The Ministry of Mines and Energy (MME) has established new guidelines for upcoming Unionnatural gas auctions, aiming to democratize access to the commodity and prevent supply concentration among large industrial groups.
The Ministry of Mines and Energy (MME) presented, this Thursday (September 10), the supplementary regulations for the natural gas auction to be conducted by PPSA (Pré-Sal Petróleo S.A.). The initiative’s main focus is to ensure widespread distribution of the commodity, making approximately 1 million cubic meters per day available to a broader range of companies starting in October.
To prevent a single player from dominating the entire offered volume, the draft ordinance — open for public consultation until September 14 — sets a purchase limit of 160,000 cubic meters per day per agent. This cap, however, may be revised if there is insufficient demand for the available lots in the market.
Division by Lots and Focus on Basic Industry
The government’s strategy consists of dividing the Union‘s gas into smaller contracts of 20,000 cubic meters per day. This format is designed to accommodate industries ranging from those using large volumes to those with less intensive demand, facilitating the entry of new competitors.
In this round, the MME has expanded the scope of the incentive policy. In addition to the chemical, petrochemical, fertilizer, mining, and steel sectors, the auction will now include the ceramic and glass segments. These industries have been divided into five major blocks, receiving equal shares of the total supply.
Market Dynamics and Next Steps
The designed structure guarantees that at least five different buyers will participate in the process. However, the estimate is that the number of companies involved will be significantly higher, potentially reaching up to 50 distinct industries if there is a complete dispersion of lots.
PPSA is yet to publish the pre-tender notice for the auction, which will allow for partnerships between industries and marketers to facilitate transportation logistics. Those who already have their own transportation contracts will have a competitive advantage, reducing final costs by eliminating intermediaries.
Should there be any leftover gas, the unawarded gas by priority sectors will be offered to other industrial segments, such as pulp and paper, and, as a last resort, to distributors and carriers. The guidelines will apply to all annual auctions until 2030, while the model for long-term contracts remains under review.
