Grupo de Economia da Energia

Posts Tagged ‘english version’

Exploration and production of oil and gas in deep waters: evolution and trends – Part III

In natural gas, oil on 02/01/2012 at 00:30

By Thales Viegas

The first two articles about E&P in deep waters (*) characterized this activity at the global and domestic levels. Aspects such as the importance and attractiveness of this business can be identified as factors that contributed to increase investments, offshore discoveries and production in deep waters.

This article will discuss the process of technological learning and investments in research and development (R&D) made by oil companies. The goal is to encourage attention about the emergence and consolidation of new technologies. It is also demonstrates that increased innovative efforts by oil companies indicates an increasing search for technological ability, in order to counterbalance rising costs.

However, the maturity of a set of technologies and their domain by agents is a process that requires practice and time. In this context, we have to analyze some limits and technological opportunities arose during the development of skills for operating in deep waters, especially in the case of Pre-salt. Continue lendo »

The evolution of the Brazilian government’s natural gas policy

In natural gas on 05/12/2011 at 00:37

By Marcelo Colomer

Almost a year after Decree 7,382 by the former President of the Republic Luiz Inácio Lula da Silva, a seminar was held in Brasilia on the challenges of the new regulatory framework for the natural gas industry in Brazil. The event occurred in the last 29, from a joint initiative of the Ministry of Mines and Energy (MME), National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Energy Planning Company (EPE).

The main objective of the event was to discuss with the sector agents the main challenges for implementing the new regulatory framework for the natural gas industry. According to the MME Secretary, Marco Antônio Almeida, there is recognition that Act 11,909 and Decree 7,382 do not cover issues relating to gas regulation, thus requiring additional regulatory acts. According to him, this is a major challenge for MME and ANP. Helder Queiroz, ANP Director, states that development of new resolutions and ordinances and review of regulatory acts in force are essential to bind ANP rules to the new industry’s regulatory framework. Continue lendo »

Pre-salt: an obstacle to renewable energy?

In oil, renewable energy on 28/11/2011 at 00:09

By Edmar de Almeida 

Recent accidents involving oil spillage in the Gulf of Mexico and now in the Campos Basin raise an issue on Pre-salt exploitation in Brazil: Would Brazil going through an irrelevant adventure with the imminence of substituting renewable energy sources by oil?

This question is linked to the idea that oil is a former energy and there is no worth to mobilize society’s resources in a business doomed to shrink and disappear quickly. This idea has no support nowadays.

Prediction studies of global energy matrix show oil and natural gas still prevailing in long-term horizon. According to the International Energy Agency, these energy sources, together with other fossil fuels, will account for 75% of global energy matrix in 2035, the most optimistic scenario for renewable energies.

This type of prediction is confirmed by other government agencies and major energy companies worldwide. We can say that oil and gas will keep a prominent role in the long transition to a decarbonized economy. Thus, Pre-salt is a significant comparative advantage for Brazil. Our country could take a leading role in the energy transition, not only because of its large endowment of oil and gas, but also because of its significant potential for renewable resources. Continue lendo »

The future of biofuels X: the two sugar rushes

In biofuels on 21/11/2011 at 00:30

By José Vitor Bomtempo

In the rush to develop new processes and products that will compose the bio-industry of the future, searching for suitable feedstocks is a strategic point, especially in the case of biotechnology-based processes. As some innovative projects try to overcome the original stage and make scale up to demonstration and commercial one, ensuring access to feedstocks becomes critical. For many of these processes, and probably for the most innovative ones, sugar is feedstock of choice.

As a consequence, a real sugar rush similar to gold rush for bioprocesses occurs. In fact, evidenced in recent months not only one but two sugar rushes: a more immediate and commercial / strategic nature one, in order to ensure the best sugar that exists today – the Brazilian sugarcane – and other one with technological nature to seek the plentiful sugar existing in plants in general (2/3 of the lignocellulosic material is composed of sugars: cellulose and hemicellulose). Continue lendo »

Reduction of CO2 emissions: distributing costs and sacrifices

In energy on 07/11/2011 at 00:49

By Ronaldo Bicalho

According to our last article, thinking about the transition between the current economy based on intensive use of fossil fuels and a future economy relying on renewable energy as a defined process with a single trajectory, a single timing and unique content, is a simplification that does not help in understanding the nature of this transition, its possibilities and hindrances.

Indeed, the transition is an undefined and open process with multiple paths, content and possible times.

In other words, there is no a single transition, but various transitions.

In this sense, analyzing nowadays the possible evolution of the energy sector in the world involves the analysis of these various transitions.

Mapping transitions

To identify these different possibilities of transition it is essential to map the different ways of noting the trade-off energy security versus climate change and the various forms of facing it.

