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The Union Gas Could Conduct Effective Tests to Assess Market Demand and Help Reduce Uncertainty in the Energy Sector.
According to industry experts, Pré-Sal Petróleo S.A. (PPSA) has the potential to play a crucial role in the convergence between the supply and demand for natural gas in the Union’s sharing contracts. This, in turn, could stimulate new investments in gas infrastructure in the coming years.
Sylvie D’Apote, director of natural gas at the Brazilian Institute of Oil and Gas (IBP), emphasizes that the Brazilian market will experience a supply shock by the end of the decade. She highlights the importance of a demand perspective for producers to feel encouraged to invest in new projects. Thus, public policies are essential to align supply and demand in the natural gas sector.
Rivaldo Moreira Neto, CEO of Gas Energy, believes that PPSA can play an important role in establishing a balance between gas supply and demand, mainly through long-term gas sale auctions. He points out that the Union gas could serve as a benchmark for these auctions, effectively testing market interest.
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Moreira Neto expressed his opinion during his participation in the panel ‘Paths to the Gas Market’ at the 6th Technical Forum of PPSA, held in Rio de Janeiro on November 22.
The Role of Auctions in the Decarbonization of the Gas Industry
According to Professor Edmar de Almeida, auctions could prioritize segments seeking to decarbonize their operations by increasing gas consumption.
He also mentions the possibility of the government selecting specific segments for this priority, emphasizing that this is a legitimate decision for any government.
Almeida emphasizes the importance of auctions as tools to reduce uncertainty faced by the gas industry in investment decision-making, citing the positive example of the electricity sector. According to him, auctions can help reduce the degree of uncertainty and stimulate more sustainable investments.
Currently, long-term auctions are no longer necessary due to changes in the market context. However, in the post-energy rationing period of 2004, these auctions played a crucial role in the development of the green hydrogen market.
Almeida highlights the German model used to promote the green hydrogen market, which consists of paired supply and demand auctions. In this model, gas suppliers present their selling prices simultaneously with industries that state the price they are willing to pay, allowing the market to develop more efficiently and balanced.
The process of automatic convergence is desirable, but if it does not occur, it is possible to identify the necessary support to unite interests and achieve the decarbonization of coal in steelmaking and the reduction of petroleum coke consumption in the cement industry.
For the interviewee, PPSA plays a fundamental role in developing the oil and gas market, not only in selling the Union’s resources but also due to its technical expertise, which is crucial for contributing to discussions on public policies related to the sector.
PPSA’s function is to ensure that the government and Brazilian state institutions align the expectations of various agents involved in the oil and gas production chain, aiming to establish a vision for the future of the sector. By sharing privileged and detailed information with companies, PPSA plays a crucial role in providing insights into the technical and operational challenges involved in the production and flow of gas, as well as issues like resource re-injection.
Optimization of Dialogue and Structuring of Gas for Employment
The director of the Natural Gas Department of the Ministry of Mines and Energy, Marcello Weydt, highlighted the importance of dialogue with market agents and the structuring of the Gas for Employment program adopted by the government.
According to Weydt, the conclusion of the first report from the program’s working group is expected by March 2024, aiming to provide a basis for future political decisions.
Maisira Neto emphasized the relevance of the moment for making political decisions, especially for the industrial sector facing challenges related to decarbonization and the lack of clarity regarding gas policy, which is already causing the migration of industrial customers to alternative energies like biomass.
According to PPSA, the natural gas production from sharing contracts is expected to reach about 3.3 million m3/day in 2024, of which approximately 200 thousand m3/day belongs to the Union.
These volumes are projected to increase over time, with the expectation that the Union’s share of gas will reach 3.5 million m3/day by 2029. Furthermore, PPSA estimates that in the next ten years, the revenue generated from the sale of Union gas will total R$ 4 billion.
Source: EPBR Agency
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