Why Eneva is benefiting from Brazil’s water crisis

Brazil’s water crisis has been particularly profitable for Eneva, one of the country’s main natural gas producers.  

The local company’s August output reached 50,851boe/d, up 269% from a year earlier, when it produced 13,786boe/d, according to data from regulator ANP compiled by BNamericas.  

This growth – the highest among all producers in the country during the period – was due to gas extraction, which jumped from 2.19Mm3/d (million cubic meters per day) to 8.07Mm3/d.

Source: BNamericas based on ANP data

The increase reflects rising demand by the company’s thermoelectric power plants in Maranhão state, since, given the lack of rain, Brazil has been forced to use all its thermal power resources to preserve its hydroelectric reservoirs.  

In March, which marks the end of the rainy season, Eneva’s output was 123boe/d (18,000m3/d of gas). Since then, it grew every month, except in June and July, when it remained flat at 47,105boe/d (7.48Mm3/d of gas). 

Second quarter power dispatch from Eneva’s thermal plants was 65% higher compared with a year earlier, with gross energy generation reaching 2,450GWh from the 366GWh produced in the same period 2020. 

The performance resulted in a 35% growth of its 2Q21 Ebitda to 378mn reais from 280mn reais a year earlier, and a 38% net profit increase, which reached 118mn reais. 

Eneva’s natural gas-fired thermoelectric plants in operation include the Parnaíba I, II, III and IV units, in the Parnaíba basin, which are supplied by the Gavião Real, Gavião Vermelho, Gavião Branco, Gavião Caboclo and Gavião Azul fields. 

More recently, the company inaugurated the Jaguatirica II thermoelectric plant in Roraima, supplied by the Azulão field.  

The company is also installing the Parnaíba V and VI thermal units in the region, with potential reservoir-to-wire (R2W) undertakings considered in the Paraná onshore basin.  

The R2W projects are based on a model under which natural gas output directly serves an electricity generation unit. 

OTHER PLAYERS 

Eneva’s performance in the past year exceeded that of other oil and gas producers in Brazil. 

Petrobras’ production, for example, fell 5% year over year in August, to 2.8Mboe/d (million barrels of oil equivalent per day), and Shell’s – the second largest producer – around 2%, to 466,107boe/d. 

Among the top national producers, and besides Eneva, only Enauta, TotalEnergies and PetroRio registered growth, of 93%, 52%, and 6%, respectively. 

Imetame Energia, which also has R2W projects in operation, registered a 92% annual production increase in August, reaching 2,125boe/d from the 1,114boe/d extracted in the same month of 2020.