Thus, we can consider generally the reduction in the intensity of the climate change process as the main objective and, thereafter, to evaluate the type of negative impact (cost) the reduction of CO2 emissions has on energy security, according to several hypotheses to achieve this reduction. Continue lendo »

Exploration and production of oil and gas in deep waters: evolution and trends – Part II

In natural gas, oil on 24/10/2011 at 00:50

By Thales Viegas

Our last article concerning E&P in deep waters attempted to place this industry segment in the deepest part of Global Oil Industry (GOI). This approach aims to analyze the oil activities in Brazil carried out in great depths. It demonstrates the high rate of exploitation success and leadership of the country in regard to the greatest discoveries of the decade. It debates the virtuous circle on new discoveries. It considers the Brazilian remaining potential and high degree of attractiveness, in general, and the Pre-salt province, in particular. It highlights that the magnitude of reservoirs and quality of hydrocarbons found are relevant stimuli for international oil companies.

Pre-salt has been showing one of the largest oil structures in the world. In Brazil, Pre-salt pushed up the success rate in drilling wells. Table 1 shows the extraordinary success of the drilling in the Pre-salt, in the Lula field (former Tupi), in the Santos Basin. Pre-salt province’ success average is greater than world’s one. This indicates that the exploration risk in this environment has been low in the Pre-salt in relation to the alternatives around the world. By the early 2000s the national average was consistent with average rate of success in the world, which has ranged around 25%. Continue lendo »

Environmental regulation: an obstacle to shale gas extraction?

In natural gas on 03/10/2011 at 00:15

By Edmar de Almeida & Luiz Suárez 

Shale gas is a type of unconventional natural gas in low permeability sedimentary formations. Unlike conventional gas, which migrates from rocks to reservoir rocks, this unconventional gas is trapped, because the low permeability hinders its escape. This characteristic prevented for a long time such gas extraction of, since there were no technologies able to promote its removal from shale formations.

Due to horizontal well drilling and hydraulic fracturing advent this paradigm has been overcome. This process consists of pumping sand and water under high pressure with other chemicals in the well in order to fracture the shale formations through slots opened initially by using “perforating gun”, allowing the release of gas from sedimentary formations into the well.

This technique was responsible for increasing greatly the recoverable natural gas resources of the world. In the USA, for example, 24 trillion out of 71 trillion cubic meters of total recoverable reserves is related to reserves of shale gas, according to International Energy Agency (IEA). This scenario changed significantly, and USA, as former LNG importer, became one of potential natural gas exporters.

By confirming that it was possible to extract gas from shale formations, natural gas already considered as a transition fuel to clean energy sources had this role reaffirmed. Not everything is a bowl of cherries; this new opportunity to obtain natural gas has been accompanied by questions about the negative impacts that hydraulic fracturing may cause on the environment. Continue lendo »

Energy security and climate change: the hard convergence

In energy on 19/09/2011 at 00:30

By Ronaldo Bicalho

Two main issues dominate the current debate about energy: climate change and energy security.

Initially, these issues belong to different areas of public policy; however, the recent development of events, both in energy and environment levels, made the interdependence between them increases significantly.

According to this, the peculiarity of the current moment is not simply the presence of the environmental issue – climate change – in the energy debate, but the prominence acquired by the subject in the evolution of the current energy situation. As a result, it is not enough to recognize the need to incorporate the environmental variable in the debate, but recognize the need to incorporate it as a relevant issue as energy issue (energy security) is addressed.

The need to balance environmental and energy dimensions in the discussion on energy results from the strong presence of fossil fuels in both climate change and energy security.

For the environment area , fossil fuels are the main cause of climate change as a function of temperature increase generated by the concentration of greenhouse gases in the atmosphere; in particular, the CO2 from burning fuels.

For the energy area, fossil fuels play a key role for ensuring the energy supply necessary for economic development and social welfare, due to a set of attributes – capacity of storage, density, availability and control – which allows the use of these fuels at scale levels and cost extremely advantageous. Continue lendo »

The future of biofuels IX: The diversity of strategies and future of bio-economy – by comparing Shell, Braskem and Amyris

In biofuels on 05/09/2011 at 00:30

By José Vitor Bomtempo

In previous articles, we have studied the oil companies’ biofuels strategies. In particular, we discussed the Shell, BP, Total and Petrobras’ activities. The main conclusion from these analyzes is a diversity of view and approach to “biofuels” business.

In this article we will extend the discussion about the diversity of strategies that can be observed in the development of bio-economy, by comparing Shell, Braskem and Amyris. This comparison illustrates the remarkable variety of strategies for innovation and entrepreneurial initiatives that indicates the construction of the bio-products industry.

