Brazil oil and natural gas regulator ANP is one step closer to a gas release program, but state-controlled Petrobras' goal of broadening its market share and unclear messaging from the government may halt the plan.
ANP last week released its study on the need for a gas release program to redistribute shares of the Brazilian gas market from the former monopoly to other traders. The plan has been expected since 2021, when the gas market liberalization bill was passed.
The study concludes that Petrobras' market share is far too large to allow competition to grow on its own, and that the agency should conduct a regulatory impact analysis (RIA) on the issue. The regulator must design and oversee a plan of gradual change to support an open, competitive Brazilian gas market, according to study.
A government source told Argus ANP directors believe that Brazil needs a gas release program, but that other governmental agencies are not keen to implement it. Antitrust agency Cade changed its stance on encouraging competition in the gas market, the source told Argus, and is not "making any resistance" to Petrobras' announcement that it will increase its gas market share under the new administration.
Cade did not endorse the official study released by ANP last week. Because the ministry of mines and energy is not openly supporting a gas release program, supporters are placing their hopes on the industry and commerce ministry, since representatives of that agency are publicly supporting a gas release program.
ANP was only allowed to start studies on a gas release program this year, two years after the gas law was approved. Just this year the department in charge of gas movement within ANP got the approval to hire more employees, making it possible to prepare the study.
Main regions close to monopoly
Petrobras still has a very large market share in gas, with an average of 83pc of all gas traded on the pipeline grid in 2022, according to the ANP study.
Petrobras' share of gas sent to the grid is expected to remain stable in the next five years, and may even increase after operations in the Rota 3 pre-salt outflow pipeline begin.
According to the ANP study, the level of Petrobras monopoly in Brazil's main gas consuming regions is more than three times higher than what is considered the threshold for a non-competitive market. Petrobras will continue to dominate natural gas supply in those regions "even if other producers manage to increase their participation over the next four years," ANP said.
The regulator's study also shows that recent measures adopted in the new gas market to allow for more competition do not create long-term competition. That is the case of the provisional swap contracts for processing gas for third parties at Petrobras' processing units. "Access is not provided as determined by the new gas law. Therefore, it is a temporary solution and should not be perpetuated," ANP said.
The ending of Petrobras supply agreements from 2024-2026 may help open the market, according to ANP. This is the time for gas release actions to be implemented with less need for contractual changes.
