Petrobras to hike natural gas prices

Brazilian energy company Petrobras said April 5 it would charge distributors more for natural gas starting next month, reflective of early-year spikes in commodity prices.

Measured in US dollars, the company said that as of May 1, it would charge 32% more/mnBtu than it did during the last quarter. From May through July, Petrobras said the natural gas price would be reflective of market trends from January through March, during which time the price of oil jumped some 38%.

“The variation results from the application of the supply contract formulas, which link the price to the oil price and the exchange rate,” the company said.

Fuel prices are a politically sensitive issue. Former Petrobras CEO Pedro Parente resigned in 2018 after widespread protests by truckers against the company’s decision to link petroleum product prices to rates on international markets.

Known formally as Petroleo Brasileiro, the company added that despite increases in price, its tariffs were still lower relative to last year because of the steep decline in prices in early 2020.

A trading anomaly last year saw West Texas Intermediate dip into negativity on April 20, while Brent fell to about $19/barrel and US natural gas went for around $1.55/mnBtu at its April 2020 low.

Brent was trading closer to $63/b today and US gas price on the New York Mercantile Exchange at around $2.53/mnBtu.

Brazilian president Jair Bolsonaro fired Petrobras CEO Roberto Castello Branco in February out of frustration with the company’s decision to hike fuel prices. Branco was replaced by 71-year-old general Joaquim Silva e Luna, a former defence minister with no experience in the oil industry.