Key facts
- Brazil's ANP has published contract amendments for long-term natural gas supply agreements.
- These amendments introduce pricing mechanisms linked to Brent crude indexation, with a floor of $61/bl and a ceiling of $85/bl.
- The Brent price ceiling will take effect August 1, limiting gas price increases to approximately 4%.
- Brazil's CNPE approved a resolution allowing federally owned natural gas to be sold directly to the market via auctions.
- This move is expected to cut gas prices by over 50% and boost industrial competitiveness.
- The new policy is projected to generate R95bn ($17bn) in investments and add R79bn to Brazil's GDP.
Brazil's hydrocarbons regulator ANP has published amendments to long-term natural gas supply agreements, introducing pricing mechanisms linked to Brent crude indexation. These changes establish a price floor of $61/bl and a ceiling of $85/bl, aimed at softening the impact of recent price hikes. The Brent price ceiling, effective August 1, will limit gas price increases to approximately 4%, compared to a potential 18.5% rise without the cap, resulting in a new gas price of R1.76/m³ ($0.34/m³).
Concurrently, Brazil's national energy council CNPE approved a resolution allowing federally owned natural gas to be sold directly to the liberalized market through auctions. This move is expected to cut gas prices by over 50%, potentially to $5/mmBtu from Petrobras' current $12/mmBtu, and boost industrial competitiveness. State-owned commodity trading firm PPSA will conduct these auctions, prioritizing gas-intensive industries like chemicals, petrochemicals, fertilizers, and steelmaking. The government estimates this policy, part of the 'gas-for-jobs' program, could generate R95bn ($17bn) in investments and add R79bn to Brazil's GDP.