Brazil's Petrobras signs flexibility deal with pipeline operator TAG

Brazilian state-led oil company Petrobras signed agreements and contract addendums with pipeline operator Transportadora Associada de Gas that will open transportation capacity on the pipeline network to other natural gas suppliers, Petrobras said Dec. 22.

"The instruments allow other agents access to TAG's transportation system as of Jan. 1, 2022," Petrobras said. The additional capacity will be available on the Malha Nordeste, Gasene, and Pilar-Ipojuca tranches of TAG's pipeline network.

The deals mark the latest advance in Brazil's opening of its gas market, including greater access to logistics, transportation, and export infrastructure. The more-liberal market rules were part of a July 2019 agreement with antitrust regulators that ended Petrobras' monopoly in the natural gas segment.

Brazil's New Gas Market will allow greater competition in the country's gas markets, including allowing oil companies, trading houses, and LNG importers to sell gas directly to consumers. President Jair Bolsonaro signed the New Gas Market law in April.

The deals also clear the way for TAG to contract out the released capacity to other players, with nine companies seeking transport capacity during a public tender that closed in early December, TAG said Dec. 1. Norway's Equinor, Portugal's Galp Energia, and Shell were among the larger oil companies requesting carriage space on the network, as well as LNG importers Compass Gas e Energia and Origem. Local players PetroReconcavo, Potiguar E&P, Proquigel and SPE Miranga also contracted capacity.

The companies contracted 5.13 million cubic meters/day of entrance capacity at four points, while 6.59 million cu m/d of exit capacity was also contracted along 12 of the 18 zones of the TAG network.

The contracts will be effective Jan. 1, according to TAG.

Petrobras is currently seeking a waiver from the Justice Ministry's Antitrust Division to supply gas to Proquigel, which is leasing two fertilizer plants in Bahia and Sergipe states under a 10-year contract. Petrobras was prohibited from selling gas to the plants under terms of the antitrust accord. The Sergipe plant needs about 1.36 million cu m/d, while the Bahia plant requires 1.4 million cu m/d.

While the New Gas Market is still evolving amid regulatory changes, Petrobras has temporarily maintained its dominant position as new players enter the scene.

Petrobras won supply contracts for five state natural gas distribution companies in the country's center-south, including MSGas in Mato Grosso do Sul, GasBrasiliano in São Paulo, Compagas in Parana, SCGas in Santa Catarina and SulGas in Rio Grande do Sul. The four-year supply contracts cover about 3 million cu m/d, with Petrobras winning a 44% price increase. The contracts also take effect Jan. 1.

Petrobras did face competition, however, as 13 companies submitted 130 different proposals during the public tender the five distributors held.

In addition, Petrobras claimed all of the available transportation capacity available in 2022 on the Bolivia-Brazil Gas Pipeline. Petrobras contracted 19.7 million cu m/d of entrance capacity and 17.7 million cu m/d of exit capacity, according to pipeline operator TBG.

The short-term capacity was available after TBG failed to hold a public tender for four-year capacity contracts amid regulatory changes. Future contracts won't overlap with Petrobras' one-year deals, according to TBG.