Brazilian state-owned commodity marketing firm PPSA is preparing to increase the federal government's share of natural gas sales — and to step out from state-controlled Petrobras' shadow — which would lead to a more diverse and dynamic gas market, according to market participants.
Established in 2013, PPSA represents the federal government in all eight production-sharing contracts in Brazil and is responsible for managing them. The firm has mostly sold the federal government's share of oil thus far, but it gained two new roles last year: more autonomy to act in public policies and the responsibility to offer gas at competitive prices — a promise of the gas for jobs program.
Still, its share of Brazil's natural gas is negligible. It receives a mere 140,000 m³/d, roughly 0.3pc of the 52.4mn m³/d made available to the market in January, according to oil and gas regulator ANP.
Petrobras currently acts as PPSA's commercial arm and receives most of Brazil's gas, getting 100mn m³/d in January.
But the marketing firm has been working hard on the sidelines to turn that around. Interim president Tabita Loureiro — appointed last year after an 18-year career at ANP — has been shuttling from Rio de Janeiro to Brasilia for a year, negotiating with energy policy council CNPE trying to move that agenda forward and publish new regulations. Her last visit to Brasilia was on 11 March.
PPSA's main demand is to access SIP, a system that manages Petrobras' natural gas processing units in Caraguatatuba, in Sao Paulo state, and Cabiunas and Gaslub, in Rio de Janeiro state. The two states are responsible for 80pc of Brazil's gas production. With that, the government's share of gas production could reach 150,000-200,000 m³/d this year, increasing to 200,000-300,000 m³/d in 2025-2026 and jumping to 1.8mn m³/d as of 2027, Loureiro said. That could peak at 3.5mn m³/d by 2029, when investment return clauses on the production-sharing contracts are due to end.
Under the production-sharing contract, the government holds ownership of the gas, while the oil company acts as a contractor to carry out exploration and production activities. In exchange, the company receives a portion of the gas production as payment, typically in the form of a percentage of the total production, after deducting exploration and production costs. By the end of the exploration and production expenses, the volume increases for all partners.
