Brazilian giant Petrobras has committed to reducing its stranglehold over the country’s natural gas sector — in tandem with the country’s deregulatory reforms — but the terms agreed with the Brazilian anti-trust authority (Cade) have fallen short of some expectations.

The agreement, signed with Cade this week, stated that Petrobras will sell all stakes in natural gas transport and service pipeline entities by 2021 and, in turn, Cade agreed to suspend a number of anti-trust investigations proceeding against the company.

The agreement means Petrobras will sell its 51% stake in the consortium that owns and operates the domestic section of the Bolivia-Brazil (Gasbol) pipeline, as well as its remaining 10% stakes in the two main trunkine companies in Brazil, NTS and TAG, controlled respectively by Canada's Brookfield Asset Management and France’s Engie.

In the distribution service sector, Petrobras will either sell off its minority stakes in 19 regional companies or dispose of its controlling stake in the Gaspetro holding company, in which Japan’s Mitsui is a 49% partner.

“Petrobras is firmly committed to exiting completely from the transport and distribution of gas. We will sell all our stakes, including our remaining interests in NTS and TAG and our stake in in the Bolivia-Brazil pipeline,” said Petrobras chief executive Roberto Castello Branco.

The Brazilian government recently unveiled its free market reform proposals for the natural gas sector and, under Castello Branco, Petrobras is aligned to the objective of stimulating competition while focusing its own investments on its core activity of exploration and production.

Castello Branco said Petrobras will sell off non-domestic midstream assets also, meaning interests in countries such as Uruguay and Bolivia will also go on the block.

The agreement with Cade also set the terms for Petrobras to lease out a re-gasification terminal in Bahia, although this obligation was not extended to similar terminals in the states of Rio de Janeiro and Ceara, nor to its gas processing facilities around the country.

The agreement will be underpinned by deregulatory pricing measures for the gas sector, to be announced within the next two months, according to Decio Oddone, director general of the Brazilian hydrocarbons regulator (ANP).

The agreement with Cade also made clear that the unbundling process will begin with an obligation - on the part of Petrobras - to appoint independent board members to take up its positions on subsidiary companies in the midstream sector.

The company will also start providing data on entry and exit volumes across the system, with a view to facilitating the development of business based on open access to the infrastructure.

Petrobras committed also to stop contracting natural gas from partners and third parties, except in defined circumstances but the agreement with Cade fell short of any commitment to release its own volumes, contrary to some expectations.

Petrobras currently accounts for about 75% of the natural gas produced in Brazil but buys up almost all of the remaining production due to its stranglehold on infrastructure.

ANP data suggests that Petrobras re-sells this gas to distribution companies at more than double the price it pays to its own partners.

The industry association representing industrial scale consumers of natural gas (Abrace) had led calls for Petrobras to be forced to release significant volumes of natural gas forthwith, based on the argument that such measures are needed to kick start the competitive market.

“Without (gas release) the transition will be a lot slower,” said Abrace co-ordinator Adrianno Lorenzon.

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Petrobras to ease control of Brazilian gas sector