Baker Botts Examines Rising LNG Imports in Latin America

In a recent CWC LNG & Gas Leader’s Forum newsletter article, Baker Botts partner Hannah Longley analyzes how natural gas continues to gain momentum in South America and how countries are seeking greater flexibility of supply to grow the energy opportunity.

Rising potential for LNG imports has put Latin American under close evaluation in the recent years. “With imports rising in Argentina, Brazil and Chile there is recognition of the potential for Latin America to become a key market… there is speculation that Latin America will experience rapid rates of growth and a significant increase in imports over the next few years,” Longley notes in her article.

It is known that Brazil first began importing LNG back in 2009 with FSRU’s entering production with LNG carrier supplied by Golar LNG. Today, four service terminals are working on LNG production in Brazil. “Petroleo Brasileiro SA (Petrobras) is the second largest buyer of LNG in South America and is Brazil’s only importer of LNG. Petrobras acquires LNG on the spot market during the year based on market demand,” Longley stated.

Unfortunately, throughout the past few months, Brazil has been experiencing a “drought” thus pushing the need for increased LNG imports in order to compensate for shortfalls in hydroelectric power output. However, surprisingly Longley mentions, “Further north, Mexico has recently been increasing LNG imports as it experiences rising demand, lower domestic rates of production and pipeline bottlenecks for the supply of gas from the US. “