Bolognesi Participacoes SA, the biggest winner of Brazil’s power auction today, plans to invest almost 6 billion reais ($2.3 billion) to build two LNG-fired plants, the first such projects from a company other than state-run Petroleo Brasileiro SA. (PBR)

With two thermal projects of 1,238 megawatts each, the Porto Alegre, Brazil-based company won contracts to sell power for 25 years starting in 2019, the Sao Paulo-based electricity trading board CCEE said in a statement today.

“We will be the first player with the exception of Petrobras to sell energy from LNG in Brazil,” Paulo Cesar Rutzen, Bolognesi’s vice president, said today by e-mail. He said the company had won half of the electricity auctioned. “We have LNG contracts with two large players.”

Brazil today awarded its first contracts in three years for coal- and gas-fired power plants as the country seeks to replace capacity from hydroelectric facilities that have curtailed output amid the worst drought in eight decades. Bolognesi and other thermoelectric developers won about 80 percent of the 4,979 megawatts sold in today’s auction.

Bolognesi’s plants will be in Suape, in the northeastern state of Pernambuco, and in Rio Grande, in the southern state of Rio Grande do Sul. Construction will begin next year and the plants should be ready in 2019, Rutzen said. The units, each with maximum consumption of 3 million metric tons of LNG a year, will receive as many as 48 cargoes annually when the government mandates operations at full capacity, he said in a telephone interview.

25-Year Contracts

Brazil will buy a record 5 million metric tons of LNG this year as the worst drought in decades is reducing output from dams, according to estimates from London-based consultants Energy Aspects Ltd.

Bolognesi has signed 25-year contracts to buy LNG from countries in the Atlantic basin, Rutzen said by phone. He declined to identity the suppliers or where the super-chilled fuel will come from. Petrobras is currently the only LNG importer in Brazil and so far all deals to import the fuel have been done in the spot market.

“This is the first time Brazil is buying gas in long-term contracts,” Marco Tavares, chairman of Rio de Janeiro-based consultants Gas Energy, said by phone today. “This will consolidate Brazil’s position as the biggest LNG importer in South America in the medium term.”