Brazil Opens Petrobras Pipelines to State Pre-Salt Gas, Targets 50% Price Cut for Industry

Brazil's National Energy Policy Council (CNPE) approved a resolution on Thursday 30 allowing the use of Petrobras pipelines to move the federal government's share of natural gas produced in the pre-salt, opening the incumbent's midstream network to volumes it does not own. The Ministry of Mines and Energy (MME) estimates the price of gas for large consumers will fall 50%.

The gas will be sold through auctions with direct sales to large consumers, including thermal power plants and industrial buyers. Under the resolution, the auctions will be run by Empresa Brasileira de Administracao de Petroleo e Gas Natural - Pre-Sal Petroleo (PPSA).

The access tariff is the pivot. Brazil's oil, gas and biofuels regulator, the Agencia Nacional de Petroleo, Gas Natural e Biocombustiveis (ANP), will set the amount paid to Petrobras for use of the company's pipeline. That determination decides how much of the projected price gap reaches the buyer rather than the pipeline owner.

The working group of the Gas para Empregar programme, created by the CNPE, estimates the resolution should cut the price of natural gas from USD 12 per million BTU to USD 5 per million BTU.

The decision amends CNPE Resolution No. 15 of October 29, 2018, restructuring the policy for commercialising the federal government's natural gas. The MME says the new resolution answers a requirement of Law 14.134 of 2021, whose article 33 sets out measures to expand natural gas supply in Brazil.

One auction is scheduled for the last two-month period of this year, with further auctions running to 2030 and beyond, according to the MME.

Gas sold by the federal government will go first to gas-intensive base industries such as chemicals, petrochemicals, fertilisers and steel, according to the ministry.

MME minister Alexandre Silveira, who chairs the CNPE, said the new resolution will be able to reduce the fuel's cost for base industries in Brazil. "For our infrastructure to be better used in favour of Brazil and for us to have cheaper gas, we will start with the Union's gas," Silveira said, adding that he expects other sources to come forward to increase gas supply and ease the strain on industry.

Daniela Coutinho, vice-president of Abrece Energia, said she hopes cheaper gas helps reverse the declining trend in industrial demand. More gas in the market at a lower price would raise competitiveness in industry, she said.

Agencia Brasil contacted Petrobras for comment on the change approved at the CNPE and had received no response by the time its report closed.