Brazilian states decided to go to court to try to stop the 50% readjustment in the price of natural gas that will result from the renewal of Petrobras contracts with fuel distributors. So far, four have obtained favorable decisions.
The most recent was granted this Tuesday (28) to Alerj (Legislative Assembly of Rio de Janeiro). Judge André Felipe Alves da Costa Tendinnick suspends the readjustment until “the conditions of access to the gas market are regulated, thus allowing the establishment of full competition in the supply of such input”.
The magistrate, who is on duty during the recess of the Judiciary, also conditions the increase on the statement of Cade (Administrative Council for Economic Defense) on the claim of the state concessionaire Naturgy.
“Prices are already extremely high,” said, in a note, the president of Alerj, André Ceciliano (PT). “Petrobras’ pricing policy for natural gas is a factor that hinders the economic recovery of Brazil and Rio de Janeiro, in particular.”
Before, Ceará, Sergipe and Alagoas had already obtained injunctions in this regard. All these states have supply contracts expiring at the end of 2020 and would have to accept the adjustment proposed by Petrobras to renew the supply.
In total, the contracts that expire now represent around 70% of the national gas market. At the beginning of negotiations for the renewal, Petrobras even proposed doubling prices in long-term contracts, claiming that the cost of fuel in the international market had soared.
After complaints from distributors at Cade, a new proposal was made with a 50% increase for long-term commitments. They claim that the market still has barriers to the entry of new suppliers, which reduces the possibility of competition.
The legal advisor of Abegás (Brazilian Association of Pipeline Gas Distributors), Gustavo de Marchi argues that Petrobras still exercises a de facto monopoly in the market and goes against the public interest by imposing “clearly abusive” conditions for the renewal of contracts.
“Thus, some distributors had no option but to seek judicial provision to protect themselves from this situation while the competent body does not analyze the merits of the competition damage that has been practiced”, he completes.
The readjustment definitely buries the government’s promise to promote a cheap energy shock with the opening of the natural gas market during this term of President Jair Bolsonaro (PL), one of the first banners of Economy Minister Paulo Guedes, after his inauguration.
The promise counted on a quick opening of the market after an agreement between the state-owned company and Cade providing for the sale of transport and fuel distribution assets and the approval by Congress, in March, of the new Gas Law.
But the process has been much slower than expected by the government, given the logistical difficulties to bring to the continent both the gas produced in the pre-salt and imported fuel in liquid form in ships.
Some states opened public calls to attract new suppliers, but the results did not guarantee the replacement of the entire volume supplied by Petrobras. Market estimates indicate that private suppliers would be able to supply only 10% of consumption.
In a statement, Petrobras questions the numbers and says that about half of the market already has the supply contracted for 2022. Some distributors, he says, opted for short-term contracts and, therefore, did not have supply contracts for the year.
The state-owned company says it began submitting renewal proposals in January and revised the terms of the contracts in September and November. Only eight companies, he continues, followed the rites and signed contracts for 2022.
“Petrobras meets its gas sales contracts through a portfolio of offers comprising domestic production and imports of gas from Bolivia and Liquefied Natural Gas (LNG). The high demand for LNG and limitations in international supply resulted in a significant increase the international price of the input, which rose around 500% in 2021”, claims the company.
In the text, Petrobras also says that it will appeal the injunctions and that it has been taking measures to allow other suppliers to access the market, as provided for in the agreement with Cade. One of them would be the leasing of the gas import terminal in Bahia.
On Tuesday, the state-owned company announced an agreement with its partners in the pre-salt that could represent another step in that direction, with the establishment of purchase and sale contracts for the production of partners on the offshore platforms.
The state-owned company will buy the production, carry out the treatment in its natural gas processing units and then resell it to the partners, so that they can compete for customers. According to the company, these contracts would allow national gas producers to start supplying as early as the first day of 2022.
Gas is a fundamental input for industries such as glass, ceramics and chemicals, and supplies thermoelectric plants that have been operating at full load to avoid an energy crisis with the drought on hydroelectric reservoirs.
Price increases also affect residential consumers who use the fuel to cook and heat water and drivers who fill their vehicles with CNG (natural gas for vehicles), which reached record prices in 2021.
.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
