Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Natural Gas

Petrobras gas asset sale moves Brazil's market toward opening

Electricity | Electric Power | Electric Power Risk | Renewables

US power sector faces challenges from lower utility load, global trade uncertainty

Natural Gas

Platts Inside FERC Bidweek Watch

Commodities | Natural Gas | Oil | Refined Products

Brazil Oil and Gas Conference

LNG | Natural Gas | Natural Gas (North American)

Latin American demand helps lift US liquefaction feedgas volumes to record levels

Petrobras gas asset sale moves Brazil's market toward opening

Highlights

New Gas Market program opens midstream, distribution

Third-party access to pipeline, LNG imports targets lower gas prices

An agreement from Brazil state-owned oil company Petrobras to divest a sizable share of its downstream natural gas assets is moving one of Latin America's largest markets toward an opening.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

As part of a compromise settlement with Brazil's antitrust regulator, Conselho Administrativo de Defesa Economica, or Cade, Petrobras will sell a controlling stake in its gas pipeline import business along with smaller shares of its downstream transportation and distribution network.

The decision announced late Monday comes just two weeks after Brazil's National Energy Policy Council or CNPE, approved new regulations aimed at ending Petrobras' monopoly in the country's downstream gas markets.

The New Gas Market program, backed by the recently elected presidential administration of Jair Bolsonaro, looks to stimulate demand from the power and industrial sectors by lowering the domestic price of the fuel. At an average of nearly $15/MMBtu, Brazil's gas prices rank third among the world's most expensive, according to the country's Ministry of Mines and Energy.

The first phase of the program targets Petrobras' existing monopoly in interstate transport and local distribution by opening access to import pipelines and LNG terminals -- a move that could boost foreign investment in Brazil's downstream network.

In the upstream, recent asset sales, bid rounds and production-sharing auctions have attracted global investors, such as ExxonMobil, Shell and Total. Still, Petrobras accounts for about 78% of Brazil's gas production and controls most of the country's gas-processing infrastructure, according to Ministry data.

IMPACT

Through April, gas demand in Brazil has averaged just 2.5 Bcf/d this year, which is down from record highs near 4 Bcf/d in 2014, data from the Ministry of Mines and Energy shows.

Following a hard-hitting economic downturn that officially ended in 2016, gas demand from Brazil's power generators and industry has been slow to recover as the country continues to teeter on the edge of double-dip recession. Earlier this week, a senior official from Brazil's ministry of economy said the government would revise its GDP growth forecast for 2019 to 0.8% to 1.2%, down from its current projection at 1.6%

With nearly 35% of Brazil's marketed gas supply imported from Bolivia and the global LNG market, third-party pipeline and LNG terminal access could lower prices and help to stimulate new demand in Brazil.

According to the most recent data from the Ministry of Mines and Energy, Brazil is now paying over $8/MMBtu for gas imported from Bolivia. At around $6/MMBtu, the cost of imported LNG is now at its lowest in nearly two years, down from over $10/MMBtu in December.

As the New Gas Market program ramps up, questions remain about whether and how quickly competitive hub prices could develop in Brazil.

Following a December 2013 energy-market reform in Mexico, competitive hub prices there have been slow to develop, even at border-city locations like Monterrey. Currently, Mexico state-owned power generator CFE purchases much of its imported US supply at prices indexed to Texas hubs such as Houston Ship Channel.

AGREEMENT

The agreement reached Monday will see Petrobras relinquish a 51% stake in Transportadora Brasileira Gasoduto Bolivia-Brasil or TBG -- the midstream company that imported about one-quarter of Brazil's gas supply from Bolivia last year.

The compromise includes Petrobras' sale of a 10% stake in Nova Transportadora do Sudeste, a midstream entity with over 2,000 km of pipeline connecting the states of Rio de Janeiro, Minas Gerais and Sao Paulo, as well as a 10% stake in Transportadora Associada de Gas or TAG, with a network of pipelines totaling over 6,500 km.

The agreement could also see Petrobras relinquish a controlling stake in Gaspetro, the holding company for Brazil's state-level gas distributors. Alternatively, Petrobras could sell off its indirect ownership shares in the individual, state-level distributers, the company said.

In Monday evening's release, Petrobras President and CEO Roberto Castello Branco reiterated the company's commitment to exiting the distribution business, saying it was working intensively to conclude the negotiation of its asset sales.

-- J. Robinson, Jeff Fick, newsdesk@spglobal.com

-- Edited by Gail Roberts, newsdesk@spglobal.com