Brazil gas group splits, shifts attention to new agency
A coalition of Brazilian industries created to lobby the federal government over natural gas issues has split after just three months.
The coalition for the competitiveness of natural gas as a raw material — which included the chemicals and fertilizer industries, gas distributors and engineering firms — decided to dissolve when it became clear proposals from the group to reduce natural gas prices and increase pipeline investments would conflict with each other.
Leading voices in the group were focused on directing gas to Minas Gerais state, in Brazil's heartland, one coalition source told Argus, at the expense of other efforts to guide prices. Those leaders supported subsidized prices that could help restart construction of a fertilizer production unit in the city of Uberaba. The cornerstone for the plant was laid by former president Dilma Rousseff in 2014, but state-controlled Petrobras never went further with the project. Another unit in Tres Lagoas city, in Mato Grosso do Sul state, also failed to leave the drawing board.
Mines and energy minister Alexandre Silveira is keen to resume building fertilizer units in Minas Gerais, his home state where he has deep political roots, according to another source. In recent oil and gas events in Brazil, former Uberaba mayor Anderson Adauto, who is closely aligned with Silveira, presented himself as a representative of the coalition.
But some members of the coalition found it difficult to turn these Minas Gerais proposals into reality, as final gas costs would be higher than the current average and government members of the group were not in agreement on limiting the industry sectors that would benefit from subsidies. A study funded by the group showed that taking natural gas to Minas Gerais — instead of moving it to locations served by existing pipelines — would increase gas prices by around $3/mnBtu, a member of the coalition told Argus. The current $11/mnBtu price is already too high to make urea production competitive with imported supply, fertilizer producers said.
Development ministry's doors open
Other gas industry groups and some former coalition members are now turning to the ministry of development, industry, commerce and services (Mdic), headed by vice-president Geraldo Alckmin, which is filling a void left by the mines and energy ministry (MME) in the gas sector.
Mdic's infrastructure and business environment improvement director Alexandre Messa is leading discussions on a gas release program. He attended the major gas industry event recently, while the MME did not send speakers.
On 10 May, the Gas Forum — a group of industrial and energy consumer associations — met with Alckmin to address their suggestions on policymaking to stimulate the gas market. Meeting participants told Argus it appearsMME and Mdic are not aligned on their approaches to gas policy — which may be a positive for the industry since more urgent matters that have been neglected by MME, like harmonizing states gas regulation and the gas release program, can move forward through Mdic.
"Alckmin is interested in the gas agenda and knows its problems, such as high prices and lack of supply," a meeting participant said. "There is space in the government for us to debate solutions."
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