Brazil gas sector struggles to shake off Petrobras

Brazil's natural gas sector is struggling to shake off the market dominance of state-controlled Petrobras in spite of government efforts to foment competition.

Petrobras says it is seeking to accelerate the divestment of its gas distribution and transport assets ahead of a December 2021 deadline stipulated in its July 2019 agreement with anti-trust regulator Cade. But its efforts have had a limited impact on the market so far.

Gas distributors' association Abegas says the company's planned withdrawal from the sector is not taking place in a transparent fashion and the sector still needs a clear timeline and rules for the market to take off.

For Abegas, the lack of access to the infrastructure that is fundamental for gas production, processing and transport remains the primary obstacle to greater competition and the lower prices that should go along with it.

Petrobras said last week that it remains committed to supporting increased gas market competition, including third-party access to gas treatment plants and pipelines.

The company says it has begun analyzing options for selling its 51pc stake in distributor Gaspetro, which owns stakes in 19 distribution subsidiaries, including a public share offering.
Petrobras added that it will begin the process of selling its 51pc stake in Transportadora Gasoduto Bolivia-Brasil (TBG), which controls the 30mn m³/d Bolivia-Brasil pipeline (Gasbol), once it has defined future revenues for the midstream asset.
The company is currently in the process of pre-qualifying potential bidders for a lease of its 20mn m3/d Bahia regasification terminal and integrated pipeline. Cade imposed a September deadline to offload this asset.

Petrobras has also begun the process of selling 10pc stakes in the Transportadora Associada de Gas (TAG) and Nova Transportadora do Sudeste (NTS) pipelines. French utility Engie, which owns 90pc of TAG together with Canadian pension fund CDPQ, plans to bid for the remaining 10pc stake. Likewise, shareholders of the NTS pipeline, which include Brookfield Asset Management, have also expressed interest in acquiring the remaining 10pc of the company.

The divestments have not gone far enough for companies aspiring for more gas market opportunities. Last year, an open season for access to Gasbol was suspended after Abegas complained that Petrobras had an unfair advantage. In response to the complaint, hydrocarbons regulator ANP opened a second open season and prohibited Petrobras from participating.
Last month, the ANP required Petrobras to resell 10mn m³/d of Bolivian gas and open transport capacity to third parties.

The most progress is coming from LNG, which Petrobras has controlled for more than a decade. Golar Power's regasification terminal in Sergipe is close to start-up, and over the next two years, three new independent LNG regasification terminals are expected to begin operating.

As divestments advance, Petrobras is focusing more of its resources on deepwater oil development.