Brazil's Petrobras Signs Agreements with Compagas for Natural Gas Supply

(Reuters) — Brazil's state-run oil company Petrobras has signed contracts for the supply of natural gas with gas company Compagas for around 6.4 billion reais ($1.28 billion), Compagas told Reuters on Tuesday.

Compagas, which is controlled by Companhia Paranaense de Energia (Copel), said the contracts will run from 2024 to 2034.

Compagas Chief Executive Rafael Lamastra Jr. told Reuters that the new contracts will enable a 10% reduction in natural gas costs as of January of next year in relation to the company's current contracts.

"We will make natural gas more competitive for users, especially for the industry," he said in a statement.

Around 20% of the contracts will be indexed to the Henry Hub, used as a reference in the gas market in the United States, while the remaining portion will be indexed to Brent oil and the dollar, Compagas said.

According to Lamastra, index diversification will reduce the volatility of contracts in the face of variations imposed by macroeconomic and political conditions.

The new agreements follow other contracts signed by Petrobras. In July, the firm signed 56 billion reais in a gas contract with Comgas, which has a concession for the distribution of natural gas in Sao Paulo state.

It has also signed agreements with Santa Catarina's SCGAS for around 7.6 billion reais and Pernambuco's Copergas, for 6.7 billion reais.

($1 = 4.9810 reais)

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