Southern Cone gas and power markets short-term outlook May 2021

The Southern Cone region is facing severe dry hydrological conditions. Brazil’s main reservoirs are at 32% level, which resulted in a 121% (May, year-on-year) increase in gas to power generation. Amid this dramatic gas demand increase for power generation, Petrobras scheduled for August the maintenance of the Mexilhão platform and several thermal plants. Chile is also facing a shortage of hydropower, and average spot prices in May resulted in US$80/MWh. There is good news for Argentina’s gas supply. The net gas production in May increased 7% compared to April, and also the Excelerate Exemplar starts regas commercial operations in June in Bahia Blanca. But hydro is also underperforming in Argentina.