There are many ongoing projects worldwide involving technology-based start-up alongside companies established in different industries such as oil & gas, chemical, biotechnology, and agribusiness. How have companies been building their history in the new industry? Are these strategies converging or diverging? Continue lendo »

Exploration and production of oil and gas in deep waters: evolution and trends – Part I

In natural gas, oil on 15/08/2011 at 00:30

By Thales Viegas

The offshore exploration and production of hydrocarbons is not new. The first activities would have occurred even at the beginning of last century, in the Gulf of Mexico, USA. They were performed from the adaptation of equipment and onshore exploration techniques. Since then, many technology and operating changes in the oil and gas upstream have occurred. And then, many features previously considered inaccessible or uneconomical have become the object of interest and economically recoverable reserves.

This article will address the potential for discovering resources and the level of reserves in deep waters. Continue lendo »

Fossil fuels and global warming in the complex energy policy game

In energy on 08/08/2011 at 00:30

By Renato Queiroz

By formulating and re-evaluating energy policies, countries face an issue: future energy matrixes should reflect the actions to decrease at an increasing rate the burning of oil, natural gas and coal, in order to stop the increasing concentration of (CO2) carbon dioxide emissions. This issue is followed by reports made by recognized organizations, such as those by Intergovernmental Panel on Climate Change (IPCC), warning that if such actions do not occur there will be rising of sea level, droughts in some regions, climate changes, etc.

Another example is the document published by the Asian Development Bank, on August 2, 2011, “Asia 2050”, whose findings were published recently by the press.  Established in 1966, such institution, whose objective is to promote economic growth for developing countries in Asia, warns in the document mentioned that the impact of climate change is among the main obstacles to the region to recover the dominant economic position before the Industrial Revolution. Continue lendo »

What the impacts on the current revolution market of the shale gas?

In natural gas on 25/07/2011 at 00:15

By Edmar de Almeida 

The development of technologies for production of shale gas has been considered a revolution for business and economics of natural gas. Many agents and even the U.S. government believe that unlinking price of natural gas from price of oil in the United States is a structural phenomenon that reflects the new technological and geological context of the natural gas industry. There is a perception that the technological revolution of shale gas will affect permanently not only the U.S. gas industry, but also the global gas trade. Those believing this structural show the following arguments to support this view:

  • The current shale gas resources in the USA are equivalent to 3.5 times the volume of all proved reserves in the USA today. Moreover, the availability of shale gas resources is not restricted to USA. A recent survey conducted by Department of Energy (DOE) has pointed out the existence of large volumes of shale gas resources in 48 sedimentary basins in 32 countries, including Brazil, Argentina, Bolivia, Uruguay and Paraguay.
  • The technological learning process in the last 10 years has reduced dramatically the cost of producing shale gas. The main innovations were: i) reduction of the time for drilling wells, ii) improvement of horizontal drilling techniques, iii) improvement of geological knowledge in production areas, iv) development of hydraulic fracturing technology and standardization of equipment. These innovations have reduced production costs to less than US$ 3 per MMBtu, in the best producing areas. Continue lendo »

From fossil fuels to renewables: the hard energy transition

In energy on 18/07/2011 at 00:30

By Ronaldo Bicalho

To prepare an energy policy that manages the hard transition from a fossil fuel economy to a low carbon economy is not an easy task.

The massive replacement of fossil fuels by renewable energy sources involves significant technological, economic and institutional changes. These changes go beyond the energy sector and cover subjects related to a set of values associated with the crucial role of energy in economic development and social welfare and relationship with natural resources and environment derived precisely from this centrality.

The compatibility between the imperatives of energy security and climate change, by penalizing fossil fuels and incentives to renewables, has been demonstrated much more complex than previously conceived.

The idea of bringing together the best of both worlds – the self-sufficiency and low emission, increased energy security and combat the factors causing climate change – concerning the expansion of renewable sources in the energy matrix has been facing relevant technological, economic and political-institutional obstacles.

The first obstacle is technological and concerns the requirement of significant advances in renewable technologies so they can actually compete with traditional technologies. These advances are related to overcome the problems associated with low capacity of storage, density and scale characteristics of the current stage of development of renewables. Continue lendo »

The future of biofuels VIII: The contrasting strategies of major oil companies and the future of the bio-economy

In biofuels on 04/07/2011 at 00:30

By José Vitor Bomtempo

The recent Ethanol Summit organized by UNICA in São Paulo, on June 6th and 7th, it seemed to be an interesting event for the line of reasoning that we have developed this series of articles. In some way, the Ethanol Summit addressed clearly – for the first time, I guess, in a relevant event in Brazil – the issue of industry of the future. Of course, many subjects of specific interest for Brazilian ethanol industry were highlighted and addressed in most, but some plenary sessions and meetings on Future and Technology addressed issues not so urgent.

