Brazil's PPSA Completes 1.1 Million Cubic Meters/Day Natural Gas Auction

en.Wedoany.com Reported - On October 22, Brazil's Pre-Salt Petroleum Company (PPSA) completed its first federal natural gas auction, selling a supply of 1.1 million cubic meters per day to five categories of basic industrial enterprises, with an average bidding premium of USD 2.44 per million British thermal units, approximately 35% higher than the initial premium of USD 1.80. The auction is expected to generate BRL 377 million in revenue for PPSA, with the relevant natural gas scheduled for delivery between March and December 2027.

The auction was conducted through the electronic platform of the Brazilian Electric Power Trading Chamber (CCEE), with 36 companies qualifying as bidders, of which 32 actually participated. Bidding occurred on all lots, and based on the Henry Hub natural gas benchmark price and the transaction premiums, the average price of natural gas supplied to industrial users is approximately USD 5.83 per million British thermal units. The calculation basis adopted by PPSA was a Henry Hub price of USD 2.9535, a USD-to-BRL exchange rate of 5.1447, and the premiums actually quoted by each enterprise.

Bidding proceeded sequentially across five industries: glass manufacturing, ceramics, steel metallurgy and mining, chemical and petrochemical, and nitrogen fertilizers. The glass manufacturing industry had the highest average premium at USD 4.01 per million British thermal units; the nitrogen fertilizer industry had the lowest at USD 1.82. The ceramics industry had 8 companies winning natural gas, the largest number of winning enterprises among all industries. Winning companies included Companhia Siderúrgica Nacional, Gerdau, Vale, Braskem, Evonik Brazil, and Yara Brazil, among others.

The transacted natural gas will be delivered at the outlet of the Itaboraí natural gas processing unit within the Boa Ventura Energy Complex in Rio de Janeiro State, which is operated by Petrobras. Winning enterprises must independently sign natural gas transportation contracts, or commission natural gas trading companies with qualifications recognized by Brazil's National Agency of Petroleum, Natural Gas and Biofuels to arrange transportation, to deliver the purchased natural gas to their respective production facilities.

According to the schedule announced by PPSA, contracts for this auction round are expected to be signed in the first half of December 2026. The company also announced plans to organize another natural gas auction in 2027, intending to offer a supply of 1.8 million cubic meters per day.