PPSA scheduled the auction for October 22 and set a minimum payment of 95% of contracted volumes, even if buyers take less gas.
Brazilian state company Pré-Sal Petróleo (PPSA) has published the terms for the first auction of natural gas owned by the Union. The auction is scheduled for October 22, with up to 1.1 million cubic metres a day on offer, divided into 110 lots of 10,000 cubic metres per day.
Buyers will have to pay for at least 95% of the contracted volume even if they take less. The price will be calculated monthly at 115% of the average Henry Hub futures quote, a U.S. market benchmark, plus a premium determined in the auction. Supply is expected to run from March 1 through December 31, 2027.
About 61% of the initial offer is reserved for the chemical and petrochemical industries, steelmaking, metallurgy and mining. The remaining volumes are allocated to ceramics, fertilizer and glass producers. Each economic group, including its affiliated companies, may acquire no more than 16 lots, or 160,000 cubic metres a day.
Gas will be made available at the outlet of Petrobras’ gas-processing unit in Itaboraí. Buyers or their chosen traders will be responsible for transportation from that point, connecting to distribution networks and arranging other infrastructure needed to deliver the fuel. Eligible Brazilian companies must be free natural-gas consumers, and the gas must be used as a production input at the facilities listed in their bids.
This is the first time PPSA has offered processed Union-owned gas directly to consumers. The company received 320 submissions from 22 market participants on its draft terms before publishing the final document. PPSA chief executive Luis Fernando Paroli said the changes were intended to make qualification more flexible and improve the auction’s efficiency.