Economia
& Energia
No 25 - Março - Abril 2000
ISSN 1518-2932
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e&e No 25 Emission Parameters of Heavy Vehicles Evaluation of heavy Vehicles Emissions Evolution of the Brazilian Public Debt Application of the Emission Matrix Coefficients e&e
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BRAZILIAN ENERGY SECTORHIGHLIGHTS IN 2000 AND BUSINESS OPPORTUNITIES1. General Considerations The Internal Energy Offer – IEO in the country has reached about 261 million ton equivalent petroleum (tep) in 2000, with 3% growth relative to 1999 (preliminary data). Approximately 57% of this amount is clean and renewable energy of which 39% is hydroelectricity and 18% is biomass. Since the country has a large territory and a large energy potential, Brazil has opted for policies that favor renewable energies and as examples it can be mentioned the hydroelectricity development from 1950 on and the alcohol program in the seventies. Of the about 43% of the IEO referring to non-renewable energy, 34% corresponds to petroleum and its products, 3.7% refer to natural gas and the remaining, to mineral coal and uranium. Only 18% of the IEO corresponded to imports, 3 percent points below that of 1999. The petroleum area has contributed a lot to this performance. This area has been successful since the beginning of the eighties in what concerns petroleum exploration and production, guaranteeing the regular and reliable supply of petroleum products and reducing significantly the external dependence on these energy sources - around 30% in 2000 – a result 5 percent points smaller than that of 1999. In the second petroleum shock in 1979 this dependence was 85%. In 2000 the Government continued its program for stimulating the growing participation of natural gas in the energy market, mainly in what concerns the regulation of its use in thermoelectric plants. The non-conventional and/or decentralized energy sources (solar, wind, forest and agriculture residues, vegetable oils, and small hydraulic potentials) were also encouraged. Programs aiming at increasing the energy efficiency in the country were continued in 2000 as well, including production and efficient use of energy and cogeneration of thermal and electrical energy. In the process of restructuring the energy sector, it was established the National Council of Energy Policy -CNPE, that advises the President of the Republic, whose objectives are to formulate policies and guidelines for promoting the rational use of the country’s energy resources, assure the universalization of the national energy consumption and stimulate the development of alternative renewable energy sources in order to gradually obtain an energy matrix that fully preserves the national interests. Along the fiscal year, eight Technical Committees (TC’s) started their activities, namely, TC1 – Consumer and Tariffs; TC2 – Planning of Electrical Energy Supply; TC3 – Energy Matrix; TC4 – Energy Efficiency; TC5 – Complementary Renewable Sources; TC6 – Energy Sources Import and National System of Fuel Stock; TC7 – Environment; and TC8 – Investment Incentives and Legal Milestones. Still in the institutional area, the Ministry of Mines and Energy has continued it actions aiming at a larger participation of the private sector in the necessary investments and in the responsibility of guaranteeing the national energy supply. The Regulating Agencies – ANEEL –Electric Energy National Agency and ANP – Petroleum National Agency have been fundamental for continuing the guarantee of supply and increase of the quality of energy services in all the country. In the year 2000 the MME has published and distributed the National Energy Balance – base year 1999, containing energy statistics relative to the period 1984/1999, and the Decennial Plan for Expansion of the Electrical Sector 2000/2009, containing the indicative elements for generation and transmission in the period.2 Economic Growth and Energy Consumption In the period from 1970 to 1980 the Brazilian Gross Domestic Product - GDP grew at a rate of 8.7% annually (a.a.) and energy consumption also grew at expressive annual rates, 12.4% a.a. for electricity and 8.3% a.a. for petroleum and its products. The determining factors for this result were the continental size of the country and the predominance of road transport as well as the development of base industry and infrastructure necessary for satisfying unattended needs of many regions in the country. In spite of the high consuming indexes of electricity and petroleum products, the Internal Energy Offer grew 6.5% a.a. - 0.75 elasticity relative do the GDP - mainly as a consequence of the low growth of biomass (0.45% a.a.) constantly substituted by petroleum products (LPG and fuel oil). From 1980 on, under the pressure of the recessive economical environment in the country, these rates declined and varied considerably. In the period from 1980 to 1992, the national economy grew at an average rate of only 1.3% annually, varying between (-) 4.3% in 1981 and (+) 7.8% in 1985. The growth rate of energy demand decreased as well but not in the same proportion as that of the GDP. The IEO grew 2.8% a.a., with 2.1% elasticity relative to the GDP. Electricity consumption grew 5.4% a.a., mainly due to the expansion of the electricity-intensive industries (aluminum, pig iron, etc.). As to the consumption of petroleum products, it grew only 0.9% a.a. As a consequence of the substitution policy, and biomass consumption grew 1.1 % a.a., higher than what happened in the period 70/80, mainly due to the alcohol program.
