Viewpoint: Brazil to open gas market as prices soar

Viewpoint: Brazil to open gas market as prices soar

Sao Paulo, 30 December (Argus) — With its long-expected free market debut scheduled for January, Brazilian natural gas has one of its most eventful years ahead, just as international LNG prices soar.

Natural gas prices in Brazilare expected to continue to extend their rise above pre-pandemic levels in 2022, with Brazil's hydropower plant reservoirs ending 2021 at 26pc of capacity, leading to elevated demand for thermal generation throughout 2022. Regulators have built into their market pricing structure a goal of keeping reservoirs above the 20pc mark through November 2022, meaning there will be less margin to draw on hydropower.

On the gas supply side, the shift to a competitive market in 2022 comes with Petrobras still responsible for around 90pc of the natural gas production in the country. The state-run company must decrease its gas purchases from other oil and gas producers under the new market structure, meaning those producers will have to reach consumers some other way for the first time.