annual report 2017

NTS´ gas compression station, Taubaté, São Paulo

NTS

NTS´ gas compression station, Taubaté, São Paulo.

NTS operates a gas distribution network of 2,048 km, with the capacity to transport 158 million cubic meters of natural gas/day. This network is present in the states of Rio de Janeiro, São Paulo and Minas Gerais (responsible for 50% of the gas consumption in Brazil) and connects the region’s gas processing plants to the Bolivia-Brazil gas pipeline and to the existing network of gas pipelines in the country’s northeastern region. The company operates under long-term contracts with 100% of the capacity under “ship-or-pay” contracts.

In April 2017, through an asset sales plan initiated by Petrobras, a consortium of investors led by Brookfield completed the acquisition of a 90% stake in NTS.

The gas transportation industry offers great potential in Brazil, since both production and consumption have been recording significant growth in the last decade. According to data from the National Petroleum Agency (ANP), Brazilian production in the last 10 years climbed from 45 million cubic meters/day to a daily average of 100 million cubic meters/day, with an emphasis on pre-salt production (from ultra-deep water), which is responsible for more than half of the volume produced. There was an increase of 7.2% in the gas consumption in 2017 compared to the previous year, according to data from the Brazilian Association of Piped Gas Distribution Companies (Abegás).

Serving the southeastern region, the product’s main consumer, NTS transported 41 million cubic meters/ day of natural gas, reaching a net revenue of BRL 4.1 billion (BRL 3 billion of which refers to the period after the conclusion of Brookfield’s acquisition of the company).

 

OUTLOOK

NTS operates with long-term “ship-or-pay” contracts that generate guaranteed revenues, which are indexed by inflation. In addition, its extensive and modern gas pipeline network is located in the most populated region of the country and has the capacity to meet any growth in the demand without significant additional investments.

There is great market expectation with respect to the discussion of a new Gas Law, which may lead to opening up of the market and a more favorable environment to broaden investments in the sector. Natural gas as a portion of the Brazilian energy matrix has been advancing considerably, but there is even greater potential for it as evidenced by global trends. Natural gas represented 16% of the global energy matrix in the early 1970s and only 0.4% in Brazil. In 2016, it represented 22% of the global matrix and a little over 12% in Brazil (Source: Brazilian Ministry of Mines and Energy).

NTS´compression station, São Paulo.

NTS GAS DISTRIBUTION NETWORK