Due to the Ethanol Summit, we propose a change in this blog that seems to be consistent with what we have developed: no more talk about biofuels of the future but we will talk about he new industry which includes in addition to biofuels, bio-products, biorefining and other bios that may arise. How should we name this industry?   As initial suggestion we have chosen bio-economy, which seems pretty comprehensive. Thus, we can say that the Ethanol Summit has provided a discussion of a number of questions related to the development of bio-economy worldwide and particularly in Brazil. In fact, all the videos of conference and plenary sessions can be watched here.

We will highlight in this article the plenary session O futuro do petróleo e o papel dos biocombustíveis (The future of oil and role of biofuels). The plenary session brought together executives from four major oil companies on biofuels: BP, Petrobras, Shell and Total. Continue lendo »

The future of shale gas and dynamics of the natural gas industry

In natural gas on 06/06/2011 at 00:30

By Marcelo Colomer

The development and improvement of horizontal drilling and hydraulic fracturing techniques have allowed the expansion for production capacity of natural gas in low permeability geological formations, especially in shale formations. In this new exploitation context, there is a growing shale gas production in the USA and Canada, where the increase in domestic supply of natural gas has completely changed the energy market.

However, despite the increase in Canada and USA shale gas production, there are still major uncertainties about the productive potential of natural gas in low permeability geological formations. This is explained not only by lack of geological data in specific shale formations, but also by high and still little-known environmental impacts of the shale gas production. Continue lendo »

Energy security and climate change: different views, several policies

In energy on 23/05/2011 at 00:30

By Ronaldo Bicalho

Energy security and climate change are the two main axes currently surrounded by the energy policies in the world.

Then, to ensure the supply of energy and reduce emissions of greenhouse gases have become major strategic objectives of Nation States in the energy field, with significant impact in the desired composition of the future energy matrix and setting the most appropriate strategies to achieve it.

However, the evaluation of the real consequences of these two objectives at the heart of energy policy needs a qualification. Especially, because Nation States perceive, hierarchized and insert into their set of public policies such goals, which, after all, translates into the amount of resources that, in fact, these States are willing to mobilize to achieve them. Continue lendo »

Ethanol: from promise to problem

In biofuels, ethanol on 16/05/2011 at 00:30

By Luciano Losekann

Until recently, the Brazilian government highlighted the country as a world’s top ethanol exporter. Accordingly, in 2007, the Brazilian government published a study indicating the possibility of Brazil using  ethanol to meet 5% of global gasoline consumption and, with more advanced techniques, such portion could reach 10% in 2025 [1], with a production of 205 billion liters of ethanol in the country.

Four years later, perspective is completely different. The recent scenario of ethanol in Brazil is characterized by difficulties in supplying the fuel, high prices and need to import the product.

In April, prices of hydrous ethanol and anhydrous ethanol in power plants in São Paulo showed the maximum value ever of the past 10 years. On average, the price of hydrous ethanol at gas station reached 40% over the same period in 2010. As the price of anhydrous ethanol mixed with gasoline tripled during the same period, the price of gasoline was also affected, increasing 15%. Continue lendo »

The future of biofuels VII – what does Brazilian role?

In biofuels on 09/05/2011 at 00:30

By José Vitor Bomtempo

In last article, we discussed the Petrobras strategy, arguably the most important actor in the future of energy in Brazil. We can infer from the initiatives of the company an effective participation in the biofuels industry. But this participation seems to occur in a view more committed to the current industry – so-called first-generation – than with the industry of the future – so-called advanced biofuels and other bio-products.

This perspective is supported when comparing Petrobras with other major oil companies such as Shell and BP (see the previous articles, the future of biofuels IV and V), which combine position in the current industry and a strategy for building new industry. Total is other oil company that has increased interestingly its portion on biofuels of the future. Total will be back on the next article. The question today is to examine the Brazilian role in the industry of the future and for this we must examine beyond the role of Petrobras. Continue lendo »

Effects of high oil prices: the accumulation of oil revenues in the OPEC countries

In oil on 02/05/2011 at 00:30

By Helder Queiroz*

In the article “The crisis in the Arab world and price of oil we highlighted that the volatility of prices would remain as a consequence of the sources of uncertainty. These are associated with political instability in the Arab countries and the need for restoration of geopolitical relations established between producing and oil importing countries.

At the end of the first quarter of 2011, some of the consequences of the conditions of volatility and high prices in international oil market must be reviewed.

