Page 4 - LatAmOil Week 04 2022

COMMENTARY Y
LatAmOil COMMENTAR LatAmOil

(Photo: ANP)
Federal questions emerge as

Brazil’s gas reform proceeds

The ANP has come out swinging in a bid to guard the federal government’s prerogatives

EFFORTS to liberalise Brazil’s natural gas sec- gas market reforms will go forward and that the
tor have definitely made progress over the last delays are sure to be temporary in nature. Even
WHAT: year. To cite just one example, last April, the gov- so, another potential problem has emerged –
The state regulatory ernment formally incorporated measures that and it may be headed for the Supreme Federal
agency wants federal allow competition and break up the monopoly Court.
authorities to set an previously enjoyed by the national oil company
overarching standard for (NOC) Petrobras into the legal regime that gov- Delegation of powers
gas distribution. erns the national gas market. The problem stems from the fact that Brazil is
Nevertheless, there is still some distance to a federal state, with the constitution assigning
WHY: cover before full liberalisation is achieved. From certain powers to the central government and
Brazil’s constitution a de jure perspective, Brazilian authorities have reserving others for state governments. Under
allows states to establish
their own gas distribution taken the decision to postpone implementation this constitution, individual states have the right
rules. of certain measures, including curbs on Petro- to establish their own rules for the distribution
bras’ ability to import LNG. Meanwhile, from a of gas.
WHAT NEXT: de facto standpoint, it is worth noting that gov- To date, five of Brazil’s 27 states – Ceará,
Quarrels on this front are ernment-controlled Petrobras still accounted Maranhão, Paraíba, Pernambuco and Piauí –
likely to make the push for approximately 90% of the country’s gas pro- have established their own sets of gas distribu-
toward liberalisation a duction as of the end of 2021. tion rules. One more, Rio Grande do Norte, is on
little bumpier. President Jair Bolsonaro has insisted that track to follow suit in the near future.

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