Brazil’s president irked by Petrobras gas price hike

Brazilian president Jair Bolsonaro said April 7 that a 32% increase in natural gas prices imposed by Petrobras on distributors was unacceptable.

The president said that, more than transparency, the market required a degree of predictability from Petrobras, known formally as Petroleo Brasileiro. The company in 2018 opted to peg domestic prices to the international market, and announced April 5 it was making adjustments to reflect the early-year spike in commodity prices.

Bolsanaro was quoted by Brazilian newspaper The State of Sao Paulo as saying the price increase was “unacceptable.” Vowing to avoid interfering in the market, the president added that “we can change this pricing policy.”

State-owned Petrobras replied by saying it reached out to the Brazilian ministry of mines and energy for any material information that should be released to the market about the readjustment in gas prices and possible changes to its pricing policy, but has yet to receive an answer.

The company said that as of May 1, it would charge 32% more/mnBtu in US dollars 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%.

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. In February, Bolsonaro fired his successor Roberto Castello Branco 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.