Three high-interdependent aspects should be highlighted and qualified. Continue lendo »

Prices, costs and new regulatory framework for oil

In oil on 25/04/2011 at 00:30

By Thales Viegas

The production sharing agreement, in Brazil, changes significantly the role of costs and prices in oil activity regulation. First, costs have become the decisive factor for determining the surplus oil to be shared. Second, the price of oil may not only be a reference to the monetization of oil for each agent involved, that is, the price which pays the oil purchased by agent. It can also influence the magnitude of the sharing, if the price is a variable in the calculation that defines the percentage of surplus for the government. In some countries, to share profit oil with the government depends upon the price of oil. That is, the higher the price of oil, the greater the government’s portion for the profit oil.

By deduction, the production sharing agreement may fix the involvement of government in production, but also can allow it to alternate according to contract items previously agreed. Given the centrality of price and cost variables, the following analyses attempt to explain the interdependent dynamics of these two items. Continue lendo »

Impacts of the earthquake and the japanese nuclear crisis on the international natural gas market

In LNG, natural gas on 18/04/2011 at 00:20

By Marcelo Colomer & Edmar de Almeida 

One of the few existing consensus among energy experts at the moment is the recognition that the energy crisis, in particular the nuclear crisis in Japan after the great earthquake of March 11, will tend to benefit the international natural gas market. Many experts were in rush to point out a rapid redemption of the natural gas market after nearly three years of depressed prices. In fact, the price of natural gas and oil suffered a sharp drop from the 2008 crisis, remaining at a very low level, even after the recovery of price of oil in 2009. This expected price recovery in the gas market is considered as great relief by sector agents, although a more careful analysis of the current context of the market reveals that recovery may take longer than expected. Continue lendo »

Fukushima Nuclear Accident: a dilemma for the world energy planning

In nuclear energy on 11/04/2011 at 00:30

By Renato Queiroz

The accident in Fukushima Daiichi power plant, located about 250 km from Tokyo, and the classification of the French Nuclear Safety Authority (ASN) on the explosions occurred in the Japanese generation plant that reached the level 6 (serious accident), in an international scale for nuclear events until level 7 [*] engraved energy experts worldwide. That adds a strong element of uncertainty for the global nuclear industry.

The INES level (6) means serious accident, stating that there was release of radioactive material and as consequences the adoption of measures to protect the population in the affected area.  This reflects the world public opinion, causing major concerns and pressure against the generation of electricity through this source.

Shortly after the accident, some experts, under the impact of the tragic news and images in real time, agreed with the thesis that the revival of the nuclear industry was being aborted.  Perhaps the question not discussed is: Without using nuclear energy, how can we meet the increasing consumption of energy required by societies in the coming years in a context of reducing emissions of greenhouse gases? Continue lendo »

Flex-fuel vehicles: understanding the choice of fuel

In biofuels, ethanol on 21/03/2011 at 00:31

By Luciano Losekann and Gustavo Rabello de Castro(*)

As previous article, models that allow you to choice fuel, gasoline or ethanol, rule cars for sale in Brazil. Flex-fuel vehicles already represent 46% of the Brazilian light vehicle fleet, whose portion should rise continuously.

Thus, most car owners can choose the fuel they use at the time of fueling. Thus, the demand for gasoline and ethanol becomes more volatile. Although other factors influencing consumer choice, such as autonomy and environmental impact, the relative price of fuels is the predominant criterion of choice. Continue lendo »

The future of biofuels VI: Petrobras’ strategy

In biofuels on 14/03/2011 at 00:30

By José Vitor Bomtempo

In the previous article, we compared the BP and Shell’s strategies for biofuels. Today we present the case of Petrobras. We have to recall the reasons for the analysis. We start with a basic distinction between competition within the existing industrial structure – ethanol and biodiesel – and the competition in what we call biofuels and bioproducts industry of the future – new processes and new biofuels and bioproducts. In the first case we have a typical competition based on positioning within a known industrial structure. In the second case, the industrial structure is not yet established, and the basis of competition is the ability to innovate and shape the new industrial structure. These points are developed in more detail in previous articles of this the series.

It is also important to note that the first-generation biofuels industry conversion technologies are available to investors from accessible external sources such as engineering/technology companies and equipment manufacturers. In the biofuels industry of the future – based on innovation in new commodities, new processes, new products – a fundamental change is to move the source of technology into the companies; thus, the technology tends to be much more advanced in bioproducts of the future and, therefore, owned. Therefore, there are large differences in the technological strategies of the current industry and the future of the industry. Continue lendo »

The crisis in the Arab world and price of oil

In oil on 28/02/2011 at 00:30

By Helder Queiroz

The current political crisis in the Arab world is already causing upheavals in the international oil market. After the worsening crisis in Libya, an OPEC member with production around 1.5 million barrels, the international prices of crude oil have risen significantly in recent days, reaching the level of US$ 108 per barrel for Brent crude.

