Brazil distributors sign new gas acquisition contracts

Potiguar E&P and New Fortress Energy (NFE) have closed contracts for supply of natural gas in Brazil, according to local pipeline gas distributors.  

The Brazilian company, which is a subsidiary of the PetroRecôncavo group, has closed a contract with Potigás in Rio Grande do Norte state for natural gas supply as of January 1, 2022. 

Potigás said the deal will represent a 35% reduction in the price of gas, with all savings to be passed on to final consumers. 

The public call won by Potiguar E&P was launched in September 2020 with the other northeast concessionaires, including Algás (Alagoas), Cegás (Ceará), Copergás (Pernambuco) and Sergás (Sergipe), for a total of 2.41Mm³/day (million cubic meters per day). 

Some 24 proposals from nine suppliers (Oncorp, Total, PetroReconcavo, Petrobras, Shell, Golar Power (NFE), Compass, Potiguar EP and EBrasil) were submitted. Some of them did not present offers for all distributors. 

In Pernambuco, Shell was chosen by Copergás to supply gas beginning next year. The other distributors have not announced contracts yet. 

The CEO of PetroRecôncavo, Marcelo Magalhães, told BNamericas that the natural gas to be supplied to Potigás will come from the 32 concessions operated by Potiguar E&P in the Potiguar basin. 

“The company has invested in increasing its natural gas production, as well as in the reliability of its production outflow systems in order to have a safe and stable supply,” he said. 

The executive highlighted that the start of supply in 2022 is linked to the conclusion of ongoing negotiations with Petrobras for access to the outflow and processing infrastructure (UPGN Guamaré) and the conclusion of negotiations for access to the transportation network operated by Transportadora Associada de Gás (TAG). 

“The company has acted proactively in coordinated public calls for the acquisition of natural gas, positioning itself as a gas supply alternative for gas distributors in the northeast, and has also observed the recent advances in state legislation with respect to the creation of free consumers, which may enable a more plural environment for the commercialization of the production of its natural gas,” Magalhães added.

In Santa Catarina state, local gas utility SCGás has signed a deal with NFE Power, part of the NFE group, for the acquisition of 274Mm³ (150,000m³/d) of natural gas for five years

Supply is forecast to start in March 2022, after the authorizations and licenses are obtained for construction and operation of the LNG regasification system, the Gás Sul terminal in Babitonga Bay. The LNG will be transported by road to the city of Içara, where it will be regasified and injected directly into the SCGÁS distribution network.

SCGÁS is participating in another coordinated public call, called CP22, together with four other natural gas distributors from the center-south region. The goal is to expand the supply of natural gas in the state and contribute to opening up the natural gas market in the country. 

Between 2022 and 2023, CP22 will contract about 3.5Mm³/day of natural gas, adding to the volumes already contracted. As of 2024, the figure should be even higher, with a potential supply of 6Mm³/day.

The public gas acquisition calls are a result of the opening of Brazil’s gas market, with the gradual exit of Petrobras from the transport and distribution segment and the institutionalization of the free gas consumer, among other changes.