BRAZIL OPENS GAS MARKET

ENERDATA - 18 Mar 2021 - The Brazilian Chamber of Deputies has approved the new Natural Gas Law, which intends to open the gas market to the private sector and to end the monopoly held by the national oil and gas company Petrobras. The lower house of the Parliament had approved the text in the first reading in September 2020 and has now approved a final version, rejecting all the amendments adopted by the Senate in December 2020. The law will now be signed into law by the President.

Gas distribution and the operation of gas pipelines will switch from a concession regime (concessions granted by the government, with public bidding), to a regime of authorizations granted by the oil and gas regulator ANP, which should reduce administrative procedures to build gas pipelines. In addition, the text prevents vertical integration in the production of natural gas. The ANP should stimulate competition, using mechanisms such as mandatory transfer of transport capacity, flow of production or processing, obligation to sell or auctions part of the sales volumes for companies with high market shares, or restriction of gas sales between companies in the same production areas. Power companies will be allowed to distribute gas for industrial use, which was until now reserved to Petrobras. The bill is expected to reduce the price of gas in Brazil and to unleash BRL40bn (US$8bn) in private investment for the gas sector. The draft law will now return to the Chamber of Deputies.

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