The 2023 start of Brazil's gas for jobs program elevated natural gas as a potential driver of the country's reindustrialization, but several bottlenecks have yet to be resolved.
The gas for jobs program was created under the new administration of President Ignacio Lula da Silva in 2023 to focus natural gas toward fulfilling national economic growth ambitions. Instead of just being looked at as a stable energy source to ensure the energy transition, natural gas is now recognized as a force capable of propelling industrial revitalization, said João Victor Marques, researcher at the Getulio Vargas Foundation, an energy think tank.
Natural gas has a potential role in growing strategic sectors like steel, ceramics and petrochemicals, where its use has been suppressed by limited supply, according to many industry groups. It is now being seen as a tool as important as oil, but with the added benefit of being able to support the energy transition — a subtle but important distinction.
But gas for jobs has its work cut out for it. Brazil produced 162.1mn m³/d of natural gas in November but only half of it was available for the market — the rest was reinjected into wells to boost crude production or because of lack of pipeline capacity. Current domestic natural gas prices top $11/mmBtu, similar to the price of imported natural gas.
Brazil's natural gas market has undergone a significant revolution in the last two years, but market participants remain divided into two categories: the confident, who believe the progress will continue; and the skeptics, who question if the market has really evolved and bemoan the slow pace of change.
Market participants engage with each other in many oil and gas industry roundtables throughout the year, each one with distinct priorities. Producers, transporters, distributors, end-consumers, the federal and states governments, legislators, and regulators mostly agree on a goal of maturing the market and making it grow. How to do so is where the parties are divided.
The gas for jobs program, initiated in March through five working groups, has several key goals: increase the country's natural gas supply, optimize the socioeconomic returns of national gas production, enhance gas availability for fertilizer and petrochemical sectors, and integrate natural gas into the national low-carbon energy transition strategy, including biogas, low-carbon hydrogen, industrial cogeneration, and carbon capture.
After some rounds of debate, the program reaches the end of 2023 with some of those goals on a path to advance in 2024. This includes the need to increase exploration projects to expand natural gas supply and bring prices down; facilitating access to Petrobras' existing facilities such as gas processing units; better integrate infrastructure such as transport pipelines; increase pipeline mileage; and advance the regulation agenda.
In January, the oil and gas regulator ANP is set to release regulations for access to existing oil, gas and biofuels facilities for market participants — which are highlighted as key bottlenecks for the segment.
If gas is to serve as an essential input for Brazil's industrialization, the industry expects an increase in supply, better prices, and caution to avoid fueling the legal and regulatory uncertainty.
