Petrobras Will Cut Gas Purchases From Enauta and PetroRio at Manati Field in Bahia

Due to the economic crisis triggered by the COVID-19 pandemic, Petrobras notified its two partners Enauta and PetroRio about its intention to reduce the volume of natural gas in the Manati field in Bahia. Petrobras Discovers Oil in the Campos Basin

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Enauta issued a statement contesting Petrobras and informed that it is “analyzing the alternatives it has to avoid and/or mitigate the risks” that a reduction in gas sales from Manati may cause to its business. The company, formerly Queiroz Galvão Exploração e Produção (QGEP), also clarified that it will adopt “all necessary measures to safeguard its rights”.

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The gas produced in Manati is sold exclusively by Enauta and PetroRio to Petrobras, based on a contract that provides for the purchase of a minimum volume by the state company, through the “take-or-pay” clause – minimum volume of gas that a company commits to withdraw and for which it pays regardless of consumption.

Enauta was notified by Petrobras, however, that the current pandemic would constitute a force majeure event that could lead to a decline in gas consumption in the market and thus affect its gas withdrawal commitment with the partners. The notification also reached PetroRio, another partner of the state company in the asset.

One third of Enauta’s net revenues came from Manati in 2019. Last year, PetroRio’s percentage was 5%.

Manati is one of the ten largest gas fields in Brazil. It is operated by Petrobras (35%), in partnership with Enauta (45%), PetroRio (10%), and Geopark (10%).

The issue in Manati occurs at a time when the natural gas industry as a whole is undergoing a general review of contracts across the entire chain.

All state concessionaires have resorted to force majeure clauses and asked Petrobras, for example, to review the penalties in their supply contracts with the oil company.

Petrobras agreed to stagger the bills for April, May, and June related to gas purchases for the non-thermoelectric market (industrial, residential, commercial, and vehicular). In addition, it will not impose penalties related to the “take-or-pay” clause. At the same time, Petrobras claims the same reason to request the flexibility of its contracts with the Manati partners and with the transporters, owners of the gas pipelines.