Pre-salt state may subsidize pipelines to reduce natural gas prices

The Brazilian government is planning a new strategy to increase the supply and use of natural gas in the country, with the aim of reducing the price of the energy input and making it more accessible to the industry.

After New Gas Law, which aimed to encourage competition in the sector and lower costs, did not achieve the expected result, which Ministry of Mines and Energy (MME) is considering using the State of the pre-salt Petróleo SA (PPSA) to subsidize the construction of new pipelines.

Pre-salt State as an alternative

PPSA is responsible for managing the sharing contracts in the exploitation of reserves in ultra-deep waters and for the commercialization of the part of the oil in these areas that belongs to the Union. The idea now is to use the state to subsidize gas pipelines that allow the expansion of pipeline infrastructure and gas supply, reducing imports and, consequently, lowering the final price for consumers, mainly for industrial sectors.

Currently, almost half of natural gas production is reinjected into wells due to technical factors or flow difficulties. With the construction of new pipelines, the expectation is that the supply of natural gas in the country will increase, making the energy source more accessible and competitive for Brazilian industries.

the expected result

O government plan is to reduce imports and the final price of natural gas, making it cheaper for the industry, which can increase the competitiveness of sectors that depend on the use of this energy input.

According to MME data, the natural gas price for the industry has seen a significant increase in recent years, going from US$ 13,58, in the average price of 2021, to US$ 20,31 per million BTU, in the average of 2022, representing an increase of 49,5%. As for the residential consumer, the value went from US$ 32,24 to US$ 41,70, an increase of 29,3%.

New Gas Law did not achieve the expected result

A New Gas Law, enacted in March 2021, aimed to encourage competition in the sector and lower the cost of natural gas for industry and consumers. However, after almost two years of its implementation, the gas price continues to increase and Petrobras maintains significant market dominance.

With the new strategy, the government seeks to expand the supply of natural gas and reduce costs so that the industrial sector can count on a cheaper and more competitive source of energy. PPSA may be the necessary alternative to subsidize pipelines and allow the expansion of pipeline infrastructure in the country.

A state of Pre-Sal Petróleo SA. could become an alternative to subsidize gas pipelines and allow for the expansion of the supply of natural gas in Brazil. With the aim of reducing prices and making this source of energy more competitive, the government is looking for new strategies to improve infrastructure and meet the demand of Brazilian industries.

A New Gas Law did not reach the expected result, increasing the need for complementary actions to promote the reduction of price of natural gas in the country. PPSA can be the key to making the sector more competitive and accessible to Brazilian consumers.