From 1992 to 1997, with the stabilization of the economy, a new development cycle was established which raised the economy expansion and energy consumption rates. In this period the, GDP increased 41% a.a and the IEO grew 4.3% a.a and the average increase rate of petroleum products was 5.8 % a.a, 5.0% a.a for electricity and 0.6% a.a for biomass, with the corresponding elasticity of 1.4, 1.21 and 0.14 of the GNP, respectively. Residential and commercial electricity, automotive gasoline and aviation kerosene were the large instigators of the high energy consumption rates due to the better income distribution caused by the Real Plan. In 1998, under the influence of the crisis in the Asian countries, the Brazilian government was forced to take measures that led to high retraction in the economical growth and the GDP grew only 0.22%. Nevertheless, the energy sources mentioned above, associated with the well being of the population kept the consumption levels above 5%, and this fact resulted in an increase of the IEO well above that of the GDP. In 1999, with the devaluation of the national currency, the low performance of the economy continued (0.79% GDP ) and now affecting significantly energy consumption associated with the particular use. The following energy sources had negative consumption rates: aviation kerosene (-6.4%), hydrated alcohol (-8%) and automotive gasoline (-1%). But residential electric energy increased only 2.5%. According to preliminary data, in 2000 the GDP grew 4.2% levered by good performances of the Communication (17%), Mineral Extraction (11%) and Transformation Industry (5.5%) sectors. As already mentioned, the IEO will grow 3% in 2000, a result lower than that of the GDP mainly due to the low performance of energy consumption associated with the particular use that also occurred in 1999. 3 - Electrical Sector From the fifties on, the Brazilian states created their own electricity utilities. They progressively substituted the then existing private companies. Later on, the Federal Government created ELETROBRAS in 1963. Since then, the installed electrical generation capacity increased dramatically reaching about 72.4 GW in December 2000, not including 6.3 GW from the Paraguayan part of Itaipu, almost entirely destined to the Brazilian marke,t and other energy imports. In 2000, 4.2 GW were added to the installed electrical generation capacity, of which it should be highlighted the start of operation of the following power stations: the Angra II Nuclear Power Plant – RJ, with 1,309 MW; the Porto Primavera - SP, with 504 MW, Itá – RS/SC, with 1,160 MW and Manso - MT, with 53 MW hydroelectric power plants, and also the Uruguaiana thermoelectric power plant -RS, with 600 MW. Associated with the increase of the installed capacity, 2,600 km of transmission lines (TL) at levels above 230 kV were added to the Electrical System. It should be highlighted the start of operation of the Garabi-Itá TL , with alternated current of 500kV and extension of 354 km and the Ivaiporã- Itaberá III TL, with 750 kV and extension of 265 km, permitting the import of electrical energy from Argentina through the Garabi Conversion Station (Brazil/Argentina Interconnection), with a 1,050 MW capacity. As a consequence of the production capacity increase and the growth of the consuming market, the internal electricity generation for public use, 324 TWh (93% of hydraulic origin), plus electricity imported from Paraguay and Argentina (42.2 TWh) and that from self-producers (24.6 TWh) have permitted to satisfy a total consumption of 331 TWh, 5.2% higher than that of 1999. With the accelerated growth of the electric energy national market, ANEEL has been acting intensely in order to increase the electrical energy generation capacity in the country by leading the process of invitations to bid concerning concessions, granting concessions and authorizations for electrical energy generation undertakings as well as signing concession contracts. Therefore, between 1999 and 2000, 15 invitations to bid concerning hydroelectric generation were made, adding 2,328 MW, namely: Itumirim, Candonga, Quebra Queixo, Barra Grande, Corumbá IV, 14 de Julho, Castro Alves, Monte Claro, Picada, Capim Branco I, Capim Branco II, Murta, Barra do Braúna, Itacoara and Espora. The foreseen investments are about R$ 5.7 billion. These undertakings will benefit the South/Southeast/Center-West interconnected system, particularly the states of Goiás, Minas Gerais, Rio de Janeiro, Santa Catarina and Rio Grande do Sul. When these hydroelectric power plants start commercial operation they will generate approximately R$20 million annually for the Federal Government due to the use of public assets. Of these undertakings, 5 have been already granted: Ourinhos, Itumirim, Candonga, Quebra Queixo and Corumbá IV, adding 436 MW. In 2000, 116 new thermal plants (9,685 MW), 1 wind power station (0,275 MW) and 50 small hydroelectric plants (576 MW) were granted authorization, adding 10,262 MW of capacity in the next years and investments around R$ 10 billion. In global terms, the bids and authorizations totaled 12,590 MW of new energy in 182 undertakings, with investments around R$ 15.7 billion. These amounts satisfy the indicative planning of the sector, fulfillment of established goals in the Management Contract and permitted the incoming of new generating agents, besides giving opportunities of investments by the private sector, releasing