Brazil natural gas auction reduces industrial costs

Brazil's state-run oil firm PPSA successfully concluded its first auction for the direct sale of federal natural gas to end consumers. The auction saw the total volume of 1.1 million cubic meters per day sold across 110 lots to 23 winning companies.

The sale is expected to raise approximately 376 million to 377 million reais ($74.6 million) for the public treasury. The gas supply is scheduled for a ten-month period between March and December 2027, with delivery originating from the Petrobras Gas Treatment Unit in Itaboraí, Rio de Janeiro.

According to the Ministry of Mines and Energy, the auction significantly lowered energy costs for various industrial sectors compared to current market rates. Price reductions were reported as high as 57% for the fertilizer sector, 56% for the ceramic and chemical/petrochemical sectors, 46% for mining and metallurgy, and 38% for the glass industry.

Major winners included Vale, CSN, Gerdau, Braskem, Samarco, and Ternium Brasil. The average price paid by industries is estimated at US$ 5.83 per million BTU, which is notably lower than prices tied to Brent crude oil benchmarks.