Brazil's natural gas market reached nearly 100 valid contracts with different suppliers, but participants complain about non-competitive prices for consumers as state-controlled Petrobras' dominance continues to spread.
Intense activity in the country's gas market in late 2023 carried through into the beginning of 2024. There are 98 contracts from 16 different suppliers currently in effect, according to hydrocarbons regulator ANP, but Petrobras is the supplier in 53 of them. Petrobras signed 25 contracts on 29 December, including 15 with northeastern distribution companies — a twist following the company's decision to not renew supply contracts in the region in 2022 after the new gas law was published. Petrobras' signed deals with distributors from Paraiba, Ceara, Rio Grande do Norte, Pernambuco and Sergipe states.
Bahiagas has the most diverse supply portfolio in the country, with 10 suppliers: Shell, Equinor, Galp, Origem, Petroreconcavo, 3R, Alvopetro, Consorcio ERG, Eagle, and Petrobras. That shows the northeastern market's dynamism after Petrobras' 2022 decision.
In December Petrobras also renewed agreements with CEG and CEG Rio — the two Rio de Janeiro state distribution companies controlled by Spanish utility Naturgy— ending a two-year legal dispute. While Naturgy signed long-term contracts, the pricing conditions — averaging 13.49pc of the Brent crude index in 2024 — were not as favorable as those negotiated by other distributors.
In 2023 Petrobras signed long-term contracts with terms near 12pc of Brent — lower than those signed during the early days of the Russia-Ukraine war — and introduced Henry Hub US gas indexation. But percentages revolved around 11.6pc for four-year contracts before the conflict in Europe, large energy consumers association Abrace chief executive Adrianno Lorenzoni said. "Now, they stand at approximately 11.9pc for decade-long commitments, painting a less favorable picture for the end consumer," he said.
Other participants have entered the market, such as Sao Paulo state distributor Comgas, which signed a deal with Petrobras in mid-2023. The pricing starts at 11.9pc of Brent for 2024 and 2025, then transitions to a hybrid model with the Henry Hub in 2026.
On 2 January, Comgas added some supply diversity in a deal with Shell — but with very similar conditions, at 11.7pc of the Brent.
