* Brazil seeks extra LNG to makes up for lost hydro
* Cargoes heading for Brazil
* LNG prices likely high as Asian winter drives demand
By Edward McAllister
NEW YORK, Jan 8 Brazil is paying top dollar for
emergency imports of liquefied natural gas, scrambling to deal
with a power crisis as the worst drought in decades threatens
hydro-electricity supplies in the country's northeast, regional
energy traders said.
LNG traders said state-run energy giant Petrobras
has been forced to pay premium prices to secure spot
cargoes of LNG due to strong demand for the fuel from Asian
countries hit hard by cold winter weather and ahead of planned
purchases by Argentina.
The high-priced spot purchases would leave Petrobras with
millions of dollars in losses if the company is not able to pass
on the full price of the purchases to Brazilian consumers.
LNG traders believe Petrobras may have recently paid as much
as $15-$17 per million British thermal units (mmBtu), a large
premium to domestic gas prices.
Asian prices rose above $17 per mmBtu last week as a cold
snap boosted purchases. LNG prices in Europe are currently
around $11 per mmBtu.
In the United States, abundant domestic gas is priced just
above $3 per mmBtu.
"The drought in the north (of Brazil) is very aggressive, so
Petrobras is having to balance it out with LNG purchases," said
one LNG industry source who trades in the region. "They are
buying everything they can so they will not be left short."
Brazil has two LNG import terminals, one in Pecem, a few
miles north of Fortaleza in the northeast, and one in Rio de
Janeiro in the south.
LNG, which is natural gas cooled to a liquid state for
shipping, is generally used as a substitute fuel in Brazil
during the dry months when hydro power levels fall.
Petrobras is expected to purchase about four cargoes per
month for January and February, the source said.
Two LNG cargoes have already arrived at the Pecem terminal
in the northeast this month. The facility usually does not
receive any natural gas in January or February since normal
rainfalls encourage maximum use of hydro-power.
A third tanker, the Excelsior, is currently anchored a few
miles from the terminal, Reuters ship tracking data shows. The
Arctic Voyager tanker was expected in Brazil on Jan. 22.
(Additional reporting by Oleg Vukmanovic in London; Editing by