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Brazil expands tax cuts to nat gas projects

  • Market: Natural gas
  • 18/08/21

The Brazilian federal government will include the natural gas sector in an existing tax incentive program for infrastructure investments, a move that could boost the country's burgeoning gas markets.

The new ordinance will let natural gas production, processing, pipelines and local distribution system projects waive up to 9.25pc in federal taxes on machinery or feedstock under the existing Special Regime to Incentivize Infrastructure Investments (REIDI). REIDI was created in 2007 for transportation, power, ports, energy, irrigation and sanitation sectors, to eliminate the PIS and Cofins taxes which generate funds for social programs.

Companies can mandate gas structure projects get the PIS/Cofins tax breaks, which are then deducted from the machinery and feedstock purchase invoices. These taxes will be later zeroed-out when the equipment, feedstocks or other products are used by the project.

The update to the REIDI to include natural gas projects is aimed at "giving more legal certainty to entrepreneurs" and help "increase the investment in the gas sector", the Ministry of Mines and Energy told Argus.

At least one natural gas pipeline construction project applied for the tax break in the past, but it was not clearly defined by law. The inclusion of the natural gas sector, particularly the possibility of including non-oil associated gas production infrastructure in the tax break, is one more signal from the government that it will open the gas sector and attract infrastructure investments. The biofuels sector has asked for the same benefit but has not yet been granted.

Including natural gas in the REIDI tax break may encourage more domestic natural gas production, said Renata Beckert Isfer, partner at oil and gas exploration company Petres Energy.

"Brazil's overly demanding regulatory framework and its high royalty payments for onshore E&P companies make the production of natural gas economically unfeasible in areas that could be producing and generating more jobs and income," Isfer said.

It can also speed up the expansion of market capacity and reduce the cost of projects, said Márcio Seixas, an energy sector tax advisory attorney at the law firm Terciotti, Andrade, Gomes, Donato.

The newly opening gas market in Brazil will depend on deep levels of investment to gain liquidity. Tax breaks for construction of new infrastructure can accelerate the expansion of the 9,409km pipeline network and add more gas processing capacity to the 14 existing units, with 96mn m³/d processing capacity.

Seixas said gas businesses are still hoping for even deeper tax cuts, like the oil industry gets under the REPETRO law, where production, import and sales taxes can also be trimmed.


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13/12/24

Canada sets 2035 emissions reduction goal

Canada sets 2035 emissions reduction goal

London, 13 December (Argus) — Canada has set a new 2035 climate goal, aiming to reduce its greenhouse gas emissions by 45-50pc by 2035, from a 2005 baseline. This builds on its 2030 target of a 40-45pc emissions reduction, again from 2005 levels. Canada's emissions had been in 2015 projected to rise by 9pc by 2030, from 2005 levels, "but we are now successfully bending the curve", the Canadian environment and climate change ministry said. The newly-announced target is in line with a pledge Canada made at the UN Cop 29 climate summit last month. Countries that are party to the Paris climate accord must submit new national climate plans by 10 February 2025, to cover a timeframe up to 2035. Canada, the EU, Mexico, Norway and Switzerland committed at Cop 29 to set out new plans with "steep emissions cuts" that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The plans are known as nationally determined contributions (NDCs). Canada's NDC is being considered by the cabinet, and the country plans to submit it by the deadline, Canadian climate change ambassador Catherine Stewart told Cop 29 delegates on 21 November. Tackling climate change is "both an environmental imperative and an economic opportunity", she added. The target was informed "by the best available science, Indigenous Knowledge, international climate change commitments, consultations with provinces and territories and expert advice", the ministry said. Canada will also "seek feedback on how to help companies take advantage of the economic opportunities that come with building a clean economy" in the near term, it added. Although the plan is not yet available, the ministry said that it will examine the role of carbon removal technologies for the energy transition. "Canadians are increasingly experiencing record-breaking extreme weather," the ministry noted. The country experienced record wildfires in 2023. Carbon emissions from wildfires this year were second only to the "unprecedented" levels in 2023, EU earth-monitoring service Copernicus found this month. Canada has a legally binding target of net zero emissions by 2050. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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India's Gujarat Gas raises PNG prices in Morbi cluster


