Government wants to direct oil and gas from the Union to refining and national industries – 03/17/2023 – Market

The government announced this Friday (17) a series of initiatives to try to boost investments in refining and natural gas with the use of the portion of pre-salt production that belongs to the Union, managed by PPSA (Pré-Sal Petróleo SA).

The objective is to offer this production to the domestic market, both to encourage new investments in refineries and fuel supply infrastructure and to enable industrial investments dependent on gas, such as the production of fertilizers.

In 2022, the Union was entitled to about 9.8 million barrels of oil (equivalent to about 27 thousand barrels per day) and 48 million cubic meters of natural gas (138 thousand cubic meters per day). The oil is sold at auctions and goes on for export, and the gas is sold to Petrobras.

In its first meeting under the Luiz Inácio Lula da Silva (PT) government, the CNPE (National Council for Energy Policy) determined that the PPSA begin to study the “technical and economic feasibility of mechanisms to prioritize the national supply of fuels derived from petroleum “.

In a note, the Minister of Mines and Energy, Alexandre Silveira, said that the objective now is to add value to the Union’s oil through the sale of refined products. Brazil currently has 19 refineries, with a capacity to process 2.4 million barrels of oil per day.

It exports oil, but still depends on the international market to supply around 20% of the diesel market and around 10% of the gasoline market.

“We want the Union’s oil and natural gas, coming from production sharing contracts, to promote the industrialization of Brazil and guarantee security in the national supply of energy, petroleum inputs, nitrogenous fertilizers and other chemical products, reducing dependence on external, and valuing local content”, said Silveira.

The CNPE also decided to revoke a resolution by the Jair Bolsonaro (PL) government that established guidelines for the sale of Petrobras refineries.

“Whether by stimulating greater use of the installed refining capacity, or by expanding the national refining park, the focus now is on energy security, expressed through the search for reducing external vulnerability in the supply of derivatives”, said Alexandre Silveira.

Present at the meeting, the President of the Republic stated that “it is always necessary to think, with affection, about our internal demand, valuing the arrival of investments to our country, guaranteeing employment and income to our population”.

“That’s what we need to prioritize and I’m counting on you to honor this commitment,” added Lula. PPSA even entered the list of privatizations of the Bolsonaro government.

In the gas area, some proposals were defined to try to expand the supply of national production to the domestic market —currently, due to the lack of transport infrastructure and to accelerate oil production, more than half of the gas produced in the country is reinjected into wells.

In this segment, PPSA will also have the mission of expanding its offer to the market, being able to exchange part of its oil production for natural gas to offer to customers. There is also a plan to create a long-term pricing policy for gas.

Another measure under study is the deduction of possible investments in infrastructure to bring gas to the continent from the total oil and gas that pre-salt producers have to deliver to the Union in production sharing contracts, those with the participation of the government.

The objective, according to the government, is to improve “the use and the social and economic return of the national production”, increasing the offer for the production of fertilizers, petrochemicals and other productive sectors and to integrate the gas to the national energy transition strategy.