resources of the Federal Government to be applied in the social and strategic areas. In what concerns the Thermoelectricity Priority Program, established by the Decree nº 3.371/2000 (55 undertakings with a total of 22,756 MW), ANEEL authorized 16 undertakings in 2000, corresponding to 7,447 Mw (approximately 30%). Associated with generation undertakings, 5,236 km for the Basic Network were put in bid in 2000, of which 1,050 km are for the North-South II interconnection and 924 km for the north-northeast interconnection, both in 500kV. To these undertakings are added more than 696 km of transmission lines authorized for the whole national territory, which do not need invitation to bid because they are included in the concession area of the distributors. Most of the Brazilian municipalities have regular and reliable electricity services. However, in spite of the facts that 95% of residences are electified, the transmission network does not cover part of the large Brazilian territory. The North Region presents the largest problems in what concerns electricity supply in the country, where localities are still supplied by isolated and inefficient diesel oil thermal generation. This opens a large market for private investors interested in the segment of small and medium size generation, especially projects that use decentralized energy sources (for example, photovoltaic, wind, biomass and small hydro plants). To this, it should also be added the natural gas from Urucu which will permit the expansion of electricity offer in the North Region in a more economic and competitive way, enlarging the possibilities of participation of private entrepreneurs. In this sense, the Federal Constitution was amended in 1995, eliminating restrictions to foreign private investors' capital in the energy sector. Laws 8987 and 9074/95 (new Concession Laws) introduced deep and important alterations, especially concerning: (i) invitation to bid for new generation undertakings; (ii) creation of the Independent Energy Producer entity; (iii) free access to transmission and distribution systems; and (iv) freedom of choice for large consumers in choosing energy suppliers. The Decree 1717 established the conditions for extending and regrouping the public service concessions and the approval of Conclusion Plans for suspended works. Decree 2003 of 09/10/96 regulated the conditions for independent and self producers. Also in 1996 the National Electric Energy Agency - ANEEL was established by the Law no 9,427 of December 26. Other regulations were established in 1997 and 1998, especially: (i) Law no 9,433 that established the National Policy for Hydraulic Resources and established the National System for the Management of Hydraulic Resources; (ii) Law n0 9,648 that established the Wholesale Energy Market - MAE and the National Operator System - NOS; (iii) Decree no 2,335 that established ANEEL and approved its Regimental Structure; (iv) Administrative Rule DNAEE no 466 that consolidated the General Conditions for Supplying Electrical Energy, harmonizing it with the Consumer's Defense Law (Law no 8087 of 09/11/90); (v) Resolution ANEEL n0 094 that defines the limits of concentration for the electric sector in the distribution and generation activities
In 1999 new regulations were established aiming at improving the legal structure of the electrical sector; among them we should mention: (i) ANEEL Resolution no 333 that defines the general conditions for establishing electrical energy installations for private use, and for those granted with electric energy public service permit, and fixes rules for the regulation of rural electrification cooperatives; (ii) ANEEL Resolution no 233 that established the Normative Values, giving the necessary conditions for generators and distributors to make long-term contracts (PPA's) , guaranteeing the expansion of the generating park and reasonable tariffs; (iii) ANEEL Resolutions no 141, 142 and 143, concluding all the process that defines the amount of energy and power demand and the respective tariff, enabling the generation and distribution enterprises to sign the initial contracts; (iv) ANEEL Resolution no 281, that introduced the new Free Access regulation to the transmission and distribution systems for generation agents and free consumers.
In 2000, the following norms should be highlighted: (i) Law nº 9991 with provisions concerning R&D investments and energy efficiency for the concessionaire companies; (ii) Law nº 9993 that changes the destination of resources from the financial compensation; (iii) Decree nº 3371 that established the Thermoelectricity Priority Program ; (iv) Decree 3739 with provisions concerning the calculation of the reference updated tariff for the purpose of financial compensation through the use of hydraulic resources; (v) ANEEL Resolution nº 024 that establishes new standards for the distributors’ service quality; (vi) ANEELResolution nº 138 that regulates the operation of consumer councils; (vii) ANEEL Resolution nº 278 that establishes limits to economic concentration and gives incentives to competition; (viii) ANEELResolution nº 290 that approved the market rules of the Energy Wholesale Market; (ix) ANEEL Resolution nº 433 that updated the criteria for the composition of the Basic Network; and (x) ANEEL Resolution nº 456 that updated the general conditions of supply that up to then were regulated by the DNAEE Administrative Rule nº 466/97.