13/12/24
News
13/12/24

India's Gujarat Gas raises PNG prices in Morbi cluster

Mumbai, 13 December (Argus) — India's state-run city gas distribution company Gujarat Gas has increased prices of piped natural gas (PNG) in the Morbi industrial cluster in west India's Gujarat state. This came after it kept rates unchanged since July. Prices of PNG used in the industrial ceramic cluster have been hiked to 46.95 rupees/m³ ($0.55/m³) from Rs44.68/m³ in July. This comes to Rs5.60/kcal on an energy equivalent basis, based on a calorific value of 8,400 kcal/kg. This is slightly higher than propane prices, which is a competing fuel in the region's ceramic cluster. Propane prices in Morbi were pegged at Rs61/kg for December , up from Rs60.30/kg in November because of rising import costs. Propane on an energy equivalent basis is Rs5.50/kcal based on the calorific value of 11,100 kcal/kg, traders said. Gujarat Gas has regained some market share in the last few months by keeping its prices unchanged. But it remains to be seen if ceramic units in the region will switch back to propane again. Propane demand in the region fell to 3.2mn m³/d in November from 4.5mn m³/d in October, regional traders said. Overall gas demand in the region was 7mn m³/d in November. Capacity utilisation of ceramic clusters continues to remain weak because of lower export demand for the upcoming Christmas season in the west, according to traders in the region. Gujarat Gas competes with regional propane distributors, including state-controlled IOC, BPCL and HPCL, as well as private-sector firms Reliance Industries, Aegis Logistics and Gogas. It remains to be seen if propane prices will rise further next month, as Saudi Arabia's state-controlled Aramco kept its December propane contract price unchanged at $635/t. Spot LNG prices have also risen this month, which makes a fall in PNG prices unlikely. The Argus -assessed spot price of LNG delivered to India's west coast for first-half January stood at $14.09/mn Btu on 12 December, up from $12.70/mn Btu a month earlier for December-arriving vessels. Tile manufacturers in Morbi have been switching between PNG and propane depending on LNG import prices, since the latter rose in 2022 as a result of the Russia-Ukraine war. By Rituparna Ghosh Propane vs PNG prices (Indian rupees/kcal) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US inflation rises to 2.7pc in November


11/12/24
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11/12/24

US inflation rises to 2.7pc in November

Houston, 11 December (Argus) — Headline US inflation ticked higher in November, largely on food and shelter costs, suggesting the Federal Reserve still has work to do to reach its inflation target. The consumer price index rose by an annual 2.7pc in November after rising by 2.6pc through October, the Labor Department said. The gain matched expectations in a survey of economists by Trading Economics. So-called core inflation, which strips out more volatile food and energy, rose by 3.3pc, matching the prior month's gains. Services less energy services rose by 4.6pc following a 4.8pc increase the prior period. Today's report is the last consumer price index (CPI) reading before Federal Reserve policymakers meet next week to assess progress in bringing down inflation to their 2pc long term goal and release economic projections. The CME FedWatch tool today gave a 96pc probability the Federal Reserve will cut its target rate by a quarter point at its last meeting of the year, up from nearly 89pc Tuesday. The Fed began cutting its target rate in September after holding it at a 23-year high for more than a year. The energy index contracted by 3.2pc for the 12 months ending in November after falling by 4.9pc through October. Gasoline fell by 8.1pc and the fuel oil index declined by 19.5pc. The food index rose by 2.4pc over the past year, following a 2.1pc gain through the prior month. Transportation services rose by 7.1pc. Shelter slowed to 4.7pc from 4.9pc The CPI rose by 0.3 in November from the prior month, after rising by 0.2pc in each of the prior four months. The shelter index rose by 0.3pc for the month, accounting for nearly 40pc of the total monthly gain in the headline index, Labor said. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Brazil's inflation accelerates to near 5pc in November


10/12/24
News
10/12/24

Brazil's inflation accelerates to near 5pc in November

Sao Paulo, 10 December (Argus) — Brazil's headline inflation accelerated to a 14-month high in November, led by gains in food and transportation, according to government statistics agency IBGE. The consumer price index (CPI) rose to an annual 4.87pc in November from 4.76pc in the previous month, IBGE said. Food and beverage costs rose by an annual 7.63pc in November, accounting for much of the monthly increase, following a 6.65pc annual gain in October. Beef costs increased by an annual 15.43pc in November following an 8.33pc annual gain for the prior month. Higher beef costs in the domestic market are related to the Brazilian real's depreciation to the US dollar, with the exchange rate falling to a record-low R6.11/$1 at the end of November. The stronger dollar leads producers to prefer exports over domestic sales. Beef prices rose by 8pc for the month alone. Soybean oil prices rose by 27.75pc over the year. Transportation costs, another major contributor to the monthly acceleration, rose by an annual 3.11pc in November after a 2.48pc gain in October. On a monthly basis, transportation costs rose by 0.89pc in November, reversing a contraction of 0.38pc in October. Housing costs rose by 4pc over the 12-month period. Brazil's central bank last month hiked its target rate to 11.25pc, its second increase off a low of 10.5pc between May and September, to try to head off a resurgence in inflation. It was at a cyclical peak of 13.75pc from August 2022 through July 2023 as it sought to tamp down the post-Covid-19 surge in inflation. Fuel prices rose by an annual 8.78pc in November after a 7.22pc gain in October. Motor fuel costs fell by 0.15pc in November compared with a 0.17pc drop in October — thanks to lower ethanol and gasoline prices. Diesel prices contracted by 2.25pc in the 12-month period. Power costs slowed to an annual 3.46pc in November following a 11.58pc gain in October. Electricity prices contracted by a monthly 6.27pc after a decrease in power tariffs on 1 November. Monthly inflation slowed to 0.39pc in November from 0.56pc in October. The central bank's inflation goal for 2024 is 3pc, with a margin of 1.5pc above or below. By Maria Frazatto and Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Meta sites largest data center in Louisiana


10/12/24
News
10/12/24

Meta sites largest data center in Louisiana

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