Brazilian imports of liquefied natural gas surged to 715,425 cubic meters during the first half of December, up nearly 136% from 303,500 cu m imported during the same period last year, data from Platts unit Bentek Energy showed Wednesday.

First half December LNG imports were also up 24% from H1 November, when Brazil imported 577,600 cu m.

Rising LNG imports so far this month come as drought conditions continued to worsen in November, with hydro-electric reservoir levels in the Southeast-Midwest region dipping to a record low of 16% capacity. November marked the eighth consecutive month of declines in the region, as reservoir levels continued to dwindle from an annual high at 40.3% in January. As of Tuesday, reservoir levels in the Southeast-Midwest had recovered modestly, standing at 17% capacity, according to the National Electric System Operator.

Under normal weather conditions, Brazil depends on hydropower for up to 80% of the country's electricity supply; the Southeast-Midwest region contains roughly 70% of that generation capacity. During the recent drought, Brazil has been using natural gas to shore up the nation's energy supply.

During the final two weeks of November, the marginal operations cost for electricity generation in Brazil averaged Real 1,087.03 ($401.98) indicating that all of the country's gas-fired thermal plants were operating at full capacity.

The marginal operations cost or CMO is a measure of the cost of adding one additional MWh of electric generation capacity to the national interconnected electricity system. Currently, a CMO price above Real 740 implies that all of Brazil's gas-fired thermal plants are dispatched.

IMPORTS CONTINUE TO PRIORITIZE NORTHEAST

First-half December imports continued to prioritize northeast Brazil, which imported 427,425 cu m or roughly 60% of the total. The regasification terminal at Salvador de Bahia imported 293,000 cu m, while Pecem Regas in the state of Ceara, imported 134,425 cu m.

During November, Brazil also sent more than 57% of LNG imports to the Northeast in a move to ensure sufficient gas supply to the region.

The Gasene pipeline, which normally enables the transportation of up to 20 million cu m/d of gas from the southeast to the northeast of the country, saw its flows restricted due to 100% dispatch of gas-fired power plants in Brazil's southeastern states.

Historically state-owned oil and gas company Petrobras, which has a de facto monopoly on LNG imports, has sent upwards of 60% of globally-sourced supplies to the Guanabara Bay regasification terminal, located in the Southeastern state of Rio de Janeiro.

If Brazilian imports of LNG remain at their current pace during the second half of the month, December will mark the fourth largest volume of monthly imports on record.