In 2000, in what concerns actions for energy conservation and efficiency, 43 concessionaires submitted to ANEEL, by force of contract, investment projects around R$ 300 million that will allows energy savings of 1,020 GWh annually. With technical support from the National Program for Electrical Energy Conservation – PROCEL, ANEEL analyzed and approved the 43 projects that will be concluded until June 2001. Also in 2000, all electric energy concessionaires, distributors, generators and transmitters were inspected in what concerns financial and economic aspects, quality of supply, technical standards of generation, execution of network procedures and expansion of transmission system in course. In some of the activities, ANEEL had the support of six state agencies. Furthermore, aiming at properly inspecting the operation of electric energy meters of the distribution concessionaires in the country, ANEEL made a technical cooperation agreement with the National Institute of Metrology, Standardization and Industrial Quality – INMETRO, within which pilot field inspection works were carried out in the Rio de Janeiro distributors. During 2001 all concessionaires will be subject to these meter inspections. Throughout the year, actions concerning consumer's defense, strengthening of consumer's committees, conflict settlement and public hearings had strategic importance, due to the Agency's commitment to the Brazilian society. In 2000 the Brazilian electric energy market profile had 65.23% of private participation – including the companies that were already private and those privatized from 1995 on, as shown in the graphic below.
The privatization process totaled resources around R$ 33 billion, including a debt transfer of about R$ 6,6 billion.
4. Setor de Petróleo 4. Petroleum Sector The petroleum and gas industry, after decades of state monopoly exercised by PETROBRÁS, entered a new era. The Constitutional Amendment no 9 of 1995 extinguished the monopoly of the industry's basic activities and the Law no 9478/97 disciplined the opening to the direct participation of the private sector in all links of the production chain. The complement of the new institutional framework was introduced by the installation of the National Petroleum Agency - ANP in 1998 with large regulation, contracting and inspection responsibilities in the petroleum and natural gas sector activities. The effective break of monopoly occurred in June 1999, when ANP made the first invitation to bid for contracts concerning exploration, development and production of petroleum and natural gas. Including the second invitation to bid issued in 2000, 33 blocks have already been granted to the private sector and together with the blocks conceded to Petrobras they totaled 122 exploratory blocks. If the concessionaires are successful in the initial surveys, after the subsequent exploratory periods in all blocks, about 190 exploratory wells will be drilled in up to nine years. The APN has established regulations and inspections concerning the activities of the petroleum and natural gas industry, with the following highlights: (i) definition, in the upstream, of criteria for the invitation to bid process, of the rules for exploration and production as well as determination of parameters for application of governmental participation; (ii) regulation, in the downstream, of the export activities as well as the construction, amplification and operation of refineries; (iii) acquisition of last generation scientific equipment and establishment of agreements with Universities aiming at monitoring fuel quality from refining up to retailing and (iv) Inspection of the distribution and resale activities with the purpose of safety evaluation and examination of documents of retailers and distributors. In the Exploration and Production segment there was considerable progress due to the new environment of the Brazilian petroleum industry. With the opening of the market there are now approximately 35 companies in action in the exploration segment in Brazil, operating or participating in consortia in exploratory blocks. Table 1 that follows presents a summary of results of the first invitation to bidOn 12/31/2000, Transpetro operated 126 tanker ships with total transport capacity of about 8.4 million tons of gross weight (tgw) of o which 62 belong to Petrobras, with 3.7 million tgw. The total tranported load was 107.7 million tgw of which 72.3 million in coastal transport and 35.4 million overseas.
Table 1: Data Relative to the First Invitation to Bid of Blocks
Quadro 1. Dados Relativos à Primeira Rodada de Licitação de Blocos.
· Empresa operadora. The Table 2 that follows summarizes the results of the second invitation to bid. Table 2: Data Relative to the Second Invitation to Bid of Blocks
* Empresa operadora. In August 1998, prior to the First Invitation to Bid of Blocks, Petrobrás obtained from ANP, according to the Law nº 9478/97, the concession of 115 blocks for exploration that had as limit a three-year period to be declared as commercially viable otherwise they should be returned to ANP. The expiration time would be August 2001. In May 1999 Petrobrás obtained from ANP extension of two years for 34 blocks and six years for two other blocks in case there are discoveries in these blocks before the time limit foreseen for return. In the same occasion, Petrobrás returned integrally to ANP 26 exploratory blocks and part of two others. Of the 89 blocks that were under its control in May 1999, Petrobrás lost the operation control of 21. Another relevant factor was Petrobrás’ participation in the first and second invitation to bid for concession of exploratory blocks, participating in consortia in 13 exploratory blocks, acting as operator of 10 blocks. Presently, Petrobrás operates 78 exploratory blocks, 44 fields of production development and 239 fields already in production.
The following figure presents how the production development and production fields are distributed among the Brazilian basins. In 12/31/1999[1], the proved petroleum reserves (oil and condensate) reached 8.2 bbl and the total ones, 13.7 bbl, representing an increase of 10.8% and a decrease of 5.5%, respectively, relative to1998. The proved as well as the total petroleum reserves are concentrated in the Campos Basin in the Rio de Janeiro state, responsible for respectively 87.1% and 87.9% of the reserves in 1999. The domestic petroleum production (including schist oil) and LNG reached the daily average of 1,270,941 bbl, 12.4% higher than that obtained in 1999. This increment is due to the production growth in the Marlin field (128,000 bbl/day), in the Roncador field (24,000 bbl/day), in the Voador field (12,800 bbl/day) and in the Marlin South (9,200 bbl/day). It should be noticed that the production increase of these fields between 1999 and 2000 was larger than the total national production, since there has been production decrease in several other fields. It should be remarked that the Roncador well has the depth world record, with 1,877 meters of water layers. Petroleum production offshore corresponds to 83% of the total one, coming from 74 production fixed platforms and 23 floating ones (based on April 2000), of which 63% originating from production systems situated in water layers superior to 400 meters. The daily production record was 1,531.4 thousand bbl on 12/30/2000. The Figure below presents the petroleum production distribution in the year 2000, onshore and offshore.
