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Oil and gas producer PetroReconcavo signed a 10-year natural gas supply contract with distributor Sergas.
PetroReconcavo (RECV3) signed a contract aiming at supply of natural gas to Sergas, a natural gas distribution company (Sergipe Gás S/A), for a period of 10 years. The contract provides for different modes of supply of inputs. In the “firm” mode, the oil company must deliver 50.000 m³/day of natural gas in the second half of 2023 and 100.000 m³/day of natural gas from 2024 to 2032.
A giant in the oil and gas sector, PetroReconcavo is one of the largest independent operators in Brazil
The contract between the companies has different types of gas supply
Rafael Cunha, CFO of PetroReconcavo, explains: “This is another important step in our strategy to become the largest player of natural gas in the Northeast. Today we already supply the input to distributors in large states, such as Potigás, PBGás, Cegás, BahiaGás. The contract signed with Sergas represents our delivery capacity, the diversification of our customer base and the expansion of our portfolio”.
As for the “interruptible” and “flexible” modalities, PetroReconcavo has committed to transfer more than agreed, with the exception that there is demand from Sergas and commercial availability of the oil company.
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In these modalities, supply and withdrawal commitments are established only upon prior agreement between the parties involved, with demand on the part of the distributor (PetroReconcavo) and availability on the part of the destination company (Sergas).
The value of the contract will be defined through the total sum of the pass-through of the transport cost with the molecule portion. The latter will amount to 13,6% of the oil price Brent for 2023 and 2024, and 12,6% of the quotation between 2025 and 2032.
The floor and ceiling for payment for supply and sale were not disclosed, but will be adjusted according to the CPI (Consumer Price Index), one of the main indicators of American inflation, which measures price variation from the perspective of the consumer.
According to PetroReconcavo, "the start of supply is conditioned to the signature between Sergas and TAG of a contract for the transport of natural gas, corresponding to departures from the delivery points determined by the buyer — a contract that is in the negotiation phase".
Get to know PetroReconcavo
The independent onshore oil and gas producer has 22 years of experience in the segment, focusing on mature onshore fields in Brazil.
The company's reputation is respected by customers, regulatory agencies, suppliers and employees, due to its experienced team, made up of specialized professionals, and founding shareholders with extensive experience in the segment.
The company's portfolio includes oil and natural gas concessions, in which they act as concessionaires and/or operators. In fields that are beginning to decline, the company has developed a production revitalization system.
The company's knowledge in the field is associated with high cost performance and operational efficiency, implementing secondary recovery mechanisms by water injection, verticalization of services and other activities.
