Southern Cone gas and power short-term outlook: August 2024

Aiming to reduce historically high domestic gas prices, the Brazilian government has enacted the "Gás para Empregar" decree. In the short term, however, Bolivia and Argentina have a strategic opportunity to capitalize on Brazil's elevated prices by increasing gas exports to the country in Q4 2024. This opportunity arises as Brazil faces surging demand driven by heightened gas-fired power generation, a necessity due to one of the driest years on record, particularly in the SECO and North regions, marking the 7th driest year in 91 years. While poor hydrology is affecting the entire Southern Cone, Chile's record-high reservoir levels and robust renewables penetration have minimized the need for increased thermal generation, contrasting with the situation in Brazil.