The degree of uncertainty in the markets and the resulting volatility of prices tend to increase in the coming days, due to unpredictability for the political and economic consequences in Libya, but especially on possible developments in other OPEC countries.

Thus, the greatest fear of the agents operating in that market is about the possibility of disruption of supply. Under these conditions of uncertainty, the oil futures market is more active, multiplying significantly the number of transactions, causing an upward trend. This aspect is not particularly recent. In mid-2008, prices reached the level of US$ 145 and dropped to almost half that value at the end of that year. Continue lendo »

A future agenda for biofuels policy in Brazil

In biofuels on 17/01/2011 at 00:30

By Renato Queiroz

The Brazilian Association for the Study of Energy – AB3E – held on December 14, 2010, in Rio de Janeiro, a seminar to discuss the agenda for the Brazilian energy policy for the next administration. In the specific panel, where agenda for biofuels was discussed, there were two approaches: one from representative of Petrobras, Eduardo Correia, Competitive Strategy area, who identified a number of critical uncertainties that influence strongly the biofuels market, developing initially from these uncertainties four exploratory scenarios and selecting two scenarios for the next 20 years, and the other one from professor José Vitor Bomtempo, Energy Economics Group, who assessed the future of the biofuels industry in a strategic approach with assumptions that break current paradigms.

This article presents the considerations from these experts and question on the topic that will surely be discussed by energy policy agenda developers for future years. Continue lendo »

Recent development and trends in pricing in the global LNG market

In LNG, natural gas on 29/11/2010 at 00:52

By Edmar de Almeida

The global Liquefied Natural Gas (LNG) trade has experienced an enormous expansion in the last two decades. This expansion was accompanied by an important evolution in pricing and types of contracts for LNG trade. Traditionally, LNG trade was supported by long-term contracts with a pricing trying to link the price of LNG to the competing fuels (oil or its byproducts). Until now, this sort of trade prevails in the LNG markets in Asia and parts of Europe.

The liberalization of gas markets in North America and some European countries allowed the appearance of new rules on pricing of natural gas. With the gradual increase of gas-gas competition, some short-term and spots markets were developed, allowing the use of new indexes for natural gas trade. Concurrent with the appearance of gas spot markets in North America and Europe, we have witnessed a fast development of the LNG market in the Atlantic Basin. The regasification capacity of the Atlantic Basin is now approaching half of global capacity. United States and United Kingdom, as an example, had stopped importing LNG in the 1980s, and returned to import LNG in 2000.

Continue lendo »

Brazil: The Pre-salt and State control

In oil on 22/11/2010 at 00:34

By Ronaldo Bicalho

The ongoing changes in the institutional framework related to oil exploration in the Pre-salt includes an overview of the strategic role to be played by the Brazilian petroleum sector different from that one defined previously, both with respect to the newly global Brazilian insertion and supporting conditions of such insertion.

The core of this change is focused exactly on expansion of the State control over the exploitation of the Pre-salt resources, in order to achieve maximum benefits from such exploitation, under a long-term strategic perspective that transcends the boundaries of the oil industry.

Thus, changes related to the institutional framework of the Brazilian oil sector is not a merely discussion about the advantages and disadvantages of exploitation systems – concession agreement versus production sharing agreement -; advantages and disadvantages of Petrobras’ interest in all consortia; advantages and disadvantages of Transfer of Rights and Petrobras’ capitalization; advantages and disadvantages of establishing a new state-owned company; and so on. Continue lendo »

The future of biofuels V: Shell and BP’s strategies

In biofuels on 25/10/2010 at 00:30

By José Vitor Bomtempo

In previous article, we discussed the nature of competition and innovation in biofuels. In the classification proposed, the essential issue was a basic distinction between competition within the existing industrial structure – ethanol and biodiesel – and the competition in what we call biofuels and bioproducts industry of the future – new biofuels and bioproducts. In the first case, we have typical competition based on positioning according to Porter. A competitor becomes competitive upon finding a favorable position within the existing industrial structure.  In the second case, the industrial structure is not established yet, and the basis of competition is Teece capabilities building that seek make feasible opportunities for innovation and shaping the new industrial structure.

It is also important to note that the first-generation biofuels industry conversion technologies are available to investors from accessible external sources such as engineering/technology companies and equipment manufacturers. In the biofuels industry of the future – based on innovation in new feedstocks, new processes, new products – a fundamental change is to move the source of technology into the companies; thus, the technology tends to be much more advanced in bioproducts of the future and, therefore, owned. Continue lendo »

The divergent integration of the natural gas and electricity industries in Brazil

In electricity, natural gas on 20/09/2010 at 00:30

By Luciano Losekann

The movement of convergence of the natural gas and electricity industries characterized the global energy industry over the past 20 years. In OECD countries, the use of natural gas for generating electricity increased at a rate of 6% per year during this period and its participation in the generation matrix increased from 9% to 23%. Currently, the portion of natural gas is higher than nuclear one and lower than coal one.

