Brazilian ministry delays clearing Gaspetro sale

The Brazilian ministry of mines and energy asked the competition watchdog CADE for more time to analyze the sale of Petrobras gas subsidiary Gaspetro to Compass Gas, a Cosan group company.

The oil and gas department at the ministry said the sale, first requested by CADE in a commitment signed with Petrobras in 2019, would involve a "vertical participation" — where a company is involved in all steps of the natural gas industry, from production to distribution — and a consolidation of the market on the demand side, which therefore requires "cautious analysis."

In a preliminary analysis the ministry said it identified various issues that need CADE's attention. This includes greater limits on the geographic concentration of the wholesale market, according to a letter signed by the ministry's deputy oil and gas secretary João Nora Souto that was delivered to CADE and obtained by Argus.

The sale to Compass Gas can "potentially produce great consequences to the structure of the competitive market in the natural gas industry", the ministry letter says.

The Gaspetro sale deal was announced on 29 July and still requires a CADE ruling on market concentration. CADE has requested that the Gas Market Opening Monitoring Committee (CMGN), headed by the ministry, provide information on the sale.

The Gaspetro sale is part of Petrobras' commitment to competition watchdog CADE to open the country's gas market. The agency has nearly 11 months to review the Compass proposal.

Compass is the gas division of Cosan group. It owns Sao Paulo gas distributor Comgás, which has the largest marketed volumes of natural gas in the country. Players in the gas sector worry the transaction would hinder competition, giving market power to the largest gas consumers.

By Flavia Pierry