Natural gas price will have an average increase of 17% in May, says association

The average price of natural gas sold to piped gas distributors will rise 17% in May, according to a projection by Abrace (Brazilian Association of Energy Consumers). The rise reflects the escalation of international oil prices in the first quarter.

The transfers to the consumer depend on the state legislation for the sector. In some states, it’s immediate; in others, it only occurs on the dates of annual tariff readjustments. But Embrace estimates that tariffs for the industry will rise, on average, 9%.

In Rio de Janeiro, for example, the adjustment was authorized this Thursday (28) and is valid from May. At CEG, which serves the metropolitan region, the increases will be 6.8% for residential customers, 7% for commerce, 18.5% for industry and 19.6% for CNG (natural gas for vehicles).

Embrace’s projection considers a 26.7% rise in the price of Brent oil, used as an index for natural gas contracts in the country. “The economic sanctions against Russia, a relevant producer of the commodity, had repercussions on the decrease in energy supply”, he says.

Although the increase in Brent is almost 30%, Abrace continues, the pass-through to natural gas contracts is lower because oil does not influence other price components, such as the cost of transporting the fuel to the distributors.

The price of gas had already increased at the beginning of the year, after the signing of new contracts between Petrobras and distributors. In February, the average price of fuel sold to distributors rose 12%.

As a result, CNG (natural gas for vehicles), for example, has jumped 8.7% since the end of 2021, reaching an average cost of R$ 4.754 per cubic meter last week, according to data from the ANP (National Oil, Gas and Biofuels).

Petrobras is currently responsible for supplying around 85% of the natural gas sold to distributors. The rest comes from private gas producers in the country, such as Shell, or from importers.

According to Abrace’s projection, Shell’s contract with Bahiagás, for example, will increase by 28%. But as the company has other suppliers, the average increase in its gas acquisition cost will be 12%.

In São Paulo, which has not yet passed on the February high to the consumer, the entity estimates that the industrial consumer will suffer an 18% increase in June, when Comgás’ annual tariff readjustment is carried out.

In March, Embrace released a study that projected a 30% rise in the purchase price of natural gas by distributors until August, considering the two contractual readjustments foreseen in that period, still under the effect of the war in Ukraine and the new Petrobras contracts.

Currently, five states have injunctions against the price increases of new Petrobras contracts: Sergipe, Santa Catarina, Rio de Janeiro, Espírito Santo and Minas Gerais.

CEG said that the readjustment authorized on Thursday still considers the terms of the previous contract, in force until December 2021, which was extended by the Court. That is, if Petrobras overturns the injunction, the transfer could be even greater.

The rise in gas prices makes the promise of the “cheap energy shock” made by the Minister of Economy, Paulo Guedes, at the beginning of the Bolsonaro government even more distant. Guedes believed that increased competition could reduce the price of fuel by up to 50%.

Despite the approval of the new Gas Law, competition is still low in the country and international natural gas prices reached a record this year, after the start of the conflict in Eastern Europe.

For the industry, the emptying of the ANP, which spent a long period with the board of directors embezzled, also hampered the advancement of competition in the sector, by delaying regulations on the access of other suppliers to the gas flow infrastructure in the country.