South America City Gas Distribution Market - Growth, Trends, and Forecasts (2023 - 2028)
The South American city gas distribution market is projected to register a CAGR of over 2% during the forecast period. The market was negatively impacted by the COVID-19 pandemic in 2020. Presently, the market has reached pre-pandemic levels.
Over the medium term, the growing demand for natural gas as an alternative fuel and the ability of city gas to emit low carbon particles compared to coal and oil are factors expected to drive the growth of the market studied. On the other hand, the increasing adoption of renewable fuels in the transportation sector is expected to restrain the growth of the market studied during the forecast period.
Nevertheless, projects using CNG to power will likely provide a vast market for the city gas distribution players. Additionally, the rapid urbanization in the region is expected to create considerable opportunities for the South American city gas distribution market in the coming years.
Brazil dominates the market and is also predicted to witness the highest CAGR during the forecast period. The growth is mainly driven by the increased demand for natural gas from the various sectors in the country.
Key Market TrendsPower Sector to Dominate the MarketA gas-fired power plant, also called a gas-fired power station or natural gas power station, is a thermal power plant that generates electricity by burning natural gas. Natural gas power plants are low-cost and quick to build and have very high thermodynamic efficiencies compared to other power plants. The burning of natural gas churns out fewer pollutants, such as NOx, SOx, and particulate matter than coal and oil.
Combined cycle plants are more efficient because they utilize hot exhaust gases that would otherwise be discarded from the system. These are then used to boil water into steam, which can then spin another turbine and generate more electricity, resulting in up to 60% thermal efficiency.
In 2021, about 1,364.8 TWh of electricity was generated at various electricity generation facilities in South America. About 20.6% of this electricity generation was from natural gas. In 2021, electricity generated from natural gas was 281.1 TWh, with an increase of 21.2% from 2020. The demand for gas-fired power plants is expected to increase during the forecast period.
According to the International Energy Agency (IEA), in Argentina, natural gas (55%) and oil (33%) constitute the majority of the country's primary energy mix, while bioenergy contributes 5% and nuclear and hydropower each contribute 3%. The upcoming gas-fired power projects in Argentina are expected to drive the growth of the market studied.
In October 2022, Invenergy commissioned operations at the Energía del Pacífico (EDP) LNG-to-power project located at the Port of Acajutla in El Salvador. A natural gas-fired power plant of 380 megawatts (MW) is included in the project, along with a floating storage regasification unit (FSRU), a 1.8-kilometer subsea pipelines connecting the power plant with the floating storage regasification unit, and two 230-kV transmission lines, one of which connects to the Central American Electrical Interconnection System.
Due to these factors, the ongoing developments in power plants based on natural gas in various South American countries are expected to dominate the market during the forecast period.
Brazil to Dominate the MarketThe South American city gas distribution market is partially consolidated. Some of the major players (in no particular order) are Petroleo Brasileiro SA, Companhia de Gás de São Paulo (Comgás), Ipiranga, Naturgy Energy Group SA, and Tecpetrol.
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