Mitsubishi, Shell JV to build gas-fired power plant in Brazil

Patria Investments, Shell and Mitsubishi Hitachi Power Systems Americas (MHPS) have announced the signing of a contract with Brazil’s State-owned development bank (BNDES) to finance the gas-powered Marlim Azul Energia thermoelectric plant, in Macaé (Rio de Janeiro State). The loan approved by the federal bank for the construction of the plant is R$ 2 billion, over 24 years.

“The contract with BNDES is an important step in the development of a project that will make a decisive contribution to the consolidation of the new gas market, making the market and prices more competitive. We are making energy generation from Brazilian pre-salt gas a reality,” says Bruno Chevalier, CEO of Marlim Azul Energia.

Formally agreed in December 2018, the joint venture among Patria, Shell and MHPS develops the plant, as well as trading of the energy generated, both in the captive market through auction held by the National Electrical Energy Agency (ANEEL) in December 2017, and in the Free Contracting Environment (ACL, in Portuguese), through Shell Energy Brasil. Patria Investments has a 50.1% stake in the project with Grupo Shell having 29.9% and MHPS, 20%.

“BNDES’s faith in Marlim Azul reflects the capacity demonstrated by Patria over the years in developing solid and efficient assets that have been contributing to the expansion of Brazil’s infrastructure in a several segments. For Patria, the energy area is one of the most relevant in Brazil, with a lot of opportunities for private initiative,” says Otavio Castello Branco, a partner in Patria, and head of investments in infrastructure.

The Marlim Azul plant (565 MW) is the first of Brazil’s pre-salt gas-powered energy projects to win an auction, offering one of the most competitive variable unit costs (VUCs) in gas-powered plants. The plant will come into operation in January 2023. The joint venture is to invest R$ 2.5 billion in the construction of the thermoelectric plant, with Shell Brasil Petróleo Ltda supplying the gas.

“It is a pioneering and competitive project that will enable us to monetize Brazil’s pre-salt natural gas. To do this, we chose partners who share our purpose, our vision of the future. Marlim Azul is the latest indication of our bet on energy transition. Establishing a new value for natural gas and underscoring our production in energy production and trading makes this project a milestone in our century of history in Brazil,” says the CEO of Shell Brasil, André Araujo.

The first plant to use a gas-powered MHPS turbine with M501JAC technology in Brazil, Marlim Azul is expected to have a dispatch efficiency of more than 80%, which will allow it to complement renewable generation intermittency with pre-salt natural gas reserves. At its peak, construction of the plant with directly employ around 1,500 people.