Brazil: Petrobras to Lower its Gas Prices by 9.7 pct in May

Against the back of recent developments in energy prices and their impact on prices stipulated in contracts for Brazilian natural gas, Petrobras has decided, at its own discretion, to the price of these contracts as of May 2011. This measure, based on studies carried out by the company’s commercial department, is designed to stimulate competition on the natural gas market.

An average discount of 9.7% will be applied to gas supply contracts with distributors when they are reviewed on May 1, bringing down the price distributors will pay over the next three months (May-July). The discount will not affect the existing pricing formula, nor alter contracts or agreements, so all contractual arrangements currently in force will remain unchanged.

Furthermore, short-term supplies of natural gas will continue to be sold by electronic auction. The latest auction, held in March, guaranteed distributors a firm supply of 7.8 million cubic meters of gas per day from April to July, at a discount of 46% compared to the price in contracts scheduled for review in May. This means that the selling price of Petrobras’ Brazilian natural gas, taking into account the discount to be granted on May 1 and auction prices, is now on average 24% cheaper than the long-term contract price paid by distributors.

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Source:Petrobras, April 21,2011;