Imports of LNG to Brazil rebounded in August to 1.497 million cubic meters, up more than 48% from imports that totaled 1.010 million cu m during July, data from Platts unit Bentek Energy showed Tuesday.

The dramatic rise in imports comes as the nation's hydroelectric reservoirs dip to critical lows. As of September 1, current capacity is at just 30% in Brazil's Southeast-Central West region, where more than 70% of the country's hydropower is installed. According to Brazil's Ministry of Mines and Energy, hydroelectric power accounts for upwards of 75% of the country's total domestic power generation.

"Right now is an unusual time for Brazil," said one market source, who asked not to be identified. "The hydroelectric reservoir levels are so low that Brazil has no choice but to buy LNG for power generation. Even if the upcoming rainy season [November - May] were to return the reservoirs to their normal levels, I don't think it would change the near-term outlook much."

Most recently, state-owned oil and gas company, Petrobras was heard in the market bidding aggressively for an FOB cargo currently being tendered by a supplier from Trinidad and Tobago. The cargo, scheduled for lifting on September 26, is likely to be sold around the mid-$11.00s/MMBtu, according to one portfolio player.

Petrobras also continues to seek LNG cargoes for October, November and December, according to market sources. "Petrobras is buying further out right now because they don't know if they'll need the supply," said one South American-based trader. "They're looking mostly for FOB cargoes so if the rain comes, it gives them the flexibility to sell-off what they don't need."

August imports of LNG to Brazil are the second highest on record after March 2014 imports, which totaled 1.504 million cu m, following a period of severe drought in February. The March import record was also prompted by concerns over an expected surge in electricity demand associated with Brazil's status as host of the 2014 FIFA World Cup during June and July.

During the first eight months of this year, Brazil has imported a total of 9.3 million cu m of LNG, up from 7.4 million cu m over the same period in 2013. The more than 25% increase in imports so far this year comes as demand for electricity grows while severe drought conditions continue to grip the tropical nation.