MOSCOW (MRC) -- Brazilian state-led energy company Petrobras will grant rival producers and other companies access to onshore natural gas processing facilities in a two-step process in the latest move toward opening Latin America's biggest market under the terms of an antitrust agreement signed in July 2019, reported S&P Global.
"According to the business model adopted, the company will start to act as a processor of natural gas supplied by other agents," Petrobras said in a statement late Wednesday. "With the measure, Petrobras reaffirms its commitment to contribute to the development of an open gas market that is competitive and sustainable."
Brazil launched the "New Gas Market" program last year after Petrobras agreed to end its monopoly in gas distribution and transportation. The program aims to lure private-sector investment to expand gas supplies, distribution networks and logistics and transportation infrastructure, including offshore export pipelines and onshore distribution pipelines. Brazil expects the wholesale opening of its gas market to increase output of the fuel, boost consumption and reduce prices.
The opening will be conducted in two steps, Petrobras said. In the first phase, which is currently underway, companies will be allowed to buy processing capacity for gas produced from fields in active production, Petrobras said. The first phase will be used "as a way to guarantee the continuity of the country's oil and gas production," Petrobras said.
In the second phase, any remaining processing capacity will be made available to other interested market entities after the first phase of negotiations with gas producers has been completed, Petrobras said. The second phase will be conducted on an annual basis, it said.
Under the terms of the antitrust agreement, international oil companies in Brazil will be allowed to sell gas directly into the Brazilian market. The gas was previously sold directly to Petrobras, which was tasked with onshore processing, distribution and delivery.
"When the new model is implemented, natural gas producers will no longer need to sell gas to Petrobras," the company said. "Producers could contract part of Petrobras' processing capacity and will continue to be the owners of the gas produced and all of its derivatives, allowing for the direct sale of their products in the market."
The processing will be allowed at any of Petrobras' 10 processing plants, which have the capacity to handle 93.4 million cu m/d, the company said. That includes the three biggest plants at Cabiunas (25.2 million cu m/d), Caraguatatuba (20.0 million cu m/d) and Cacimbas (18.1 million cu m/d), it said. Petrobras plans to maintain operational control of the units, which will not be sold under the company's USD20 billion-USD30 billion divestment program for 2020-2024, according to the company.
Interested companies will sign contracts covering firm, fixed use of available capacity or interruptible contracts covering excess processing capacity, Petrobras said. Payments for the processing will be negotiated between the parties, it said.
As MRC reported earlier, Braskem has recently announced that it has signed agreements with Petrobras for the supply of naphtha feedstock to Braskem's units in Bahia and Rio Grande do Sul. The deal, which covers five years after the expiry date of the current agreement at the end of this year, provides for the supply of a minimum volume of 650,000 metric tons/year, at an option for Petrobras to supply an additional volume of up to 2.8 million metric tons/year, at a price equivalent to international ARA reference price.
We remind that the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.
Besides, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.