brazil's large variety of energy sources and interconnected power grid allows for broader, less expensive and more flexible service options, which gas may have trouble competing against.

The April 2021 gas law allows storage operations under a permit instead of the old concession model, which requires entrepreneurs to allow third-party access. But oil and gas regulator ANP has not yet released new rules on defining costs and fees to use such facilities.

"Gas storage is about providing flexibility for energy supply, and this is the cost that needs to be addressed for investments to start to happen," said Adrianno Lorenzon, gas director at the large energy consumers association Abrace. "And it is starting, since some companies are adding gas storage to their business plans."

But in Brazil, gas storage can help producers reduce reinjection rates, or how much gas is put back into an oil well to