In the commercialization segment, Brazil imported 397 thousand bbl of petroleum (oil and condensate) per day, spending US$ 4,313 million FOB and 230 thousand bbl per day of petroleum products, spending US$ 3,096 million FOB. Exports of petroleum and its products were 86 thousand bbl per day, corresponding to a revenue of US$ 845 million FOB. In 2000 the daily average of raw material processed in the refineries of the Country was 1,580 thousand bbl, 2% higher than the 1999 average. In the private refineries, the average was 24 thousand bbl per day. The participation of national petroleum in the processed load reached 74%, while in 1999 this participation was 71%. In June 2000, the record of 1,664 thousand bbl per day of average load was registered in the distillation units of the refineries installed in the Country. The following Figure presents the evolution of the load processed in the refineries of the country.
It is important to highlight as well the total production of petroleum products that reached the daily average of 1,546 thousand bbl, 2.1% higher than that of 1999. The nominal installed capacity of the Brazilian refineries in 2000 reached 1,992 thousand bbl per day, of which 1,947 of Petrobrás. The pipeline network has increased 3,450 kilometers, reaching 15,932 kilometers of which 7,861 of oil and other product pipelines and 8,071 of gas pipelines. The storage capacity of terminals reached 67,373 thousand bbl at the end of 2000. On 12/31/2000, Transpetro operated 126 tanker ships with total transport capacity of about 8.4 million tons of gross weight (tgw) of o which 62 belong to Petrobras, with 3.7 million tgw. The total tranported load was 107.7 million tgw of which 72.3 million in coastal transport and 35.4 million overseas. 5. Natural Gas Sector In the last decades of the 20th century changes in the international situation gave to natural gas an increasing participation in supplying energy demands due to the specific characteristics of this energy source, namely low emission of sulfur and carbon, a more efficient and complete combustion, resulting in economical, environmental and processing advantages compared to other fuels, mainly fuel oil and mineral coal. In this context is inserted the initiative of the Brazilian government since the start of the nineties to establish the goal of increasing from 2% to 12% the participation of natural gas in the energy matrix until year 2010. As a function of the mentioned characteristics of natural gas and the recent progress concerning the fabrication and operation of turbines for thermo-electric generation and aiming at satisfying the generation needs of the next decades, the government created the Thermoelectric Priority Program – TPP, that will demand a considerable volume of this fuel in the next future. Furthermore, it is expected that the development in the use of this fuel in other sectors of the economy such as industrial, commercial, residential and automotive sectors will have a great impulse, creating therefore the opportunity of development of new technologies. In 1999, it was verified that the Brazilian natural gas proved reserves are approximately 231 billion m³, 2.3% higher then that of 1998. These reserves, in spite of the fact that most of it in the form of associated gas, are pulverized in various regions of the Brazilian territory. Of all the natural gas discovered in the country, about 37% are in land, in the Amazon and other producing fields in the state of Bahia while the remaining 63% is located in the sea, mainly in the Campos Basin that contains more than 45% of the country’s reserves. The average natural gas production in Brazil in 2000 was 36.4 million m³/day, a volume 125 greater than that registered in 1999. Of this production, 7.4 million m³/day were reinjected, 4.8 million m³/day were consumed in Petrobrás’ activities and 6.5 million m³/day were burned and the remaining 17.7 m³/day were available for commercialization., restando cerca de 17,7 milhões de m³/dia que foram disponibilizados para a comercialização. The following Figure presents the distribution of natural gas production offshore and onshore.
