Petrobras expands gas contract offerings

Brazilian state-controlled Petrobras will expand the benchmarks it uses in gas contracts and lengths of contracts to remain competitive in tender offers being held by gas distributors and on the wholesale market.

The company will resume using the US benchmark Henry Hub index, which has been adopted by some Brazilian suppliers, in addition to Brent-tied contracts.

Petrobras will also offer additional options regarding gas delivery, including contracts under which the company secures entry capacity for transport infrastructure and the buyer is responsible for contracting exit capacity. Petrobras will also continue to offer contracts with gas delivery at a specific city gate, where the company will contract both entry and exit capacity.

The company will offer 10 different types of contracts, when factoring in indexes, duration and points of delivery.

Petrobras highlighted the changing dynamics in the Brazilian gas market, which now has over 14 suppliers, indicating growing competition.

The changes in gas contract terms coincide with the announcement last week by hydrocarbons regulator ANP that it could adopt a gas-release program, under which the dominant player on the market would be forced to sell gas to third parties to help develop the market. The agency will conduct studies to assess the state of play in the market to determine whether the dominant company is abusing its monopoly position.

Under a 2019 agreement with anti-trust regulator Cade, Petrobras agreed to reduce its dominant position in the gas market through the sale of key midstream infrastructure. The company had met over 95pc of the requirements stipulated in the agreement as of the end of last year. Petrobras still needs to provide third-party access to offshore pipelines and gas-processing infrastructure, but has made significant progress on that front this year.

Despite progress in some regions, such as the northeast, the company remains the dominant supplier in other parts of the country, such as southern Brazil.