Updates with more background about the ruling and project.
Brazilian oil and gas regulator ANP has ruled that the state of Sao Paulo cannot authorize local gas distribution company Comgás to build the Subida da Serra pipeline.
In a 17 September decision circulated internally, the agency board of directors agreed with a technical ruling that the 16mn m³/d project from a coastal Santos LNG regasification facility project to Sao Paulo state cannot be considered a distribution pipeline, and thus cannot be authorized by state regulation or state law.
Documents obtained by Argus show that agency officials consider the Comgás project "clearly ... a transportation pipeline," which places it under the jurisdiction of federal authorities for approval. ANP's infrastructure superintendent said that "by authorizing the construction of the facility, ARSESP (Sao Paulo state's regulatory agency) usurped ANP authority."
Following the infrastructure superintendent's recommendation that the project cannot be authorized through state law, the board of directors for the federal agency unanimously adopted that view. The decision is pending publication in the Federal Register.
The pipeline project Subida da Serra is considered an important asset for Comgás, since it will connect the distribution network to LNG regasification facilities.
The state regulator approved the project in 2019 but in November 2020 the Brazilian Association of Gas Transporters (ATGas) challenged the decision, telling ANP in a letter of the state's decision and that the project was included in the tariff calculation process. Many in the market thought the federal agency would rule against Comgas or it would be stopped by the courts. But on 27 July of this year Sao Paulo state governor João Doria published a decree saying it was up to local regulators to define which assets are considered distribution assets.
Comgás declined comment on the ANP ruling.
