Brazil gas and power long-term outlook

If the ‘Novo Mercado de Gas’ program can increase competitiveness in the Brazilian gas market, the main drivers for new gas pricing regimes will be fundamentals and the supply cost curve. For fundamentals, gas fired power plant demand will change dramatically in the upcoming years due to: Run-of-the-river hydro in the North, large scale renewables penetration in the Northeast and the new gas prices for the gas supply re-contracting. The supply cost curve will be given by a mix of declining production in Campos and in the mid-term Lula-Iracema and Sapinhoa and new giant fields such as Buzios, BM-C-33 and Sergipe-Alagoas deepwater.