Abegas Sends Natural Gas Price Proposal to Ministry

Brazil's natural gas distributors association, Abegas, has sent its proposal for a natural gas policy to the mines and energy ministry, to coincide with high-level government talks over revising the price of natural gas imported from Bolivia, according to executives from the distributors.

The main thrust of the proposal is to limit the regional differences in natural gas prices by bringing the price of Bolivian gas down, closer to the price of domestic gas, according to Rogerio Lima, CFO of Santa Catarina distributor SCGas.

Abegas wants the government to reintroduce a price cap that would limit the variation of natural gas prices to those of fuel oil prices, he told BNamericas. It wants the government to convert natural gas commodity prices into Brazilian reais, based on the prices set in the original supply contracts of about US$0.95 per million British thermal units (mBTU), and not at today's price of about US$1.68/mBTU.

The transport price should also be converted into reais, he said, adding that distributors would commit to making certain investments and building their respective natural gas markets. The measures are essential for allowing natural gas to compete with fuel oil, said Oscar Prieto, president of Sao Paulo's Comgas.

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