Trucks to coexist with pipes in Brazil’s gas market

Trucks to coexist with pipes in Brazil’s gas market

Trucks to coexist with pipes in Brazil's gas market

Sao Paulo, 11 April (Argus) — Brazil's natural gas industry is looking toward trucks to avert pipeline bottlenecks, expand consumption regionally and partially replace household LPG use as LNG freight is less than $1/mmBtu above LPG freight.

LPG logistics specialist firm Contatto estimates it costs $1.079/mmBtu to truck LPG 600km, while the same amount of LNG would cost $1.99/mmBtu to truck, with both rates excluding taxes and tolls.

"The cost difference for a maximum 600km route freight is not substantial to determine the fuel," Contatto executive director Walter Vighy said. "The terms of the supply agreement are decisive in the fuel option, whether on-the-spot or long-term, and the place of delivery. For longer distance routes, above 2,000km, the freight difference from LPG to LNG can reach $3-4/mmBtu. Even so, for the current [gas and LPG price] levels, these values have a low impact on the decision."

The lack of transportation pipeline capacity in Brazil is among the hindrances to expanding natural gas consumption. Compressed natural gas carried in trucks is perceived as a threat to LPG for large consumers, but not yet for medium and small volumes, a market source said.

Gas transportation pipelines in Brazil