In gas, Petrobras is a "middleman", ANP director says. "We are not an NGO," Magda says

The National Petroleum Agency advanced today a plan that aims to reduce Petrobras' market power in the natural gas industry, potentially reducing the price of a key molecule in the Brazilian economy. The agency opened a public consultation on a proposal that creates the so-called gas release program – with compulsory auctions to release part of the gas concentrated in the state-owned company to the market.

The measure was received with criticism from the oil company – and supported by 95% of sector agents – and establishes annual auctions for the sale of part of the gas that the state-owned company buys from third parties and imports from Bolivia, in addition to the volumes of gas from the Union commercialized by it.

The rapporteur of the process on the topic at ANP, director Pietro Mendes – who was chairman of Petrobras until recently – said that the company “sells natural gas more expensively than private agents” and has an “enormous margin”, which would justify the intervention.

In recent days, after ANP announced that it would discuss the gas release at its meeting on Friday, several Petrobras executives published articles in the press asking for “caution” and showing opposition to the proposal.

An advisor to the presidency of the state-owned company, Wagner Victer, wrote that the release of volumes from the company “would not necessarily create genuine competitors, but could only generate intermediaries, that is, mere middlemen.”

Pietro rebutted with data pointing out that Petrobras buys gas at the wellhead for $3.80 per million BTU, paying less than other buyers and reselling it to distributors and free consumers for $12.40, and $9.20 in the thermoelectric market.

“In Brazil, is gas expensive because there is no supply? No! Gas is expensive because there is a middleman that makes the natural gas price in Brazil more expensive. The big middleman that we have in the market today is Petrobras itself,” said Pietro.

He also denied that the measure could discourage Petrobras investments in new gas projects, saying that the company's own production would not be the target of auctions for the release of volumes.

The proposed gas release was defined by the agency as “moderate”, partially attending to Petrobras' concerns and discarding an “intense” model for the release of volumes.

In this “moderate” alternative, ANP is proposing annual auctions between 2027 and 2030 that would initially involve 8 million m³/day, gradually increasing to 9.2 million m³/day in the last auction.

When justifying the proposal, the coordinator of the promotion of competition in the gas market of the agency, Barbara Ferreira, said that Petrobras holds 59% of the gas sales – below the 100% seen until 2021, but still a “dominant” position.

Almost at the same time, in a Petrobras teleconference with investors about the result of the second quarter, the Commercialization and Logistics director, Angélica Laureano, used the same data to state that “the market is already open” and that there would be no need for a gas release.

The CEO Magda Chambriard said that the company could reevaluate investments “in light of a possible regulatory change”, when answering a question about the Sergipe Águas Profundas gas project.

“We are not an NGO. We are a company, and a company must make a profit,” said the CEO appointed by the PT.

The gas release program is another among several recent ANP measures to regulate devices of the 2021 Gas Law, with the goal of increasing competition in the sector.

In his presentation about the measure, rapporteur Pietro said that the deconcentration of the market is a “legal duty” of the agency after the Law, and that the public consultation opens a debate to “build, with all agents, the best design for the program.”

He also said that the gas price in the country is “one of the most expensive in the world” and that practice has shown that the concentration of the sector in the hands of one company, even if state-owned, did not generate benefits to society as a whole.

At Petrobras, technical teams have started to analyze the resolution proposed by ANP, and the company will put its arguments in the public consultation, said the Energy Transition director, William Nozaki, in a press conference after the regulator's decision.

“Petrobras' position on this topic has already been externalized. Our position is that redistributing existing gas molecules, transferring their ownership, will not solve the structural problem of gas supply, and therefore will not reduce price.”

For the competition area of ANP, it is not quite like that.

In a study presented today, the agency's technicians alleged that divestitures by Petrobras in past governments reduced concentration in the Northeast gas market and led to an actual reduction in the price of the molecule in the region.

After this market opening, the Northeast has registered a “consistently cheaper” gas supply than the Southeast, with a price difference that reached 22% in 2023, according to the agency's data.