Brazilian state-led energy company Petrobras will grant rival producers and other companies access to onshore natural gas processing facilities in a two-step process in the latest move toward opening Latin America’s biggest market under the terms of an antitrust agreement signed in July 2019, S&P Global Platts reported on Thursday.
“According to the business model adopted, the company will start to act as a processor of natural gas supplied by other agents,” Petrobras said in a statement late Wednesday. “With the measure, Petrobras reaffirms its commitment to contribute to the development of an open gas market that is competitive and sustainable.”
Brazil launched the “New Gas Market” program last year after Petrobras agreed to end its monopoly in gas distribution and transportation. The program aims to lure private-sector investment to expand gas supplies, distribution networks and logistics and transportation infrastructure, including offshore export pipelines and onshore distribution pipelines. Brazil expects the wholesale opening of its gas market to increase output of the fuel, boost consumption and reduce prices.
The opening will be conducted in two steps, Petrobras said. In the first phase, which is currently underway, companies will be allowed to buy processing capacity for gas produced from fields in active production, Petrobras said. The first phase will be used “as a way to guarantee the continuity of the country’s oil and gas production,” Petrobras said.
In the second phase, any remaining processing capacity will be made available to other interested market entities after the first phase of negotiations with gas producers has been completed, Petrobras said. The second phase will be conducted on an annual basis, it said.
Under the terms of the antitrust agreement, international oil companies in Brazil will be allowed to sell gas directly into the Brazilian market. The gas was previously sold directly to Petrobras, which was tasked with onshore processing, distribution, and delivery.
“When the new model is implemented, natural gas producers will no longer need to sell gas to Petrobras,” the company said. “Producers could contract part of Petrobras’ processing capacity and will continue to be the owners of the gas produced and all of its derivatives, allowing for the direct sale of their products in the market.”
The processing will be allowed at any of Petrobras’ 10 processing plants, which have the capacity to handle 93.4 million cu m/d, the company said. That includes the three biggest plants at Cabiunas (25.2 million cu m/d), Caraguatatuba (20.0 million cu m/d) and Cacimbas (18.1 million cu m/d), it said. Petrobras plans to maintain operational control of the units, which will not be sold under the company’s $20 billion-$30 billion divestment program for 2020-2024, according to the company.
Interested companies will sign contracts covering firm, fixed use of available capacity or interruptible contracts covering excess processing capacity, Petrobras said. Payments for the processing will be negotiated between the parties, it said.
S&P Global Platts