Brazil sells all 1.1 million cubic meters per day in first Union gas auction

SAO PAULO — Brazil's Ministry of Mines and Energy (MME) said all 1.1 million cubic meters per day of federal government natural gas offered to base industry were sold on Thursday, Oct 22, in the first Union Natural Gas Auction, run by Pré-Sal Petróleo S.A. (PPSA).

According to the ministry, 23 companies in the chemical, petrochemical, ceramics, steel, metallurgy, mining, glass and fertilizer sectors bought 110 lots, with an average premium 35% above the starting premium. The average premium was $2.44 per MMBtu, and the estimated average price for industry was $5.83 per MMBtu. Compared with about $12 per MMBtu currently paid by industry, the ministry estimated reductions of up to 57%, for nitrogen fertilizers. Bids reached 1.53 million cubic meters per day, 39% above the volume offered.

Under the new policy, at least one auction round a year is planned until 2030. PPSA projects a 2027 auction with an estimated 1.8 million cubic meters per day on offer, the ministry said.