The new Petrobras pricing mechanism for natural gas sold to distributors should smooth out the rise in fuel prices – still affected by the conflict in the Middle East – and could impact competition in Brazil.
The new model creates reference bands for the price of Brent crude, establishing a floor and a ceiling to limit sharp fluctuations in the quarterly adjustments of natural gas supply contracts.
The state-owned oil company’s estimate is that the measure announced on Tuesday (July 1) will reduce the adjustment scheduled for August 1 from 22% to around 6%.
According to Petrobras, adherence to the mechanism will be voluntary and will depend on the signing of contract amendments by the distributors.
The state-owned company stated that the measure seeks to increase price predictability and avoid abrupt pass-throughs resulting from international volatility. The final price to consumers will continue to depend on factors such as transportation, distribution and marketing margins, taxes, and tariffs approved by state regulatory agencies.
The Brazilian Association of Piped Gas Distribution Companies (Abegás) evaluated the initiative positively. According to the entity, the measure temporarily reduces the impacts of the international surge on the price of the molecule and results from discussions held with Petrobras.
The association added that it expects other suppliers in the market to also show sensitivity to the issue and that it continues working toward a structural solution for the price of natural gas in the country.
For Lívia Amorim, a partner at Veirano Advogados, the adoption of mechanisms to reduce volatility is not unprecedented in the Brazilian gas market.
She noted that this is not the first time Petrobras has adopted mechanisms to mitigate price volatility, whether due to fluctuations in indexes or even in exchange rates.
“The new element to be observed is that the gas market now has other competitors, and these mechanisms must preserve the possibility for the other players to continue offering and not generate a demand lock-in that extends the concentration of supply for a longer period,” he told BNamericas.
Maria Amélia Braga, partner in the Oil and Gas practice at TAGD Advogados, pointed out that the change should be understood as a mechanism for smoothing volatility, and not as a structural reduction in the cost of gas.
According to the lawyer, the new model redistributes risk over time by limiting the immediate pass-through of international increases, although part of this effect may remain incorporated into the methodology through the price floor.
She believes that the main benefit is to provide greater predictability to contracts and reduce shocks for distributors and consumers.
Braga added that the initiative may favor market stability, but warned that it will be necessary to monitor distributors’ adherence, the terms of the contractual amendments, and the effects on competition.
“In a market that is still taking shape, Petrobras’ contractual design is not just a commercial decision; it also influences the competitive dynamics of the entire sector,” he told BNamericas.
In a press release, Tiago Macêdo, partner at Tauil & Chequer Advogados in association with Mayer Brown and former attorney general of ANP, stated that the initiative may generate significant competitive impacts by pressuring other marketers to review their pricing strategies in order to remain competitive in the face of Petrobras’s offer.
According to Macêdo, the change is commercial in nature and does not alter the current regulatory framework, since it will be implemented through optional amendments to existing contracts.
“It is a contractual arrangement between private parties – Petrobras and the distributors – made possible through optional addenda to the current supply contracts,” he said.
The lawyer added that the containment of the molecule’s price tends to reduce the impact of readjustments for consumers served by the captive market and assessed that Petrobras will be able to offset part of the cost of the policy through increased commercial scale.
Source: Original Article