Fonte: ANP In what concerns imports of natural gas, in 12/31/2000 it reached the volume of 8.2 million m³/day, of which about 6.8 million m³/day from Bolivia and 1.4 million m³/day from Argentina. Some facts that occurred in 2000 should be highlighted: In March 2000, the operation of the South Section of the Bolivia -- Brazil Gas Pipeline (GASBOL) was started, permitting the flow of Bolivian natural gas between São Paulo and Rio Grande do Sul. Along the year 2000, this gas pipeline transported on the average 6.0 million m³/day, a volume 3 times larger than that transported in the previous year. It should be noticed that since May 2000 the distributors COMPAGÁS (Paraná), SCGÁS (Santa Catarina) and SULGÁS (Rio Grande do Sul) are commercializing Bolivian natural gas. GASBOL foresees for 2004 the transport capacity of 30 million m³/day. In June 2000 the section 1 of the gas pipeline belonging to the Transportadora Sul Brasileira de Gás – TSB, started operation between the Argentina/Brazil border and Uruguaiana. This section was responsible for the average flow of 0.5 million m³/day of natural gas consumed by the Uruguaiana Thermoelectric Power Plant, reaching the plateau of 1.4 million m³/day in 12/31/2000. On the other hand, section 3 (Canoas/REFAR – Triunfo/COPESUL) also started operation in mid 2000, permitting the average flow of 0.7 million m³/day of Bolivian gas. It is foreseen for 2002 the end of construction of the gas pipeline’s section 2 that will connect Uruguaiana to Porto Alegre with capacity of 12 million m³/day, turning viable the offer of Argentinean gas to the south of the Country. For the first time in Brazil it was accomplished the principle of free access to gas pipeline. The access to the Bolivia Brazil Gas Pipeline was made possible by ANP that resolved the conflict between the Transportadora Brasileira Gasoduto Bolívia Brasil - TBG and ENERSIL (subsidiary of the ENRON Company). This resolution will contribute to reach the following objectives: protection of the consumers’ interests; promotion of free competition, attraction of new investments, non-discriminatory treatment among agents and transparency, necessary for the development of the natural gas in Brazil. The progressive growth of natural gas in the Brazilian energy matrix, so that it will reach the goal of 12% in 2010, is linked to events related to the exploration, production and transport areas, as mentioned below: - Development of the natural gas reserves discovered at the Campos Basin, specifically in blocks facing the Espirito Santo state; - Confirmation of indications of natural gas at the Santos Basin, specifically in blocks facing the Rio de Janeiro state; - Development of geochemical and geophysic studies in the Paraná Basin; - A more aggressive application of the Zero Burn Plan by Petrobrás, that aims at gradually decreasing the levels of natural gas burned in the country, mainly at the Campos Basin; - Continuation of the Urucu Natural Gas Project, involving the construction of the Coari-Manaus and Urucu-Porto Velho gas pipelines with foreseen investments of US$ 730 million. It should be noticed that there is a project of the Amazonas government for transporting gas, in its compressed form, in barges; - Continuation of the Cabiúnas Project aiming at better using the natural gas associated with petroleum produced at the Campos Basin. The project consist of the construction of units for treatment, compression and liquefaction of natural gas in Cabiúnas (RJ), of a Liquid Fractioning Unit at the Duque de Caxias Refinery (Reduc) and of several gas pipelines, among them the one that links Cabiúnas to Vitória, Espirito Santos state (300 km) and Cabiúnas to Reduc (160 km). The foreseen investments for the project are around US$ 800 million; - Star of operation of the Pilar (AL) – Cabo (PE) gas pipeline, which will only be possible after the start of operation of the Natural Gas Processing Unit (UPGN) of Pilar; - Start of operation of the Lateral Cuiabá gas pipeline, operated by Gasocidente (company of the ENRON group) that will have a flow capacity of 2.5 million m3/day of Bolivian gas to supply to the thermoelectric power plants of Cuiabá; - Developments of Petrobrás’ and Shell’s project that aims at guaranteeing the natural gas offer for the Northeast Region through the GNL do Nordeste Ltd company. Petrobrás will be responsible for the construction and operation of a terminal that will receive, store and regasify Liquefied Natural Gas (LNG) in Suape (PE), with capacity of 4 million m3/day. Investments are estimated in US$ 200 million and the start of operation is foreseen for 2005. In what concerns natural gas demand, it should be mentioned that in the short term its growth will be based on the thermoelectric power plants included in the Thermoelectric Priority Program. Of the 40 units announced by the Federal Government, 10 are under construction and other 16 were already viable in February 2000. The following plants are under construction: Termorio (RJ), Macaé Merchant (RJ), Termelétrica de Juiz de Fora (MG), Termelétrica de Araucária (PR), Fafen (BA), Termobahia (BA), Corumbá (MS), Piratininga (SP) Ibirité (MG) e Puerto Suarez (Bolívia), most of them with the participation of Petrobrás. In what concerns medium and long terms, the natural gas sector believes in the growth of consumption in industrial units as well as in the development of its use in the commercial (for refrigeration/heating), residential (for cooking) and automotive sectors. It should be noticed that in the year 2000 the automotive segment was the one that presented the largest growth with the opening of several Vehicular Natural Gas – VNG stations and with the exponential growth of conversion of natural gas fueled vehicles, mainly taxis. 6. Mineral Coal Sector The mineral coal industry in the country began its activities about 140 years ago. The characteristics of the Brazilian coals, with low calorific power, much ash and high sulfur content, demand processing that raises its cost and makes them not very competitive vis-à-vis other energy sources. These limitations lose their importance when new technologies are introduced, more appropriate for direct burning, eliminating the processing used in the past when the coal used in the thermal generation was subsidiary of metallurgical coal production. Until 1975, mineral coal participation in the national energy matrix was 3,2%, mainly for metallurgical use (about 80% of the total). From 1975 on, its use in the industry grew as a function of the advantageous prices compared with those of fuel oil as well as of the subsidies to its transport, decreasing afterwards from 1986 on, when petroleum prices decreased. Presently, the participation of the mineral coal in the Brazilian energy matrix is 5,0%, of which, 0,8% of national coal and 4,2% of imported metallurgical coal and coke. In the Thermoelectric Power Plant Priority Plan the present installed capacity using mineral coal is 1,415 MW but it will grow about 1,050 MW by the year 2003. In order to increase the present competition capacity of the Brazilian carboniferous sector, efforts for industry capacitation and upgrading continued to be made, aiming at establishing new technologies such as clean coal technologies. For this purpose, cooperation agreements between the Ministry of Mines and Energy and the Energy Department of the United States were extended aiming at fixing a path for the new industrial phase through: (i) production costs reduction and coal processing using modern technology; (ii) mitigation of the environmental impacts generated by the industry; (iii) increasing the generation yield by introducing combined cycle techniques; (iv) study development in order to use the combined cycle gasefication process and (v) development of specific programs to facilitate partnership between national and foreign companies.
