The military escalation in the Middle East may eventually have indirect repercussions on the LRCAP (Capacity Reserve Auction) scheduled by the Brazilian government for this month, especially regarding the cost and logistics of natural gas used by thermoelectric power plants that will compete in the bidding process.
The international market began the week with expectations of higher oil prices following attacks by the United States and Israel on Iran, followed by Iranian bombings of countries such as the United Arab Emirates and Qatar, among others in the region.
The most sensitive point of the crisis is the Iran's blockade of the Strait of HormuzThis is a strategic route for the flow of oil and gas from the Middle East. The capacity for diversion via alternative routes is considered limited, and the impacts will depend on the duration of the blockade and any logistical bottlenecks.
Natural gas is also on the radar.
In addition to oil, the conflict affects the global natural gas market. According to Adriano Pires, director of CBIE (Brazilian Center for Infrastructure), the rise in oil prices tends to also put pressure on gas, especially because the Strait of Hormuz is a relevant route for the transport of LNG from Qatar, currently the world's largest producer of this input.
Pires notes that the impact will depend on the intensity and duration of the conflict. He points out that Brazil imports LNG and that there are gas-fired power plants competing in the capacity auction, which could affect the prices offered.
However, he notes that the international oil and gas market is currently well-supplied, and that any price increase may be temporary if the war does not continue. The consultant also points out that the main supplier of LNG to Brazil is not Qatar, but the United States, via shale gas production.
Nevertheless, he acknowledges that conflicts of this magnitude affect all energy sources, given the interdependence of global markets.
The auction takes place in two stages.
In this context, the Brazilian government will hold two LRCAPs in March, with confirmed dates for the 18th and 20th. According to data from EPE (Energy Research Company), the first stage, scheduled for March 18th, will be aimed at natural gas and coal-fired power plants, as well as hydroelectric expansions.
The second stage, on March 20th, will be exclusively for existing thermal power plants fueled by fuel oil, diesel, and biodiesel. The objective of the auction is to contract power capacity, not just energy, ensuring that the SIN (National Interconnected System) has plants available to meet peak demand and critical situations.
Strong market acceptance
The number of registered projects indicates high interest from the sector. In the March 18th phase, 330 projects were registered, totaling 120.386 MW. Of this total, 311 are natural gas-fired power plants, three are coal-fired, and 16 are hydroelectric expansions.
The March 20th phase already has 38 registered projects, totaling 5.890 MW, of which 18 are oil-fired thermal plants and 20 are biodiesel-fired. Combined, the two phases bring together 368 projects and 126.276 MW (126,3 GW) of registered power, a volume exceeding the contracting needs.
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