Gas struggles hinder Brazilian industry: Study

A lack of natural gas supply is hindering 9pc of Brazil's industry, according to a study conducted by the country's industry confederation (CNI).

According to CNI, 14pc of the Brazilian industry uses natural gas in its production processes, with 9pc reporting some sort of supply issue in the last 12 months. The study also showed that 10pc of industry have limited access to energy in general.

Among those who do not use natural gas in the production process, 10pc point to the lack of access to energy as the main reason for choosing another energy source, 8pc blame the lack of distribution infrastructure, such as gas pipelines, and 5pc said prices are too high.

The study provides some insight to the industry, but it may not paint the most accurate picture, given that gas usage is more intense in some specific sectors, CNI's energy policy and industry expert Rennaly Patricio Sousa said.

Brazil's south holds the heaviest natural gas users in the country and its regional federations have been very active in advocating for a more competitive gas market.

"The attraction of new investments to the south is related to the availability of gas," Santa Catarina state's industry federation president Glauco Jose Corte said on 10 July during an industrial forum. "Therefore, we need to discuss improvements in transport infrastructure, supply strategies, the entry of new players and the role of regulatory agencies."

CNI's study makes it clear that low competition in the natural gas sector holds back both industry and consumers, making the Brazilian product more expensive and less competitive. Hence, lowering the price of natural gas is important to increase investments and revenues in sectors that are very dependent on it, such as the petrochemical industries, steel, ceramics, glass, aluminum and mining, the report said.

The 2021 new gas law made room to reform the sector, but the market remains very concentrated, Sousa said. "So opening up the gas market is a good bet to help resume growth in the industry that consumes about 60pc of this energy."

By Betina Moura