Some dynamic factors explain this: (i) the discovery of significant natural gas reserves and interconnection of markets have changed the perspective, especially in Europe, natural gas as a product with limited availability and reserved for more noble purposes, (ii) the expansion of combined cycle turbines causes generating electricity from natural gas more efficient, increasing its competitiveness against other sources, and (iii) liberalization of industries reduced institutional barriers to new entrants. Continue lendo »

The future of biofuels IV: Brazilian position

In biofuels on 06/09/2010 at 00:40

By José Vitor Bomtempo

In the previous article, we discussed the nature of the ongoing innovation process. The importance of this process is that its evolution will define the structure of biofuels and bioproducts industry of the future. As a result, policies and strategies regarding the future of the biomass-based industry can not ignore this new structure under construction, due to losing current competitiveness later.

Our previous analyzes suggest that there are interesting opportunities ahead. The essential question is: Have strategies and policies in Brazil taken into account the opportunities and threats that this process brings us? Or do we believe undoubtedly that our competitive ethanol from sugar cane – which gives us an enviable competitive position in the current industry – is enough to ensure a prominent position in the industry of the future as well?

The two questions above summarize an issue that seems crucial to consider: competition in the industry of the future tends to be considerably different from what we have today in ethanol industry. The fact that we are leaders in this game – the first-generation biofuels – ensures us not necessarily a leadership position and even a prominent position in the industry of the future. Continue lendo »

The inexorable interdependence of Brazilian energy policies

In energy on 30/08/2010 at 00:30

By Helder Queiroz

The discussion on energy issues has been guided, at international and national level, about the future of the production and use of energy sources, which can not be any longer dissociated from policies that aim to achieve 3 goals simultaneously: security of energy supply, decreasing of energy dependence by Brazilian states and mitigation of impacts of climate changes caused by greenhouse gases, especially from the burning of fossil fuels. There is nothing trivial in reconciling these objectives, and they indicate probably an increasing importance of the binomial Energy-Technology in the process of finding solutions.

In the case of the energy industries, there are negative externalities, in variable degrees, regarding the production and use of all means of energy. For this reason, the State plays a fundamental role in both establishment of energy policy guidelines and application of economic and tax instruments required to mitigate externalities and securing energy supplies.

In Brazil, for decades, the guidance for energy policies, since the first oil crisis, implemented by many governments, was the attempt to achieve self-sufficiency in oil. This is an outstanding aspect of government guidelines for the Brazilian energy sector. The results are widely known. Although Brazil has to import light oil to balance its refining process, the degree of dependence in oil imports is now close to zero. And the possibilities unveiled with the important findings of the Pre-salt, even with major technological and institutional challenges to address and overcome, set the country in a privileged position regarding the allocation of energy resources. Continue lendo »

The future of biofuels III: The innovation process that is building the industry of the future

In biofuels on 16/07/2010 at 00:30

By José Vitor Bomtempo

In the previous article, we presented a debate about points that can justify our central premise:  in the future, the industrial use of biomass will be very different from the current industry. The World Economic Forum has just published “The future of industrial biorefineries”, a report that reinforces the idea of a new industry under construction.

Note that this is the first work of the Collaborative Innovation Initiative group, established in 2009 to identify important trends in the global economy and contribute to the cooperative development of innovations.

In this article we will discuss the ongoing process of innovation that is based on construction of the biofuels industry of the future. Continue lendo »

The accident in the Gulf of Mexico and its consequences for the World Oil Industry

In oil on 05/07/2010 at 00:28

By Helder Queiroz

Over the last decade, the global oil industry (GOI) was strongly affected by the changes observed: i) asset configuration due to transactions of mergers and acquisitions; ii) market conditions, with changes in supply and demand structures; and iii) regulatory frameworks of the main producing countries.

Over the past five years, in particular, there was a major change in economic conditions of GOI: high international prices that reached the level of US$ 145 per barrel, after a long period of relatively low prices (below US$ 28 in 1986-1998).

