Brazil TAG pipeline signs 9 new gas carriers

Brazil natural gas pipeline company TAG signed deals with nine new carriers to access its pipeline grid in coastal states from Rio de Janeiro to Ceará and Amazonas in 2022.

The gas carriers include fertilizer producer Proquigel, gas trader Compass, and gas producers Petrorecôncavo, Potiguar, Equinor, Origem Energia, Petrorecôncavo SPE, Shell and Galp.

The new Brazilian gas transportation model requires gas carriers to sign either entry or withdrawal gas contracts for specific locations. The nine companies signed for a combined 5.13mn m³/d of entry capacity and 6.59mn m³/d of withdrawal capacity in 12 of TAG's 18 zones and four entry points.

The volumes under the new entry contracts mark a shift away from Petrobras, since Petrobras told competition watchdog CADE in 2019 it would quit direct gas purchases from other producers at the wellhead completely by 1 January 2022, according to the latest version of the agreement made public.

In September 2019, prior to Petrobras' commitment, 14.8mn m³/d were sold by oil companies to Petrobras at the wellhead. In September 2021 9.9mn m³/d were sold.

The new contracts equal around 19pc of the total gas volume allocated in TAG's pipelines, based on the past 12 months' volumes for all carriers on the system.Petrobras, which used to be the only company in Brazil able to make entry capacity contracts, will still be the majority gas carrier.

Cristina Sayão, regulatory affairs manager at TAG, said that the tender was able to meet all the volumes requested by the carriers. The methodology for competition among carriers for pipeline capacity implies that if demand exceeds capacity, there could be premiums charged to the carriers.But since all demand was served in this tender the carriers will pay just the referenced transport tariffs, announced by oil and gas regulator ANP.

Following the results of the tender, the nine carriers have until 8 December to deposit financial guarantees equivalent to 100 days of service. Final contracts will be signed on 15 December. The transportation contracts are valid from 1 January 2022 to 31 December 2022.

"This is the materialization of the new players coming to the natural gas market and generating competition," said Ovídio Quintana, commercial and regulatory director at TAG. "It is progress. And the new gas market in Brazil will be under construction daily from now on."

By Flávia Pierry