Page 9 - GLNG Week 46

GLNG COMMENTARY GLNG

Thinking ahead

Brazil’s latest gas reform bill

anticipates the need to liberalise

access to pipelines, LNG terminals
and other infrastructure ahead of the

recovery in energy demand

POLICY ON September 1, members of the Chamber of
Deputies, the lower house of Brazil’s parliament,
WHAT: voted to approve a bill designed to expand the
A bill expanding the scope of the government reform programme for
gas reform programme the natural gas sector.
recently passed in the The legislation builds on the “New Gas Mar-
lower house of Brazil’s ket” policy, the package of reforms that was
Parliament. rolled out in April 2019. It aims to advance the
liberalisation of Brazil’s domestic gas market by
WHY: altering the legal framework governing distri-
The proposed reforms bution operations. More specifically, it seeks
will improve conditions to replace the current regime, under which the
in the domestic market government awards concessions to would-be
before the resurgence of distributors, with one that makes the National
electricity demand. Agency of Petroleum, Natural Gas and Biofuels
(ANP) responsible for granting authorisations
WHAT NEXT: to applicants. Additionally, it bars gas produc-
The bill is slated to be ers from participating in the gas distribution
submitted to the upper business.
house in the near future. Officials in Brasília believe that the bill will pandemic. If it does, its citizens and businesses
promote competition in the distribution sector will be in a position to benefit from the “shock
by clearing some of the bureaucratic obstacles of cheap energy” that Economy Minister Paulo
facing companies that are seeking to build new Guedes promised last year.
gas pipelines. They also hope that the anti-ver-
tical integration provisions will prevent compa- Price considerations
nies from gaining monopoly control over any This “shock” may have even more impact
part of the market. because of developments on domestic and global
energy markets.
A good time for reform Brazil does have gas reserves of its own, and
Laercio Oliveira, the legislator who presented officials in Brasília have talked before about the
the measure in the Chamber of Deputies, told possibility of using more of these reserves to sat-
Reuters in late August that he expected the bill isfy domestic demand. However, this approach
to help bring domestic gas prices down. “We does have some drawbacks, including the fact
have the most expensive gas in the world, which that most Brazilian gas is not natural gas but
forced hundreds of industries to shut down in associated gas that must be either processed out
Brazil or change their source of energy,” said of crude oil from offshore oilfields or re-injected
Oliveira, who represents the state of Sergipe. back into the same fields. The former option car-
The bill has not taken effect, as it has yet to ries costs for producers. It also entails additional
pass through the Federal Senate, the upper costs related to the establishment of new infra-
house of parliament, and secure the signature structure, in that the gas is being extracted from
of President Jair Bolsonaro. (It is due to be dis- fields that may not be connected to onshore gas
cussed in the Senate soon.) markets by pipeline and may not have access
Even so, the timing of the measure is good. to onshore transportation and distribution
Brazil’s parliament and president would do well networks.
to adopt these additional reforms soon, before These considerations have served to drive up
the country’s energy demand recovers from the Brazil’s domestic gas prices, and the national
impact of the coronavirus (COVID-19) oil company (NOC) Petrobras has tried in the

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