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Petroleo Brasileiro SA (Petrobras), Spanish multinational natural gas and utilities company Naturgy, and steel producer Gerdau have signed an agreement for the supply of natural gas in the free market environment to serve Cosigua, Gerdau's long steel production unit in Rio de Janeiro.

The plant is the first gas consumer to switch to the free-market trading model under the new rules recently approved by Rio de Janeiro's regulatory agency, Petrobras said in a news release.

Since 2021, Gerdau and Petrobras have had a partnership for the supply of natural gas in the free market environment, which began with the service to Gerdau's unit located in Ouro Branco and is now being expanded to the Cosigua unit. In the coming years, other Gerdau industrial units could also migrate to the free market, according to the release.

"The proximity of the supplier company to the client is fundamental so that we can understand their demands,” Maurício Tolmasquim, Petrobras Director of Energy Transition and Sustainability, said. “The new gas product portfolio offers a diversified portfolio of contracts in a competitive, open market environment. We always strive to be the best supply option for our business partners”.

"This pioneering and innovative move allows Gerdau to increase the competitiveness of the Cosigua unit, one of the strategic plants for the company's growth plan and long-term vision in the country,” Flávia Souza, Gerdau Global Director of Supplies, said. “This new partnership with Petrobras, enabled by Naturgy's new contractual distribution models, reinforces our efforts to seek opportunities through the development and supply of the free gas market in Brazil, which is a strategic input for steel production and decarbonization today and in the future”.

"Signing this agreement represents an important step towards making the opening of the gas market in Rio de Janeiro a reality,” Giselia Pontes, Naturgy Commercial Director, said. “It also promotes competitiveness in the State's industrial market. Gerdau has been an important customer of the captive market for many years, and Naturgy has made every effort to ensure this migration happens as quickly as possible. Measures to foster competition tend to contribute towards reducing the gas molecule price, benefiting all market segments. Naturgy will continue working to generate more customer competitiveness”.

Petrobras said it forecasts investments in the natural gas area to exceed $4.65 billion (BRL 25 billion) in the coming years. To ensure the supply of the input alone, $5 billion will be invested in projects to expand infrastructures and the capacity of the national gas supply, which will contribute towards reducing dependence on natural gas imports, the company said.

Advertisement - Scroll to continue Petrobras added that it has also been offering more flexible agreements with different term modalities and indices, allowing customers to choose the portfolio that best suits their needs.

Gerdau describes itself as the largest Brazilian steel producer, one of the main suppliers of long steel in the Americas and special steel worldwide. Brazil also produces flat steel and iron ore for its own consumption. Additionally, it has a new business division, Gerdau Next, aimed at venturing into segments adjacent to steel. The company is also the world's largest producer of charcoal, with over 250,000 hectares of forest base in the state of Minas Gerais.

To contact the author, email rocky.teodoro@rigzone.com

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