Brazil’s Petrobras announces natural gas sales prices hike of 39% for distributors

RIO DE JANEIRO, BRAZIL – As of May 1, distributors’ natural gas sales prices will be 39% higher, in Reais per cubic meter (R$/m³), compared to the last quarter. Measured in dollars per million BTU, an energy unit used in the United States and the United Kingdom (US$/MMBtu), the readjustment will be 32%.

According to Petrobras’ announcement, the variation is the result “of applying the supply contract formulas, which link the price to the oil quotation and the exchange rate.” According to the company, the contract price updates are quarterly, and for May, June, and July, the reference prices adopted are those of January, February, and March.

“During this period, petroleum prices rose 38%, following the upward trend of global commodities. Furthermore, the domestic prices of commodities were high due to the devaluation of the real,” the oil company informed in a statement.

The passing on of the company’s costs for the transportation of the product to the point of delivery to the distributors also influences Petrobras’ natural gas prices. These costs are defined by tariffs regulated by the National Petroleum, Natural Gas and Biofuels Agency (ANP). “This portion of the price is updated annually in May by the IGP-M, which, for the measurement period (March 2020 to March 2021), registered an increase of 31%.

Because of the drop in oil prices at the beginning of the year, during 2020, the natural gas prices to distributors reached an accumulated reduction of up to 35% in Reais and 48% in dollars.

Petrobras also stated that the final price of natural gas to the consumer is determined by its sales price and the distributors’ margins. In the case of CNG, by the resale stations and by federal and state taxes.

“Also, the tariff approval process is carried out by the state regulatory agencies. The distributors’ sales contracts are public and are available for consultation on the ANP website,” concluded the company.

Source: Agencia Brasil