The number of companies signing transportation capacity contracts in Brazil's natural gas midstream segment has doubled from last year.
So far this year, 23 companies have signed agreements with pipeline operators TAG, TBG and NTS to transport gas, a jump from 11 in 2022. This signals that gas consumers, producers and traders are getting ready for trading opportunities in the second year of Brazil's gas market liberalization.
TAG, which reaches the northeastern states' coastal areas, has added eight more companiesto its portfolio in 2023 over early 2022, raising the number to 16 companies. Six other companies signed master contracts that allow them to later contract capacity: producers 3R Macau, 3R Petroleum and 3R Potiguar; trader Gas Bridge; and distributors CDGN and ESGas.
TBG, which brings gas from Bolivia into Brazil's southeastern and southern states, increased its portfolio to nine companies from three. Additionally, 13 companies — producers Petrobras, Galp, Eneva and Petroreconcavo; traders Blueshift, Compass, Tradener, Gas Bridge, Trafigura and NFE; distributor CDGN; and consumers Delta and Proquigel — signed master contracts with TBG and are now able to make deals on capacity.
NTS, which covers the southeastern states, increased its portfolio of capacity deals to three companies, from one previously, as well as five master contracts with producers Petrobras, Shell and Galp; traders Blueshift and Compass; and distributor CDGN.
The additions to Brazil's gas shippers' list corroborates with how Brazilian gas market participants have found ways to navigate the new market despite a lack of proper tenders for firm ordinary capacity contracts. Only TBG has launched open seasons — four, in fact — for this kind of contract.
TAG and NTS are waiting for oil and gas regulator ANP to approve the terms of their first open seasons and both have idle capacity to be contracted. But the agency has yet to approve the terms, as it does not have enough public servants to tackle all activities, according to ANP employees and market participants. Both companies are handling this by opening capacity deal opportunities in extraordinary tenders.
NTS is working to facilitate deals for capacity, according to commercial and regulatory director Helder Ferraz. He also said that open seasons are not the best way for gas shippers to sign capacity contracts, because approvals and legal hearings take time. NTS has around 5mn m³/d of idle capacity at the Paulinia refinery, in Sao Paulo state, where it connects with TBG's pipeline.
"We want pipeline operators to work 24/7 in an online marketplace with all information open for audits," Ferraz said, adding that gas shippers need to be able to hire capacity anytime, with "no need for open seasons."
NTS foresees changes in the southeastern gas flows, which will demand investments, with Bolivian and Brazilian Mexilhao offshore field gas field production declining within five years, said Ferraz. Therefore, NTS is planning two projects to tackle future bottlenecks and changes in gas flows. One of them will be a new compression station in Japeri, Rio de Janeiro state, which is waiting for ANP's approval, expected in late 2023. It will cost around R500mn-R600mn ($94.7mn-$113.7mn).
The second project is the 300km (186-mile) pipeline connecting Rio de Janeiro and Sao Paulo that should come on line by 2030 — when NTS foresees that supply from Bolivia and Mexilhao to Sao Paulo will drop by 8mn m³/d from the current outflow — and will cost close to R7bn.
Ferraz says that the gas market needs to be educated about the need of those investments and that NTS expects no transportation cost increase after the expansions.
