Shell will invest US$570 million by the end of 2025 in Brazil in integrated energy businesses

RIO DE JANEIRO, BRAZIL – Shell will invest R$3 billion (US$570 million) until the end of 2025 in Brazil in integrated energy businesses, said the director of renewable and energy solutions of the company, Guilherme Perdigão, in a press conference on Tuesday (21).

According to Perdigão, Brazil, along with the United States, Western Europe, and Australia, is one of the priority markets for the oil company amid the group’s efforts to zero net global carbon emissions by 2050. Today, the oil company launched the Shell Energy Brazil brand focused on business for the energy transition in the country.

“Brazil has an abundant supply of gas and competitive renewable resources, in addition to the prospect of the opening of the energy market, with the New Gas Law and the exponential growth of the free electricity market,” said Perdigão.

In the case of Brazil, the focus of the investments will be the integrated renewable energy market, with a focus on solar and wind generation, aimed at the free market, with the expansion of the commercialization and self-production areas.

The company also intends to expand its activities in gas, with the expansion of gas production in the pre-salt, in addition to the importation of liquefied natural gas (LNG) and gas-fired thermoelectric generation. “Brazil is always a box of surprises. The country has, like anywhere else, a series of volatilities, but the Shell group is seeking growth opportunities in several areas, possibly even non-traditional ones,” said the president of Shell Brazil, André Araújo.

WIND POWER

Shell confirmed that it would enter the offshore wind power generation sector in Brazil. The development manager of renewable energy generation projects, Gabriela Oliveira, said that the company wants to bring Brazil the group’s international experience with the source.

“We are eager to understand the decree that the government will develop by the end of the year to encourage this clean and renewable source. We have experience outside Brazil with this source, and we aim to start this challenge in Brazil as well,” said Oliveira. According to her, in all, the group has US$600 billion in investments planned for Brazil until 2025.

Shell is focusing on developing the electric energy business in Brazil in the Southeast region in projects aimed at the free market. Oliveira says that the biggest challenge to getting the projects out of the development phase is connecting to the power grid. The group has 2 gigawatts (GW) of wind and solar generation projects under development.

“We aim to grow the portfolio and seek to diversify locations where we understand that we will be able to distribute the energy from the projects with fewer obstacles,” she said.

According to Perdigão, the company’s expansion in the renewable sector will be for the free market. “Brazil is a priority for the group due to the growing demand for electric energy that, in our evaluation, has the perspective of continuing to grow,” he said.

The Marlim Azul thermoelectric plant, a Shell Brasil project under construction in Macaé (RJ), has 70% of its structure concluded, according to Perdigão.

The thermal plant will be the first to be operated by a private company supplied by pre-salt gas. With the capacity to generate 565 megawatts (MW), the plant will start working in 2023. The project also involves the construction of a 22-kilometer gas pipeline.

“The main equipment is already in place. Our big challenge in this project was the Covid,” said Perdigão. Marlim Azul is a joint venture of Shell Brasil with Pátria Investimentos and Mitsubishi Hitachi Power Systems.

The company is also studying whether to participate in the auction that the National Electric Energy Agency (Aneel) will hold to contract thermoelectric plants in the capacity model at the end of the year.

“We are in the phase of understanding the rules. We are optimistic, the outlook is positive, but I can’t yet say that we will participate. As it is a new auction, we have to understand and prepare ourselves for it,” said Perdigão.

According to the executive, the group studies projects in Macaé (RJ) to expand the Marlim Azul project. It evaluates liquefied natural gas (LNG) projects in other areas of the country.

Perdigão pointed out that Brazil will need to expand thermoelectric generation to guarantee electricity supply amid the expansion of intermittent renewable sources. He praised Aneel’s initiative to hold the first auction in the capacity model in the country.

“In our view, due to the growth in demand for electricity and the supply profile, focused on renewables, we see as important for the country the contracting of additional installed capacity, to complement these renewables and offer a reliable supply to the consumer,” said Perdigão.

In this context, Shell sees room to expand investments in LNG in Brazil. The gas sales and origination manager, Carolina Bunting, pointed out that the sector’s agents have gained more confidence in the opening process underway in the gas market in recent months. “I think there is room for one more regasification terminal in Brazil,” she said.

In the renewable energy area, the company intends to expand its solar and wind power generation activities. In solar, the group should develop its projects, while for wind, the perspective is the acquisition of plants under development.

“Nothing prevents us from entering the onshore wind energy market with projects already developed or under development. For us, it makes more sense to enter with the acquisition and not to develop projects from scratch at the moment,” Oliveira explained.