New Brazilian gas market rules begin to take shape
The Brazilian government today published an outline of the rules that will need to be developed for the country's new wholesale natural gas market to ensure price and access transparency.
Brazil's current natural gas market is dominated by state-owned Petrobras, which is the single largest producer, seller and transporter of gas for businesses and homes. The new natural gas law, signed by President Jair Bolsonaro in April, will allow more companies to enter the market and compete for customers and services.
Under the new rule oil and gas regulator agency ANP must "secure transparency" for pricing information in the market. A secondary market for transportation capacity must be created, allowing for players to exchange transportation contracts among themselves.
Transportation companies must also offer options to hire transportation capacity "regularly" to players, with daily, monthly, quarterly and yearly options. Gas pipeline companies must also allow gas carriers to change the gas ownership in the pipeline network, allowing secondary market operations.
ANP also will need to adopt measures to ensure companies with existing capacity to process, treat or transport gas release that capacity to others, an important function for development of a free market supply chain.
"The application of mechanisms to reduce the concentration in natural gas supply is essential to create opportunities for the entry of new agents in the market," said Jose Mauro Coelho, oil and gas secretary at the Ministry of Mines and Energy.
Gas trading activity will include it as a gas, liquid or solid, to be transported in pipelines or through other methods, even for final consumers. Biomethane is to have the same regulatory treatment as natural gas, according to the new rules.
The rules will also allow for more than one transportation capacity market in the country. ANP will be responsible for the regulation of these markets and facilitate the connections between them, to increase market liquidity in a virtual market hub.
Under the Brazilian constitution, gas distribution is under the states' authority, so the decree will also create tools to encourage cooperation between the Brazilian states to harmonize gas legislation under the "National Pact for the Gas Market Development."
States still will need to define minimum gas consumption volumes to allow consumers to eventually be able to choose their own natural gas supplier.
Currently, gas distribution is a captive service, and consumers — even large industrial consumers of gas — cannot choose their gas supplier and must purchase from a single local distributor with regulated monthly tariffs. In 14 out of the 27 states there is no definition of a minimum consumption of gas so that consumers can freely choose their gas supplier. In the states where floor consumption is defined, it is still unclear how the distribution network of pipelines is remunerated, which still hinders liquidity in the gas market.
The decree published today also defines the limits among companies with the same corporate parent to participate in the market and defines limits for people in managerial tasks and board members in these companies, allowing for more competition.
It is expected that oil and gas regulator agency ANP will publish further regulations throughout the rest of the year detailing how gas transportation and trading will work in the new market.
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Canada furthers investment in GHG reductions
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NSTA fines Neo Energy for North Sea methane venting
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Korea’s Hyundai starts operations at biodiesel plant
Korea’s Hyundai starts operations at biodiesel plant
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