Brazilian state-controlled oil producer Petroleo Brasileiro SA said on May 3 it will add the U.S. natural gas pricing benchmark as an option to future sales contracts with distributors.

The move comes as Latin America’s largest oil and gas producer tries to stimulate local demand for its rising natural gas production and as the government strives to reduce domestic natural gas prices.

Petrobras, as the Rio de Janeiro company is known, will start offering contracts backed by the U.S. Henry Hub reference price, in addition to contracts indexed to the international Brent oil benchmark, the company said in a statement.

Henry Hub index pricing will meet client demand for a more stable and predictable benchmark, it said.

“Henry Hub is very cheap and is less volatile than other benchmarks,” said Jason Feer, global head of Business Intelligence at advisory firm Poten & Partners. “The risk for Petrobras would be buying or producing gas in a more expensive and volatile index, but selling for a cheaper one.”

Petrobras aims to reduce price volatility in Brazil for natural gas—largely used for cooking and power generation—while aligning with international prices. The new formula must still be negotiated with customers, Petrobras said.

In February, President Jair Bolsonaro fired then Petrobras CEO Roberto Castello Branco over a dispute on pricing. Bolsonaro has promised to reduce fuel costs for consumers.

Henry Hub is the pricing point for natural gas futures on the Nymex. It also plays a role in setting prices for U.S. LNG projects.

It has traded between $1.50 to $3.30 per million British thermal units in the past year.

Petrobras will use Henry Hub index prices in public calls for local gas distributors, alone or as part of hybrid Henry Hub-Brent contracts, it said.

“The natural gas market in Brazil is in the process of opening up, encouraging competition,” Petrobras said in a statement. The changes will allow customers to better manage gas purchasing portfolios via index pricing and contractual terms, it said.

The portfolio of contracts offered will allow clients to meet seasonal consumption with more flexible contract lengths, from six months to four years, the company said.

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