Alagoas state administration hopes to attract industrial investors with cheap gas supplies

The Brazilian state of Alagoas has been expanding its efforts to attract industrial investors seeking access to less expensive natural gas supplies, according to a report from Argus Media. This initiative is primarily being fuelled by changes in state laws, as well as the divestment process of Brazil’s national oil company (NOC) Petrobras, which has created opportunities for more oil and gas companies to invest in upstream projects in the region.

According to the state’s Economy Secretary George Santoro, Alagoas is aiming to expand its gas distribution grid and ultimately shift its focus from LPG service in vessels to residential gas consumption. Taking this approach will allow Algas, the local gas distributor, to keep revenues stable as large industrial consumers shift from unilateral purchases of LPG in cylinders to contractual agreements with upstream suppliers, he told Argus Media last week.

Santoro further revealed that Alagoas is updating the state’s legal regime in an effort to facilitate gas distribution efforts in the open market. This update is expected to secure full approval by June, he said.

In light of Petrobras’ divestment programme and the latest shifts in the gas industry, which is being liberalised, several new investment opportunities are emerging in the state. These include upstream production operations led by Origem Energia, as well as new projects led by ExxonMobil, which is looking to launch exploration work this year.

Since Origem resumed gas production just two months ago, Santoro told Argus Media, Alagoas has shifted from exporting its gas to other states to using its production to meet its own needs. The state now projects that rising output at onshore gas fields will bring Alagoas’ gas production back to the levels that prevailed in the 1970s, he said.

Santoro further explained that he expected gas to play a critical role in the state’s energy transition, particularly since Alagoas does not have any wind or solar generation capacity yet. He pointed out, though, that the state was working to expand its biomethane and biogas production. Alagoas is home to one biomethane production plant Alagoas at present, and the state is currently exploring 13 sugarcane mills as potential locations for biogas generation plants, he said.