7. Energy for Isolated Communities and the Rural Area
The MME's Program for Energy Development of States and Municipal districts - PRODEEM - gave continuity to the actions aiming at supporting the supply of basic social demands of needy communities dispersed in localities not served by the electric system, promoting increase of income, creation of jobs in the rural areas, by installing local small energy systems of production and use, using renewable and decentralized energy sources. Up to now, priority has been given to solar energy. In partnerships with other entities, the Program also promotes the development of the education, health, water supply and communication services. Surveys carried out by the states and concessionaires of electric energy point out the existence of about 100 thousand unassisted communities and more than 3 million rural properties without energy, representing about 20 million people unable to participate in the process of social development and economic growth of the country. Thus, as results of the Program, in the period 1996-2000 more than 3,050 communities have been supplied with illumination for schools, health and community centers, water pumping systems and other collective benefits, predominantly social ones, contemplating more than 604,000 thousand people. Considering only the year 2000, 873 energy systems and 180 water-pumping systems were made available in 22 states. They contemplated 681 schools, 51 community centers, 60 health centers, 36 equipment for technology diffusion in federal technical schools, 202 telephonic centers, association headquarters, TV stations, fiscal stations, etc. The benefits contemplated about 104 thousand people in 219 municipalities. Still in the period 1996/2000, PRODEEM consolidated partnerships with several institutions interested in the Program and made large efforts in order to show the extraordinary potential of the Brazilian market for the development of renewable energies, arising interest in the private sector for the Program, with integrated productive projects (residences and rural units) in isolated localities not served by the conventional electric network. As a consequence of PRODEEM’s actions, the BIRD proposed to finance one project for energizing rural residences and BID prepared, together with MME, PRODEEM's Plan of Action. With this Plan, PRODEEM is promoting the implementation of its evolution, aiming at encouraging communities and market agents to develop energy projects integrated to other economical/production projects seeking the development of isolated regions and permitting these projects to be self-sustaining, involving up to US$ 9 million sponsored by the government. These resources have the following objectives: (i) Increase the supply capacity to 10/15 thousand communities per year; (ii) Promote the training and the operational and managerial capacity, in all the activity levels and in the whole country; (iii) Stimulate the formation of market of energy supply services in the rural area from renewable decentralized sources; (iv) Make possible the effective transfer of new technologies, using the scale of the Brazilian market as vector of its competitive application in the country; and (v) Implant a system for monitoring and evaluation of results (social and economic impacts of the program), for furnishing information and for dissemination of innovative and successful solutions
Due to its national comprehensiveness and its structuring characteristic regarding social and economic development, PRODEEM participated in the Brazil in Action Program and was included in the Advance Brazil Program, starting from the administrative year of 2000 on. In the rural electrification sector and considering the resuming of the agricultural and husbandry activities growth in the country, we should mention the "Light in the Hinterland" Program established by the Federal Government, directly coordinated by the MME with technical support from ELETROBRÁS. In the rural scope, the Rural Electrification National Program “Light in the Hinterland”, established by a Presidential Decree on December 2, 1999, has as main objectives increase rural electrification and stimulate the intensification of rural activities, integrating programs and actions that aim at the rural development in their respective areas of action. In a first stage, coordinated by the MME and with technical and financial management from ELETROBRÁS, until the year 2002 the Program will carry electric energy to 1 million rural properties and domiciles, benefiting 5 million inhabitants. Therefore, resources around 2.7 billion Reais will be necessary, of which 1.8 billion Reais will come from ELETROBRÁS, through the Reversion of Global Reserve – RGR. The remaining 900 million Reais will come from state government, municipalities, concessionaires, cooperative associations and future consumers. It is worth mentioning specifically the fact that contracts were made with more than 40 concessionaires in 1999 and 2000, including almost all states of the Federal Union. It should still be noted that before this stage, ELETROBRÁS carries out the required technical and budgetary analysis of the programs proposed by the executing agents, adjusting them to the physical and financial standards required in rural electrification projects. Accounting for all the financing contracts signed or to be signed, ELETROBRÁS is committed to guarantee R$1.417 billion for the execution of “Light in the Hinterland”, of which R$200 million have already been transferred.Contabilizados todos os contratos de financiamento assinados e em fase de celebração, a ELETROBRÁS assumiu o compromisso de assegurar R$ 1,417 bilhão para a execução do “Luz no Campo”, tendo sido já liberados R$ 211 milhões.
