New infrastructure projects and supply routes may reduce natural gas prices in Brazil this year, but consumers' and government officials' views diverge on the impact.
Brazil gas prices may fall by up to 40pc, according to mines and energy minister Alexandre Silveira. Despite considerable skepticism from consumers, there is increased expectation that a surge in supply — particularly from state-controlled Petrobras, which has around 80pc of gas market share — could cut prices. Petrobras' share may fall as supplies increase and more companies enter the market.
Argus' Brazil natural gas network daily average prices were above $10/mmBtu throughout 2024, peaking at $14.525/mmBtu on 5 July before falling to $11.385/mmBtu on 2 January. A typical industrial consumer also has to pay for the distributor margin and federal and state taxes.
Brazil produced 159mn m³/d of gas in October, according to the latest data from hydrocarbons regulator ANP, but it made only 56mn m³/d available to the market, as reinjections are common for improving oil recovery. But a decree signed in August may limit that.
Brazil expects new gas supply via four different pathways: The long-anticipated Rota 3 pipeline; new volumes through state-owned marketing firm PPSA; deals to move gas directly from Argentina's Vaca Muerta formation; and another plan to move Vaca Muerta gas through Bolivia into Brazil.
Petrobras' 355km (221-mile) Rota 3 pipeline went on line in September, carrying 18mn m³/d from offshore domestic fields. This could increase Brazil's natural gas supply by about 25pc.
State-owned marketing firm PPSA, which manages Brazil's upstream production sharing contracts, may also directly negotiate processed gas volumes for the market in 2025. This marks a shift from selling gas at the platform exit, which limited competitiveness. The government owns around 150,000 m³/d of gas across six contracts, and that is expected to increase to 3mn m³/d in the coming years.
Argentina approved 10.4mn m³/d of export contracts to Brazil as of 16 December and it has reversed the flow of its 1,465km northern pipeline that previously imported gas from Bolivia. The plan is to eventually pump Vaca Muerta gas to Bolivia and then into the 3,150km Bolivia-Brazil pipeline.
