Petrobras reduces natural gas prices to distributors – 07/19/2023 – Market

Petrobras announced this Wednesday (19) that it will reduce by 7.1% the price of natural gas sold to piped gas distributors. The new price takes effect on August 1st and the transfer to the consumer depends on state legislation.

According to the state-owned company, the cut reflects variations in international oil prices and in the cost of transporting fuel in the quarter between May and June. Natural gas has its price readjusted quarterly.

In some states, such as Rio de Janeiro, changes are passed on to the final consumer immediately. In others, such as São Paulo, it is done on the date of the annual readjustment of the concessions for the distribution of piped gas.

With the drop in international prices, the price of natural gas sold by Petrobras has accumulated a 25% drop in the year.

In May, the company announced the creation of new sales contracts for the product, promising more competitive gas in the Brazilian market. The first signed contracts, however, frustrated the industry, which expected a bigger cut.

The first two contracts closed by the state-owned company have a reference price about 10% lower than the contracts currently in force, according to calculations by Abrace (Brazilian Association of Large Energy Consumers and Free Consumers).

The drop reflects the new price calculation formula, which is now equivalent to 11.9% of the Brent oil price in the longer contracts, against 12.9% to 13.9% in the previous model. The new terms were closed with the distributors Comgás, from São Paulo, and SC Gás, from Santa Catarina.

The industry, however, expected a benchmark closer to 11% for Brent, below that practiced before the pandemic. In 2022, Petrobras had raised the reference price of the product by 50%, in a process that took states and distributors to court.