Brazilian company to break Petrobras stranglehold on gas market
By Marcelo Teixeira
SAO PAULO, March 5 (Reuters) - Grupo Bolognesi is close to an agreement to import liquefied natural gas (LNG) on long-term contracts, deals that could break state-run oil company Petrobras' stranglehold on the Brazilian market for the first time in more than a decade.
Bolognesi, a Brazilian construction and engineering group, won licenses last year to build and operate two gas-fired thermal power plants. It opted for LNG imports rather than Petroleo Brasileiro SA, known as Petrobras, which supplies nearly all Brazil's gas-fired plants.
"We are talking to two suppliers. We could clinch deals with both or with just one of them", Paulo Cezar Rutzen, Bolognesi's vice-president, told Reuters. "The two are among the five largest LNG suppliers globally."
Petrobras declined to comment.
The proposed contracts are for 25 years, with prices based on the Henry Hub benchmark for natural gas deliveries in Louisiana, plus transport and other differentials.
If successful, the strategy could be copied by others, reducing Petrobras' dominance as Brazil tries to expand power generation in the face of a supply crisis. Gas is needed to complement a hydroelectric system in need of thermal backup.
Importing gas also allows Bolognesi to buy fuel at world prices rather than pay the premium Petrobras charges to restrict internal demand and preserve supplies for its own plants.
While Brazil's fuels market has been open for nearly two decades, Petrobras has a de facto monopoly on imports of natural gas, crude oil, gasoline and diesel. Continuación...