Petroleo Brasileiro SA (PETR4.SA), a Brazilian state-controlled oil producer, announced on Monday that it would include the US natural gas pricing benchmark as an option in potential sales contracts with distributors. The step comes as Latin America’s largest oil and gas producer seeks to boost local demand for its increasing natural gas output while also lowering domestic natural gas prices.
In addition to contracts indexed to the international Brent oil benchmark, Petrobras, the Rio de Janeiro firm, will begin offering contracts backed by the US Henry Hub reference price, the company said in a statement. Client demand for a more reliable and consistent benchmark will be met by Henry Hub index pricing, according to the company.
Petrobras wants to bring natural gas prices in Brazil closer to international levels while reducing market uncertainty. Natural gas is mostly used for cooking and power generation. Petrobras stated that the new formula would still be discussed with customers. President Jair Bolsonaro dismissed former Petrobras Chief Executive Officer Roberto Castello Branco in February over a price dispute. Bolsonaro has vowed to lower consumer fuel prices.
On the New York Mercantile Exchange, Henry Hub is the pricing point for natural gas futures. It also influences the pricing of liquefied natural gas (LNG) projects in the United States. In the previous year, it fluctuated between $1.50 and $3.30 per million British thermal units (mmBTU).
Be First to Comment