(Argus, 6.Mar.2020) — Brazil’s state-controlled Petrobras signed an agreement with its Bolivian counterpart YPFB to reduce its natural gas offtake to 20mn m³/d from 30mn m³/d, clearing the way for the Bolivian company to sign contracts directly with clients in Brazil.
Today’s agreement modifies a 1999 contract for 30mn m³/d that expired on 31 December and was temporarily extended for three months. The extension allowed the two companies to finalize the terms of the final phase of the contract under which Petrobras would receive the unused portion of its original contract.
Petrobras expects the new agreement to exhaust all of the remaining undelivered gas under the original contract in up to six years, with deliveries ranging from a minimum of 14mn m³/d to 20mn m³/d over this period.
The gas price under the new contract will be determined by the same formula, which uses a basket of international fuel oil prices, Petrobras says.
In a call with reporters today, Petrobras gas director Anelise Lara said the company is waiting on national oil regulator ANP to set a price on the cost of transporting gas over Gasbol cross-border pipeline, before it begins promoting the sale of this asset.
The reduced offtake of Bolivian gas is the latest stage of Petrobras’ agreement with Brazil’s antitrust agency Cade signed in July 2019, which requires the company to exit the domestic gas transport and distribution markets.
In January, the ANP said it will require Petrobras to sell 10mn m³/d of Bolivian gas to third parties, in what the agency classified as a gas release agreement. As a result of the contract signed today, Lara said Petrobras will no longer be required to resell this gas.
Instead, the ANP will hold an open season for local distribution companies to bid for the 10mn m³/d of transport capacity. Lara expects the terms of the open season to be announced by the ANP in the coming weeks.
She added that Petrobras’ gas clients would continue to be supplied despite the reduction of its supply from Bolivia, thanks to increased LNG shipments and gas production from offshore fields.
Petrobras has been ahead of schedule in reducing its dominant position in the gas market, Lara said. Last week, the company initiated the sale of its 51pc stake in gas distribution holding company Gaspetro, which owns stakes in 19 gas distributors.
Petrobras plans to create a new company that will unify three offshore gas pipelines with total transport capacity of 48mn m³/d, including new midstream projects running from pre-salt reservoirs. Petrobras’ European partners in these pipelines — Shell, Repsol and Galp — will participate in the new company, which is expected to go public in 2021, Lara said. She added that the company’s offshore pipelines are not part of the agreement with Cade.