The following figure shows the estimated indexes of rural electrification in each state before and after the implantation of the Program. 
8. Investments in the Energy Sector In the last years, with annual investments varying between 2.5 and 3.0 billion dollars, the Brazilian Petroleum Sector has been able to guarantee the supply of petroleum products and to increase significantly the oil and natural gas reserves. In what regards the Electrical Sector, the investments made in the last years, around 3 to 4 billion dollars a year, of which about half in the generation segment, has not been enough to guarantee annual increments around 3.5 to 4 GW to the installed generation capacity and the power necessary to supply the verified growth of demand. In the future some alterations will have to be made in the structure of investments in energy. With the installation of natural gas thermoelectric power plants that demand less investments than hydroelectric plants, it is expected a relative reduction in generation investments with the consequent increase of investment in gas pipelines. On the other hand the electrical interconnections with Argentina and those of the South with the North of Brazil will demand more investments in transmission. Summing up, the potential for investments in energy supply for the next years can be estimated by area: 3 to 4 billion dollars in petroleum, 1 in gas pipelines, 2.5 to 3 in electricity generation and 2 to 2.5 in transmission and distribution. Therefore, a total amount of 8.5 to 10.5 billion dollars per year. 9. Main Business Opportunities According to the Decennial Plan for the Electric Sector Expansion, the foreseen projects may increase the installed generation- capacity to 111GW in the year 2009 (including about 4 GW from self-producers), representing an additional of 39 GW relative to 2000. At the end of 2000 the undertakings with granted concessions and those authorized (under construction or not) added 26 GW to the Electrical System. Therefore, according to de Decennial Plan 13GW must be put in the market in order to satisfy the electric energy needs until 2009. In this sense, for 2001-2002 ANEEL intends to make invitations to bid for 27 undertakings of hydroelectric generation (8,890 MW), that will demand investments around R$ 21.7 billion. These undertakings will benefit the South/Southwest/Center West and North interconnected system, particularly the states of Pará, Maranhão, Tocantins, Mato Grosso, Mato Grosso do Sul, Goiás, Minas Gerais, Bahia, São Paulo, Paraná, Santa Catarina and Rio Grande do Sul. In 2000, according to the present institutional model of the Electric Sector, that shares with private investors the responsibility for the execution of inventory studies, ANEEL approved 33 inventory studies including practically all regions of the country and made available 7,137 MW for future viability studies and resulting in 11 hydroelectric power plants and 161 small hydroelectric plants. In what concerns the Privatization Program of the Electric Sector, the federal and state governments are carrying on the privatization of distribution and generation companies. Therefore, the main opportunities of business in the Brazilian Electrical Sector are connected above all with the offer of new generation undertakings to be explored by the private initiative and the construction of transmission systems as well as the privatization of assets of distribution and generation systems. It should be added the large business opportunities originating from the need to attend to the isolated communities in the rural area, in the scope of PRODEEM, represented by the installation of decentralized energy systems, using local renewable energy sources, as a complement to the conventional rural electrification. In the Petroleum Sector, including the production and transport of natural gas, the new regulation opens wide field for private investments, associated or not with to Petrobrás. In this matter, Petrobrás has initially offered partnership in 32 concessions for exploration and production development (E&P) projects in 14 Brazilian basins. Of these projects, 7 have been signed in 1998 and 16 in 1999. In 2000, together with a new group of concessions that were additionally offered to the market by Petrobrás, 18 partnership projects for E&P were signed. To these are added 10 other projects – 4 signed in 1999 and 6 in 2000 – offered for invitation to bid, promoted by ANP, and won by Petrobrás in partnership with other companies. In this way, projects of 51 concessions are already being conducted by a partnership of Petrobrás with other companies, in 12 Brazilian basins, contemplating investments of about US$ 5.57 billion, most of it concentrated in 3 years. In the exploration area, besides partnerships with Petrobrás, the country disposes of a sedimentary area evaluated in about 6,4 million km2, in the continent and offshore, most of it needing investments in exploratory campaigns for larger detail, showing large potential to be develop in its up-stream. |
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