Décio oddone, Enauta’s CEO, analyzes the challenges and the future of the Brazilian gas market

Source: Aprix Journal

 

By: Vanessa Petuco

 

The former general director of the ANP also comments on how the independent E&P company has adjusted to changes in the gas sector

 

Recently, in September 2020, Enauta, one of the main privately controlled companies in the Exploration and Production (E&P) sector in Brazil, started to be directed by Décio Oddone. Born in Rio Grande do Sul, Décio started his career by graduating in Electrical Engineering at the University of Rio Grande do Sul (UFRGS). His background also includes courses in Petroleum Engineering at Petrobras, Advanced Management Program at Harvard Business School and Advanced Management Program at Institut Européen D’Administration des Affaires (Insead).

 

With over 35 years of experience in the oil and gas sector, the engineer has already led Petrobras subsidiaries in Bolivia and Argentina, served as vice president of Braskem and director of Prumo Logística. His last position was no less notable: he directed the National Agency for Petroleum, Natural Gas and Biofuels (ANP) for more than three years.

 

In an interview with Aprix Journal, Décio Oddone analyzed the prospects for the future of the Brazilian gas market, with a view to the approval of PL 4.477/2020. In addition, the current CEO of Enauta spoke about how the independent operator has been adjusting to changes in the sector. Check out:

 

Aprix Journal — On the issue of the new regulatory framework for the natural gas sector in Brazil. In your assessment, what does your approval represent for the Brazilian fuel market? And what impacts can this new law generate?

 

Décio Oddone — The new regulatory framework will make it possible to attract investments to the sector, with the entry of new competitors, reducing costs for industry and consumers and, consequently, increasing the share of natural gas in the Brazilian energy matrix. Now that the transition to a lower carbon economy picks up speed every day, the importance of gas increases.

 

Aprix Journal — Another recent event in the sector was the 39% readjustment in the price of natural gas, which will take effect from May 1st. Considering that in 2020 Petrobras’ natural gas prices fell by 35%, in your opinion, what is the reason for this increase?

 

Décio Oddone — This increase is a response to the formula present in the contracts, which includes the appreciation of oil and the exchange rate, and also to the annual readjustment of transport tariffs, which are linked to the General Price Index — Market (IGP-M). The gas sector is directly influenced by oil and exchange rate dynamics. The entry of new suppliers, offering the input at different price and payment conditions, can change this scenario.

 

Aprix Journal — What are the challenges for the natural gas sector in Brazil for the coming years?

 

Décio Oddone — In a scenario of energy transition to a low-carbon economy around the world, it is necessary to be in a hurry to explore oil and gas while there is demand for the products. Oil is heading towards obsolescence. The energy transition will lead to reduced consumption. Gas must be the fuel of transition. And in Brazil we still drill very little. We are challenged to explore while reserves are still valuable and harness the gas during the transition period.

 

Aprix Journal — How do you see the future of this market?

 

Décio Oddone — Enauta is an independent oil and gas exploration and production (E & P) company, whose strategy is to build a more diversified portfolio with the greatest potential for generating value among independent oil and gas companies. natural gas operating in Brazil. We are experiencing an opening in the oil and gas market that brings new opportunities, which is positive for the sector.

 

In Brazil, Petrobras (the largest national company in our sector) accelerated its strategy of divestment in several assets. This movement changes the configuration of the market. In this new moment, we are particularly well positioned to build a balanced portfolio, with assets in production and under development that allow us to generate the necessary cash to develop projects that generate greater value for shareholders.

 

Aprix Journal — How has Enauta prepared and positioned itself to adapt to future changes in this market?

 

Decio Oddone — As it is less carbon intensive, gas is essential in the transition of the global energy matrix. Since 2007, we have been producing gas in the Manati Field, one of the largest non-associated gas reservoirs in Brazil, when we knew how to overcome the challenge of making a market for this energy source viable. 2020 marked the beginning of the expansion and diversification of our portfolio to onshore assets. In the 2nd Cycle of ANP’s Permanent Offer, we acquired four onshore exploratory blocks in the Paraná Basin. The studies already carried out point to good prospects for oil and natural gas accumulations and, in the event of a discovery, the proximity to the fuel consuming market would facilitate the flow of production. At Enauta, we are on the lookout for opportunities to purchase oil and gas assets in production that add value and contribute to the diversification of the company’s portfolio.

 

Aprix Journal — Would you be able to tell how technologies have collaborated and can contribute to increasing the efficiency of this market?

 

Decio Oddone — The use of innovation and technologies has been responsible for the main advances in the industry, such as the shale revolution in the United States and the increase in production in the pre-salt. The intensification of the digital revolution (digitalization, industry 4.0, big data, artificial intelligence) will revolutionize the sector in the coming years.

 

Aprix Journal — Finally, it is worth noting that Aprix has been working in the supply of pricing intelligence for the fuel sector. We believe that there are great opportunities also in the natural gas sector. How do you see this opportunity leverage in the industry?

 

Decio Oddone — I believe that transparency in the formation and disclosure of prices brings benefits to agents and consumers.