Brazil’s Petrobras to appeal injunctions that suspended gas readjustment

RIO DE JANEIRO, BRAZIL – “In these cases in which injunctions were granted, Petrobras will lodge the appropriate appeals and claims in order to establish a market price for the sale of gas,” the company said, without detailing the sources of the judicial decisions.

Rio de Janeiro was among the states that secured an injunction against the readjustment.

In the lawsuit filed against Petrobras in Rio de Janeiro, the readjustment rule imposed on Naturgy concessionaire was contested, which could raise by up to 50% the price currently charged for gas supply, according to a note from the State Legislative Assembly (ALERJ), which filed the suit.

For its part, Petrobras said it began negotiations on a new contract with gas distributors in advance and within the schedule established by the concessionaires in the public calls that included proposals from the state-owned company and others.

“In some cases, Petrobras sent proposals in January 2021,” the company noted.

The company said that, seeking better conditions for customers, it offered natural gas distributors products with terms of 6 months, 1 year, 2 years and 4 years and contractual arrangements to reduce price volatility, generally indexed to oil prices.

The oil company said that 8 concessionaires followed the procedure established in the public calls and signed contracts with Petrobras. However, some states sought legal action on an emergency basis, the company said.

The goal would be to “gain differentiated advantage from that obtained in the regular public call processes for the acquisition of natural gas.”

Petrobras pointed out that, of the total consumption of natural gas by distributors, about half had contracted supply for 2022, “whose conditions are being rigorously met under the previously agreed terms and conditions of prices and adjustments.”

The company also said that a number of gas distributors in recent years chose short-term contracts and, therefore, had no contracted supply for 2022.

The company also recalled that it meets its gas sales contracts through a supply portfolio comprising domestic production and gas imports from Bolivia and Liquefied Natural Gas (LNG), and that the high demand and limitations on international supply resulted in a significant increase in the international price of the commodity, which rose by about 500% in 2021.