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R. Fernandes:
Latin America NGVs: An update report
The NGV industry in Latin America is in continuous growth, specially in the South portion of the region, the focus of this report. Latin America gas demand is expected to more than double until 2030. Much of the increase will come from the power generation segment. Latin America has large gas reserves, but insufficient investment in some of the countries, may create bottlenecks in production and transportation to specific markets. To minimize that possibility, Argentine, Brazil and Chile have already decided to import LNG-liquefied natural gas, to improve energy security in each of these countries. In the same way, Mexico is also facing the effects of lower capital investment combined with disappointing exploration results. One concern that is starting to appear, is the fact, that imported LNG will cost more than the regionally produced gas, and this may also impact the market.
Argentine has a well developed NGV industry, with a fleet of converted vehicles, close to 1.69 million, supplied by approximately 1767 refueling stations, spread out around the country. The penetration of NGVs in the automobile fleet is close to 15%, and the local industry is making a significant effort now, to gradually replace diesel in the heavy vehicles fleet, by natural gas. Argentinean NGV manufactured products are exported to several countries, not only in the region, but also in the European and Asian markets. A three year plan to convert 1000 heavy duty vehicles in Argentine is underway, based on the possible elimination of current diesel subsidies to transportation companies.
In the region, Bolivia has one of the largest natural gas reserves, estimated as 48.7 trillion cubic feet. A significant portion of those reserves are already committed, in supply agreements with Brazil and Argentine. The Bolivian NGV industry has been showing an impressive growth, increasing their fleet from 30,000 converted vehicles in 2004 to 90,163 units in April 2008. The goal is to convert 25% of the total Bolivian fleet to natural gas, by 2012.
The Brazilian OEMs are expected to this year manufacture one of largest amount of light vehicles, approximately 3 million vehicles, 98% of them, flex-fuel units. NGVs originally put out by OEMs still represent a small portion of the total production, about 1500-2000 units per month. The current total Brazilian NGV fleet is of 1.56 million as of July 2008. To refuel this fleet of light vehicles, there are 1585 stations in most of the key cities in the country. The NGV penetration is close to 5% of the light national vehicles fleet. The Brazilian customer is more than anything else, interested in reducing their fuel consumption costs, with the flexibility to choose any of the available fuels. Therefore, in the Brazilian NGV market a low cost fuel, such as ethanol, in the high season, represents a serious competitor to natural gas, and also in terms of environmental benefits. Natural gas consumption for the transportation industry in Brazil is in the range of 6.7 to 6.9 million cubic meters per day. OEMs are now increasing their participation in the NGV market. Quality, safety and fuel availability are key issues in customer's decision to utilize natural gas in their vehicles, and this favors the OEMs products.
The NGV industry in Chile is dependent on gas availability. Presently, the country is building an LNG terminal to unload imported liquefied natural gas, expected to be in operation next year.
Colombia is fast developing their NGV market, showing in June 2008, an NGV fleet of 257,468 vehicles, and 378 refueling stations. By 2010, the industry expects to increase today's fleet to 355,058 vehicles, which will require some additional 230 stations to refuel them. The investment required to develop the NGV Program until 2010 is US$115 million. It is estimated this Program generates some savings in the range of US$ 450 million per year, for the customers. Also, it is estimated, the utilization of natural gas vehicles, in Colombia, represents a reduction of 5 million barrels of gasoline per year, which means some US$ 55 million per year savings, in subsidies, for the Government.
In Latin America region, Peru counts with one of the largest natural gas reserves, which are being fast developed. Very soon, it is expected, Peru could be producing more natural gas than Bolivia. The NGV industry in Peru is also developing rapidly, showing today a fleet of 41,411 in July 2008, of which 32,547 were financed by Government, as a replacement of imported gasoline. There are some 50 refueling stations in the country to refuel natural gas vehicles. A projection has been recently published, indicating Peru might have some 160,000 NGVs in 2010. This will require some additional new 110 refueling stations to be build in the country.
The Government of Venezuela has recently decided to stimulate an NGV Program in that country. For that purpose, the state-owned oil and gas company PDVSA has been instructed to manage the Program and a number of related products, to meet that objective. Equipment for initiating the Program, has been already ordered and delivered. However, more recently, PDVSA has announced that the Program starting date has been delayed until April 2009.
The Latin American region has today, approximately 48% of the global NGV fleet. Based upon information available from every country in the region, there are strong indications that there is still a significant increase in the NGV industry, in the next 2-3 years.
References
1. Bowles, Lincoln, “Bolivia: Hacia un cambio de su matriz energética”, June 2008
2. DÁpote, Sylvie, “Latin America NG Supplyíng”, June 2008
3. Fernandes, R., “Brazilian NGV Market Trends”, June 2008
4. Fracchia, J.C., Kopito, G., ”Gaseous Fuels in the context of Argentinean Economic Growth”,
June 2008
5. Maal, Miguel, “Desarrollo del GNV en el Perú y sus proyecciones”, June 2008
6. Ortiz, Salomón, “GNV en Colombia, Desarrollo y Perspectivas”, June 2008
R.Fernandes is President of ALGNV – Latin American NGV Association. Petroleumworld does not necessarily share these view.
Editor's Note: This commentary was originally published by NGVglobal.com, a web site of The International Association for Natural Gas Vehicles (IANGV), on 08/20/2008. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 08/21/08
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