Natural gas sold to distributors should rise 30% until August

The rise in international oil prices after the start of the Ukrainian war could raise the price of natural gas sold to piped gas distributors by 30% by August. The projection is from Abrace (Brazilian Association of Energy Consumers).

Natural gas contracts between Petrobras and distributors are adjusted quarterly based on changes in oil prices, which have reached their highest levels since 2008 after the start of the conflict in Eastern Europe.

According to Abrace, according to the current formula and oil price projections, the price of gas would rise from US$ 10.52 (R$ 53.60, at the current price) per million BTU (measurement of calorific value). in March to the peak of US$ 13.65 (R$ 69.60) million BTU in August.

Considering the oil price projections made by the EIA (United States Energy Information Agency), the price would remain around US$ 13 until December.

According to Embrace, this increase would raise the rate of gas consumed by industries by 25%, which would rise from R$ 2.85 per cubic meter in March to R$ 3.57 per cubic meter in September.

The estimate considers only the cost of the gas molecule, excluding the tariff for transporting the fuel to the distributors’ networks. Gas has already experienced a strong increase at the beginning of the year, with the start of new supply contracts.

The forecast price for August 2022 is almost double the US$ 7.45 (R$ 38) in effect in August 2021.

Four piped gas distributors still have injunctions against the adjustment in new Petrobras contracts: SCGás (Santa Catarina), ESGás (Espírito Santo), Sergás (Sergipe) and the two Naturgy distributors that serve Rio de Janeiro.

“If the injunctions fall, the increase will be greater”, says the director of Natural Gas at Abrace, Adrianno Lorenzon.

Analysts Eduardo Faria and Gyslla Vasconcelos assess that the oil and gas price scenario after the start of the war is characterized more as an economic crisis than a gas supply crisis.

“The increase in fossil fuel prices produces a cascade effect in several production chains, which can cause an increase in inflation”, they say.

They also point out that there may be impacts on the electricity bill, since the operating cost of several thermal plants in Brazil is indexed to international markets, despite the fact that, at the moment, the hydroelectric reservoirs are full.

“This scenario changes according to the need to use thermoelectric plants, which can occur if the rains reduce considerably, making prices more vulnerable to external geopolitical events.”