Despite the hard drop recorded in July 2008 causing a new price level around US$ 60-80 per barrel and the reduction in global demand in 2009 due to the downturn in world economic activity, factors of uncertainty are present regarding the future expansion of production capacity. Continue lendo »

Energy integration in South America: motivations, obstacles and achievements

In energy on 24/05/2010 at 01:00

 

By Renato Queiroz and Thaís Vilela (*)

Motivations and Difficulties

Despite several bilateral agreements executed over the years, the energy integration process in South America develops gradually. The overcoming of certain barriers to be outlined later is the basis for achieving a fully integrated market. It is important to mention that the issue raised is the energy integration among countries of a continent, involving strategic, political and economic issues. Thus, there is no relation with energy interconnection, which is an energy transmission from one country to another one. The first concept corresponds to a complex process, since it is subject to factors related to international relations.

The integration experiences in Europe have shown that the development of regional energy integration is subject to lengthy multidimensional processes and under complexity often unpredictable, because there are several players involved in decision-making that often impact the integration process. Indeed, governments, regional and international energy companies, non-governmental organizations, multilateral lending institutions, regional bodies, among others, with their powers, influence the results of decisions.

However, we consider that energy is a vector suitable for integration between continents and has characteristics that promote agreements for the rational utilization of natural resources. It also creates opportunities to reduce inequality in the countries involved, contributes to the economic and social development in the region and, above all, provides greater energy security because it favors the consumer countries to achieve diversification of energy sources through imports. Continue lendo »

The future of biofuels II: Why will the biofuels industry of the future be different from the current one?

In biofuels on 10/05/2010 at 01:30

By José Vitor Bomtempo

In our first article on the future of biofuels, we start from a clear premise: the biofuels industry of the future will be very different from the current one. It will be neither limited to current products – ethanol and biodiesel – nor the current processes and feedstocks. Its technological base and its industrial structure can be unrecognizable today.

This assumption is very important to ponder on the questions made previously. Let’s discuss it a little more and try to defend it. Continue lendo »

Belo Monte: the paradox of plenty

In electricity on 03/05/2010 at 01:27

By Edmar de Almeida 

The bid of Belo Monte hydroelectric power plant has raised a great debate in Brazilian society about the economic and environmental feasibility of the project. A large number of political and economic agents has been reporting the negative aspects in terms of environmental, economic and even electoral issues related to the project. Nearly always those who seek to point out the problems related to the project do not analyze the advantages and disadvantages of energy alternatives to Belo Monte. And they think that scarcity is not an issue to be considered. The false premise of the debate on Belo Monte in Brazil is that there are much better options in terms of economic and environmental instead of building the plant in the Xingu River. Continue lendo »

Brazilian light vehicle fleet: expansion of flex-fuel and CNG

In biofuels, ethanol on 19/04/2010 at 02:02

By Luciano Losekann and Thais Vilela (*)

The Brazilian energy matrix is characterized by a significant ethanol and natural gas participation as automotive fuel alternative to oil byproducts. Having knowledge of the evolution and characteristic of the automotive fleet is a key step to estimate the fuel consumption and guide policies related to the replacement of oil byproducts as well as the mitigation of CO2 emissions.

However, since 1986, after cancellation of Single Automotive Tax, the estimates of the national fleet circulating in Brazil, made by various institutions, have very different results. DENATRAN, National Traffic Department, publishes data on the fleet by vehicle type and states from the registration data conducted in Detran (State Department of Transit).

Continue lendo »

The future of biofuels

In biofuels on 29/03/2010 at 01:30

By José Vitor Bomtempo

The late Professor Keith Pavitt, one of the major starters of the studies in the economics of innovation, he used to say to his mentees that the goal of a research is not necessarily answer the questions, but make them better or “more answerable” as he used to say. I want to start this blog making some questions that we can do when we think about the future of biofuels and industry based on renewable raw materials. We will try to bring elements and discuss, as the master Pavitt wanted, in order to become these questions clearer, better formulated, if possible. After all, to begin we have to mention the masters, as Inácio Rangel said; no one solves problems that can not formulate clearly. So this is the initial effort for which the blog will try to help: improve our questions about the future of biofuels. Continue lendo »

Evolution of the institutional framework for energy industries in Brazil

In energy on 01/03/2010 at 01:30

By Edmar de Almeida 

Since the 1990s, the energy sector in Brazil has been a laboratory seeking a new form of industrial organization and a new institutional framework that will enable the introduction of private capital, without compromising security of supply. The relatively high rate of growth relate to energy demand and the large size of the Brazilian economy represent a major challenge to ensure the level of investment necessary for the security of energy supply.

The liberalization of energy sector in the 1990s tried to cut down the State’s role in this activity. This reform had no desired results. Private investment has failed to ensure the expansion of the Brazilian energy sector on the relevant volume and celerity. Moreover, several specific aspects of the Brazilian energy market represent important obstacles to private investments: i) marginal cost of increasing expansion, ii) presence of major energy state-owned companies, iii) significant uncertainties about the trajectory of energy prices, iv) lack of expansion planning for energy supply. Continue lendo »