Petrobras to offer gas sales contracts indexed to Henry Hub

London (Quantum Commodity Intelligence) – Brazilian state-controlled oil energy major Petrobras is adopting the US benchmark Henry Hub as an index for its wholesale natural gas contracts at a time of rising competition in the domestic gas market, Petrobras announced Monday.

Petrobras are still negotiating the new pricing formula with distributors, so the decision will not immediately impact the current pricing formula, which is indexed to Brent crude.

Petrobras will also offer a broader range of contracts, including consumption-based and long-term, less flexible contracts under more favourable pricing terms.

The company will offer ranges of six months to four years in contracts which can be tailored to seasonal demand. Distributors will also have the option to maintain Brent-indexed contracts.

Petrobras have been working on the new pricing model since last year as the bulk of its non-thermoelectric contracts are set to expire at the end of 2021.

Petrobras has a 100% market share with distributors, according to the most recent quarterly report from the gas monitoring committee (CMGN), but competition is set to be introduced in the near future.