Brazilian midstream gas opening progresses

Regulations governing the opening up of Brazil's natural gas pipelines to third-party access have been agreed this month and issues between pipeline companies and gas suppliers resolved, enabling contracts to be put in place by 1 January 2022, a vital step towards the liberalisation of Brazil's gas market.

The three main topics that had to be addressed regarding pipeline access rules before the start of next year have been resolved, pipeline operator TAG's commercial and regulatory director, Ovídio Quintana, said. These were information on pipeline capacity for new contracts, agreement on the standard contract for new gas carriers, and the definition of costs. Resolving these issues means that gas carriers can sign transportation contracts, which is expected to happen from 4-10 December, Quintana said.

Almost 10 companies have signed the master contract to be gas carriers using the pipelines, the non-binding stage of the process, Quintana said.

But two topics still require some clarification — providing suppliers for on-the-spot gas to ensure that pipelines maintain the correct pressure when the carriers fail to balance the gas volumes, and determining the rules for pipeline congestion management.

Quintana told Argus that pipeline companies were able to smooth costs for carriers for network services, which were previously provided by state-controlled Petrobras. Network costs were previously bundled together with the cost of gas supply, making it unclear for consumers. The cost of linepacking, or inventory gas — the gas inside the pipelines, which currently belongs to Petrobras — was a major concern, since TAG and fellow pipeline company NTS must buy around 105mm m³ — 40mm m³ and 65mm m³, respectively — with costs shared among the carriers.

The minimum amount of this gas will be purchased at present — owing to currently high global gas prices — which represents the share of gas for new carriers, reducing immediate shared costs, Quintana said. Petrobras will continue to be the carrier of more than 80pc of the gas supplied through pipelines in 2022, so only the share of the new carriers must be purchased immediately.

The same applies for gas that is used in the system, such as as fuel to power machinery at pipeline facilities. Carriers will be offered the possibility of either injecting more gas than their shipping volume into the pipelines to cover the use of the system, or to pay the pipeline company for this gas.

With regard to pipeline capacity, other outstanding issues include the amount of space left for carriers other than Petrobras, which must be announced in the next few days for TAG and NTS. Oil and gas regulator ANP should provide this information soon and TAG and NTS will be able to sign transportation contracts based on these volumes transferred from Petrobras to other carriers.

TAG recently presented its standard contract for extraordinary short-term gas carriers, and NTS must present its contract by next week. The contract is designed to allow for a commitment of 12-months or less and can be adjusted to accept newcomers during any month in 2022, meaning that carriers could have extra time to adjust their contracts.

Quintana also guaranteed that the pipeline companies will not be a barrier to business being carried out in the new gas market. "If you are having difficulty to close a deal due to transportation, call me at the same moment and I will step in. Gas transportation must be a solution, not a problem," he said.

At least 30 companies have shown an interest in transporting natural gas on pipelines, according to the POC shared online platform.

By Flávia Pierry