Petrobras Says It Will Suspend Natural Gas Supply to Distributors in the Northeast in 2022

With The Goal Of Focusing On The Southeast, Petrobras Announces The Suspension Of Natural Gas Supply To Distributors In The Northeast Next Year, Even Though It Is The Second Largest In The Country

Petrobras announced to the distributors in the Northeastern region that it will no longer supply natural gas starting next year. The break will occur after decades of supply from the state oil company to the region, and the announcement surprised the Northeastern states, which have only five months to promote a public call to find new suppliers.

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Petrobras Will Leave The Northeast To Focus On The Southeast

The concern on the part of the entities is that the distributors may not succeed in replacing Petrobras in time, leading to an interruption in the supply of natural gas to consumers. The suspension of natural gas supply to the Northeast is due to Petrobras focusing on the Southeast market.

The communication about the interruption of natural gas supply next year (2022) was made directly to the distribution companies. In the case of Bahia, which is the largest consumer in the region and one of the largest in the country, the state company stated that it will not suspend supply until a new contract with another supplier is finalized.

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The same should happen with the states of Pernambuco and Ceará, but for smaller markets, Petrobras did not provide the same guarantee. The Northeastern natural gas market is the second largest in Brazil, trailing only the Southeast, according to the Brazilian Association of Natural Gas Distributors (Abegás). In the region, 15.26 million m³ of gas were sold daily on average from January to March.

States Are Concerned About The Suspension

Bahia has already negotiated a new supply source and is awaiting the process of leasing the LNG import terminal, according to Marcus Cavalcanti, the Secretary of Infrastructure of Bahia.

Those most concerned are the states with smaller and less attractive consumer markets. Some are still awaiting the sale of onshore natural gas production fields by Petrobras, assets from a new potential supplier, but for now, they are without alternatives.

Across the country, Petrobras is divesting from oil and gas production fields in shallow and onshore waters, fertilizer, fuel, and biofuel plants, as well as transportation networks, regasification terminals, and wind power plants.

Petrobras Will Negotiate With Northeastern Distributors

The state company stated that it is open to negotiating provisional solutions for the Northeastern natural gas distributors that do not reach an agreement with another substitute supplier by the due deadline.

According to the company, the ongoing leasing processes for the TRBA (Bahia Regasification Terminal), part of the agreement signed in the TCC with Cade, and other divestments in production fields of the input will bring new operators to the market, who will be able to meet local demand. The TCC signed with the antitrust agency provides for Petrobras’ exit from market sectors in gas.

The goal is to enable the opening of the market, which according to Cade and the state company, can contribute to reducing the price of the input. The Unique Federation of Oil Workers (FUP) reported that it is analyzing legal actions to ensure that Petrobras does not suspend supply to the Northeastern distributors. The FUP does not support the sale of the company’s assets and has resorted to the courts to try to eliminate the divestments.