<article><p class="lead"><i>Brazil's limited pool of natural gas traders </i><i>will expand</i><i>. Power trader and generator </i><i>Delta Energia</i><i> i</i><i>s</i><i> taking its first steps as a trader in the gas market. Delta's chief executive </i><b>Alessandro di Domenico </b><i>spoke with Argus about the company's entry into the sector, which will rely on natural gas from Bolivia and try to offer innovative products. Edited highlights follow.</i></p><p class="lead"><b>Why did Delta decide to start selling gas in Brazil at this moment?</b></p><p class="lead">It is never too late to start. Delta was already a pioneer in the energy market 20 years ago when the power market was liberalized. And now, once again, it is a strategic position for the company to offer solutions to its customers.</p><p>Our focus is the solution, so we are monitoring how consumers behave. They are interested in consuming a little more in the short term, or [consuming] something complementary, so I think we have a lot to offer in this process and now is the time. The market will evolve. It will have to mature and we want to be present.</p><p class="lead"><b>There are very few companies in the free natural gas market today. Why do you think there will be space for Delta ?</b></p><p class="lead">This is a conversation we have with the distributors. They even ask for support in this complementation. The market is at its beginnings, but it will grow. </p><p>People are specializing and looking for new products. The development of state laws, mainly, will allow smaller consumers to be in the free gas market. So, they will lower that [gas demand] cut-off line in each state for the free market.</p><p class="lead"><b>What does the company expect for the future of the natural gas free market in the country? What opportunities do you see in the next few years?</b></p><p class="lead">Commercially speaking, we think we will have a large slice of the free market. Distribution companies are focused precisely on distributing.</p><p>They are already paid — through tariffs — for the investment in the networks they are expanding. I think they are increasingly asking for support from traders, that is, people who can bring new products, to have something attractive and different from what we have today.</p><p class="lead"><b>Which hurdles and bottlenecks are preventing people from entering this market?</b></p><p class="lead">I think the market's regulation needs to evolve — <b>transportation costs, for example, with [the challenge of how to charge for] interconnections</b>. ANP is already looking at this and flexible products are also beginning to appear in this transportation issue.</p><p>Of course, Brazil's pipeline network still needs a lot of investment to facilitate expansion. The government will provide conditions for this market to develop. A lot still needs to happen and we will be well-positioned.</p><p class="lead"><b>How do you plan to compete with distributors who make contracts at the standard 12pc of the Brent price for the next few years?</b></p><p class="lead">That [12pc of Brent] number is from older contracts that have now been restructured because of conflicts. We think we can have shorter-term products that can be flexible and complementary. It is difficult to compete with 12pc of Brent today when the international market is paying much more in Europe. But it is something we are mapping out and will continue to do.</p><p>Biogas is also being injected into the same pipeline as natural gas. Biogas is a product that is being industrialized here in the country and is competitive, with good pricing. We will also be looking for these opportunities.</p><p class="bylines">By Rebecca Gompertz</p></article>
