Brazil regulates gas pipeline, regas terminal access

Outgoing Brazilian president Michel Temer signed a decree that will regulate third-party access to natural gas pipelines after failing to get new gas legislation through congress.

The decree builds on a 2009 gas law to allow greater third-party access to pipelines that have been the traditional domain of state-controlled Petrobras.

The decree will allow companies to negotiate access to existing pipelines as well as regasification terminals, a process which will be managed by the oil regulator (ANP).

The goal is to increase competition and the number of gas market participants as Petrobras slowly reduces its dominant position.

The ANP will set fees and establish rules for access to the pipelines and regasification terminals.

Failure to allow third-party access to a pipeline would be considered anti-competitive, which could subject the owner or operator of a pipeline to lawsuits.

Although the decree is seen as a step forward, new legislation is still needed before the country can create a concession model for the construction of new gas pipelines. A bill governing new pipelines has been languishing in the lower house of congress, in part because of questions about consumer gas prices that are currently determined by state regulators.

The new decree coincides with efforts by state-controlled gas distribution companies to sign new contracts for supply that has traditionally come from Petrobras.

In August, five gas distributors from south-central Brazil and seven from the northeast announced joint tender offers to acquire 10mn m3/d and 9.4mn m3/d, respectively. But without clear rules defining pipeline access, the distributors were forced to extend the deadline until 31 January for receiving supply proposals.

The new rules should also facilitate discussions about third-party access to the Bolivia-Brazil gas pipeline (Gasbol). In September, the ANP requested that Transportadora Brasileira Gasoduto Bolivia-Brasil (TPG), which is controlled by Petrobras with a 51pc stake, present terms to offer third-party access to Gasbol. The ANP plans to hold public hearings over access to Gasbol in January.

For northeastern distributors, access to Petrobras' LNG terminals could help facilitate future supply contracts. Petrobras has two operating floating storage and regasification units (FSRUs): 14mn m³/d Golar Winter in Bahia and 20mn m³/d Excelerate Experience in Pecem. A third terminal at Guanabara in Rio de Janeiro is currently inoperative.