Brazil's mines and energy ministry has authorized Bolivian state-owned YPFB to begin directly marketing gas to Brazilian end-users, moving beyond the company's traditional Brazilian counterparty, state-controlled Petrobras.
The five-year authorization allows YPFB to import up to 1.2mn cm/d of gas into Brazil in 2020. Volumes will increase to 2.6mn cm/d in 2021 and 3.6mn cm/d for the remaining three years of the authorization.
The ministry said the gas will supply markets in Mato Grosso do Sul, Sao Paulo, Parana, Rio Grande do Sul and Santa Catarina states, all of which have access to the Bolivia-Brazil gas pipeline (Gasbol).
In 2018 and 2019, gas distributors in these five states conducted a tender offer for the supply of 10mn cm/d of gas. But because of a lack of clear regulations for access to transport infrastructure, the offer was dominated by Petrobras. Petrobras also swept a first-ever open season for access to Gasbol, contracting 18.08mn cm/d of capacity for 2020 and 8mn cm/d for 2021.
Petrobras and YPFB are currently negotiating a long-term gas supply contract after their 1996 contract expired on 31 December 2019.
In a 30 December statement, Petrobras said it expects the new contract with YPFB to be for 20mn cm/d, down from 30mn cm/d in the previous contract.
Petrobras said that by reducing the volume of its long-term contract by 10mn cm/d, YPFB will be able to sell gas directly to clients in Brazil.
The two companies reached a short-term gas supply agreement in late December, but expect to have a final long-term contract by 10 March 2020.
Transportadora Gasoduto Bolivia-Brasil (TBG), which controls the 30mn cm/d Gasbol pipeline, currently is receiving proposals from interested parties for a new open season.
Interested parties have until 15 January to request capacity with TBG. The terms of the new offer, including the amount of capacity to be offered and tariffs, will be determined by hydrocarbons regulator ANP. Under the terms of the offer, Petrobras will be prohibited from participating.
Brazil is seeking to diversify its gas supplies as Petrobras pulls back from his dominant position in the sector. Last July, Petrobras agreed to exit gas distribution and transport as part of an agreement with anti-trust regulator Cade.
The opening of the gas sector is similarly reflected in new LNG-to-power projects spearheaded by the private sector, breaking Petrobras' monopoly on LNG imports.
