Executives from several Brazilian companies said during a webinar last week that the government’s efforts to reform the natural gas sector were running into challenges because of questions about access to pipelines and processing facilities. Currently, the South American nation does not have a large enough network of pipelines and processing facilities to support this initiative properly, they said.

Under the New Gas Law adopted last April, which introduced new rules designed to meet rising demand and bring prices down by fostering competition, Brazil is supposed to be opening up the gas market to independent and alternative producers. So far, though, it has been slow to implement all the new rules necessary to accommodate new market entrants. Meanwhile, state-owned Petrobras has remained the dominant owner of gas infrastructure facilities in the country, as well as the biggest supplier (and the supplier of first resort for many buyers).

According to João Vitor Moreira, director for regulations and new business at the independent company PetroReconcavo, current conditions make changes in regulations a high priority. “It's an important point and, perhaps, one of the most critical for us now,” S&P Global Platts quoted him as saying.

PetroReconcavo is one of several companies emerging as an alternative gas supplier to Petrobras. The onshore producer has secured several gas-sector assets from Petrobras, including an export pipeline and processing plant at Guamare in Rio Grande do Norte State. Under the terms of a contract, PetroReconcavo started delivery of 236,000 cubic metres per day with Companhia Potiguar de Gás (Potigás) on January 1, 2022.

The company also teamed up with Shell (UK) and won a gas supply contract from the Paraiba state gas distributor PBGas, which had designated PetroReconcavo as a supplier to the state in 2022 and 2023. In accordance with this contract, PetroReconcavo began supplying 50,000 cubic metres per day of gas on January 1. Delivery volumes are scheduled to increase to 150,000 cubic metres per day in January 2023, and the onshore gas exploration company will also continue supplying 80,000 cubic metres per day until December 2023 in accordance with a pre-existing contract.

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