The restart of Fafen-BA by Petrobras raises an old question in more useful terms: what is the value of producing fertilizer in Brazil? The answer does not lie in the slogan of self-sufficiency. It lies in the gas bill. The Camaçari unit was brought back because the company says it lowered the opportunity cost of the input that powers the plant. Without competitive gas, domestic urea becomes an expensive industrial policy project. With cheaper gas, it can become a strategic hedge.
The closest estimate, since the contract is not public, starts with the volume tied to the unit: about 1.2 million cubic meters of natural gas per day. That is equivalent to roughly 42,000 MMBtu a day. At a range of $6 to $7 per MMBtu, the annual gas bill would come to about $93 million to $108 million, or roughly R$465 million to R$540 million. After recent gas price adjustments, that figure could move closer to R$550 million to R$650 million a year. That is not a small number. But it is not the country’s full bill either.
Brazil earns far more from agricultural exports than it would spend to maintain a domestic slice of nitrogen fertilizer production. Fafen-BA covers just 5% of national demand. Even so, that small share matters when wars, sanctions, freight disruptions or shocks in the Middle East and Ukraine push global prices higher. Local production does not eliminate dependence. But it can lower the price of panic.
The risk is to confuse insurance with a permanent subsidy. If gas were to return to levels such as $16 per MMBtu, the case would quickly unravel. If it remains competitive, Petrobras can capture value on two fronts: monetizing its gas while protecting a supply chain that underpins a large share of Brazil’s exports. Domestic fertilizer is expensive. Total dependence may be even more expensive.
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