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Natural Gas

Brazil publishes guidelines to increase competition and redesign the gas market

05/05/2022 | 11h31

President Jair Bolsonaro approved in an order published on Tuesday strategic guidelines for the design of the new natural gas market, in addition to improvements in public policies for the transition to a competitive market, as intended in the “Novo Mercado” program. of gas”.


The guidelines are contained in a resolution approved by the National Energy Policy Council (CNPE) in April this year.


The measures seek to promote a stable and attractive environment for doing business, reducing uncertainties in the transition period to the new market model, the Ministry of Mines and Energy said in a note last month.


Among the approved guidelines are the elimination of economic and regulatory barriers to natural gas exploration and production activities and the holding of regular auctions of exploratory blocks, including areas dedicated to the production of natural gas, especially onshore.


The resolution also intends to reinforce the separation between potentially competitive activities (production and sale of gas) from monopolistic activities (transportation and distribution).


Another objective of the new market design is to bring the natural gas and electric energy sectors closer together, seeking a “balanced allocation of risks”.


There is talk of greater integration with the planning of the electricity sector and improvement of indicative infrastructure plans, which may consider storage and storage facilities.


Among the principles of transition to a competitive product market, the text mentions, among other aspects, the mitigation of conditions that favor sharp differences in gas prices between regions of the country, “with gradual implementation of the location signal”.


The resolution also recommends that the Ministry of Mines and Energy and the Ministry of Economy encourage States to promote reforms in the provision of piped gas service, with possible amendments to concession contracts to adapt them to “good regulatory practices”.


It is also recommended that the portfolios encourage state governments to privatize their piped gas concessionaires.

Font: Reuters
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