Page 5 - LatAmOil Week 04 2022

LatAmOil COMMENTARY LatAmOil

The other 21 states have not taken this step yet, ANP guards federal prerogatives
but other stakeholders – gas producers, gas For its part, Brazil’s federal government has
transportation companies, gas consumers’ asso- come out swinging, arguing strongly for the
ciations – have signalled that they hope to play proposition that it ought to be entrusted with
a role in the process if (and when) they do so. setting up an overarching body of rules that all
As such, future efforts to hammer out state- states must follow for the sake of consistency.
level gas distribution rules may end up being Earlier this week, Argus Media reported
an unruly process, marked by vigorous debate separately that Brazil’s state-run oil and gas
among local lawmakers, representatives of mid- regulator, the National Agency of Petroleum,
stream and downstream operators, consumer Natural Gas and Biofuels (ANP), had asked the
groups and environmental advocates. They Supreme Federal Court to consider the matter.
may also lead to the emergence of different sets Specifically, it said that ANP had asked the court
of rules in different states, as political and con- to rule on the legality of the São Paulo state gov-
sumer preferences are not uniform across the ernment’s Decree No 65.889 defining which gas
country. pipelines are for transportation (and therefore
In turn, the existence of different sets of rules under federal jurisdiction) and which are for
will make some states more attractive to outside distribution (and therefore regulated at the state ANP has argued
investors than others, meaning that the adoption level). strongly for the
of new rules will not have the same financial The agency has been sharply critical of
consequences everywhere. the decree, which was approved by São Paulo proposition that
Governor João Doria in July of last year. It has
States’ rights? expressed agreement with critics who have it ought to be
In the meantime, some of the states (and some asked whether the measure might unfairly
of the stakeholders) have raised the question of benefit local distribution companies with close entrusted with
whether all of the parties involved might benefit ties to the state government by allowing them setting up an
if everyone agreed to work together under a uni- to appropriate pipelines formerly controlled by
form standard to be adopted and enforced by the federal authorities. overarching body
federal government. Additionally, it has indicated that it will
As Argus Media noted last week, many of make the same case outside São Paulo. Accord- of rules that all
the country’s gas producers and gas consumer ing to Argus Media, ANP has said it will ask the
groups appear to favour this view. They are moti- Supreme Federal Court to review several other Brazilian states
vated largely by concern that some states might cases in which state governments have chal- must follow
authorise the use of pipelines in ways that dis- lenged federal jurisdiction over the gas sector. It
regarded the needs and interests of other states has not identified any specific instances of con-
using the same infrastructure. cern but has made clear that it will guard federal
By contrast, Abegás, an association of gas dis- prerogatives.
tributors, has called for maximising the degree As such, the move toward liberalisation of the
of independence granted to state governments. Brazilian gas market as a whole is not likely to be
The group has taken this stand on the grounds smooth. It will also involve a certain amount of
that states have the constitutional right to pri- wrangling with state governments over the exact
oritise their own individual circumstances and nature of relations between the centre and the
interests when making laws. periphery as competition expands. ™

São Paulo Governor João Doria (C), pictured in 2019 (Photo: SaoPaulo.sp.gov.br)

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