The National Energy Policy Council (CNPE), chaired by the Minister of Mines and Energy, Bento Albuquerque (photo), approved yesterday, 4/06, at its 2nd Extraordinary Meeting in 2020, Resolutions with guidelines for the direct sale of ethanol; authorization for ANP to define and bid blocks in any land or sea basins, fields returned or in the process of being returned, in the Permanent Offer system; and incentives for small and medium-sized companies in the exploration, development and production of oil and natural gas. "All measures aimed at resuming economic growth with a view to the post-pandemic period," said Albuquerque.

CNPE members also examined the possibility of anticipating the minimum mandatory percentage of biodiesel in diesel oil to consumers, from 12% to 13%, as a measure to face the COVID-19 pandemic crisis, but expected to start on March 1 2021. Another topic discussed and examined at today's meeting was the third quarterly assessment report on the structuring measures for the Novo Mercado do Gás, presented by the Natural Gas Monitoring Committee.

CNPE establishes guidelines for the direct sale of hydrous ethanol fuel 

The National Energy Policy Council (CNPE) approved a Resolution that establishes guidelines for the sale, by producer, of hydrous ethanol fuel (EHC) directly with a retail retailer of automotive fuels and a transporter-retailer-retailer (TRR), in the event that this power comes to market EHC.

The guidelines established by the CNPE address: competitive equality in the tax aspect and preservation of the collection of specific tax rates (ad rem) in relation to the marketing of hydrated ethanol with fuel distributors; optional marketing in this modality by interested agents; and isonomy in the definition of standards and quality specification of the final product to the consumer.

The measure will make it possible for the National Agency of Petroleum, Natural Gas and Biofuels (ANP), based on the guidelines issued by the CNPE, to implement actions for the direct sale of hydrous ethanol fuel, a topic that is part of its Regulatory Agenda. As already established in CNPE Resolution No. 12, of June 4, 2019, the possibility of eliminating a link in the marketing chain has the potential to promote increased competition, which tends to benefit the consumer.

CNPE authorizes the ANP to define and bid blocks in any land or sea basins, as well as bidding fields returned or in the process of being returned, in the Permanent Offer system

The National Energy Policy Council (CNPE) passed a resolution authorizing the National Agency for Petroleum, Natural Gas and Biofuels (ANP) to define and bid on blocks in any land or sea basins, as well as bid on fields returned or in the process of being returned, in the system Permanent Offer.

Fields or blocks in the pre-salt area, in the strategic areas defined in art. 2 of Law No. 12,351, of December 22, 2010, the blocks located on the Continental Shelf in addition to the 200 nautical miles, the blocks authorized to compose the Seventeenth and the sectors indicated for the Eighteenth Bidding Round, in the concession regime.

The measure aims to boost the supply of areas for exploration and production of oil and natural gas in Brazil, considering that in the Permanent Supply system the areas are permanently available to the market, allowing companies to carry out their studies in their time, without depending on a pre-established calendar by the government. In addition, companies may express interest in the areas at any time, according to their strategy and financial availability.

CNPE approves Resolution providing for incentives for small and medium-sized companies in the activities of exploration, development and production of oil and natural gas

The National Council for Energy Policy (CNPE) approved a Resolution for the National Agency of Petroleum, Natural Gas and Biofuels (ANP) to evaluate the adoption of measures aimed at reducing royalties to up to 5%, for fields granted to small or medium companies postage.

The resolution also recommends the ANP to continue studies and actions aimed at defining and implementing any incentives for exploration, development and production by small or medium-sized companies and accumulations of hydrocarbons or fields with marginal economics.

The Resolution will favor the maintenance of small and medium-sized companies in the oil and natural gas exploration and production sector in the country, making the activity more competitive, with the consequent generation of jobs, maintaining the dynamism of the local economy and the potential increase short-term onshore oil and natural gas reserves.

To be applied, the measure must be regulated by the ANP.

CNPE examined the possibility of anticipating B13

The possibility of anticipating B13 was presented to CNPE. The agenda was motivated after important Associations of biodiesel producers (ABIOVE - Brazilian Association of Vegetable Oil Industries, APROBIO - Association of Biofuel Producers of Brazil and UBRABIO - Brazilian Union of Biodiesel and Biokerosene) submitted, in April this year, a request advance of the mandatory minimum percentage of biodiesel in diesel oil to the consumer, from 12% to 13%, scheduled to start on March 10, 2021, according to CNPE Resolution N0 16, of October 29, 2018, as a measure of coping with the COVID-19 pandemic crisis.

The main arguments of the biodiesel production sector for the claim were: i) support for the internal supply of bran, a biodiesel co-product, for the animal protein production link; ii) maintaining and generating jobs and supporting the national economy and iii) mitigating diesel oil imports.

The Ministry of Mines and Energy (MME) evaluated the anticipation of B13 under the following aspects: i) impact of COVID-19 on diesel demand; ii) the impact of COVID-19 on the production of biodiesel; iii) predictability of biodiesel demand; iv) production of soybean meal; v) import of diesel oil; vi) impact on the price of diesel oil to the consumer and vii) effect on the distribution and resale of diesel oil.

It was concluded that: i) the demand for diesel oil, with the exception of liquefied petroleum gas (LPG), was the one that fell the least compared to other fuels and, at this moment, it is experiencing a recovery; ii) the estimated drop in demand for biodiesel caused by COVID-19 is 0.5 to 1.0 billion liters, for an initially estimated demand of 7 billion liters; iii) the productive sector has high production predictability, since biodiesel does not compete with other fuels; iv) the potential for increasing soybean meal production is about 4.4% and there is also the potential to generate new jobs; v) the import of diesel oil is a factor of contestability in the market and, therefore, one of the determining factors of competition; vi) with the anticipation of B13 there is the potential for a small increase in the price of diesel to the consumer; vii) the increase in the percentage of biodiesel, without predictability, has the potential to impact the operational planning of the distribution and resale segments.

Thus, considering all links in the country's fuel sector, from the producer to the final consumer; the uncertainties that Brazil is going through in this unprecedented crisis; and due predictability for the fuel market, MME understands that the evolution of the mandatory addition of biodiesel to diesel should be maintained, in accordance with CNPE Resolution No. 16, of October 26, 2018.

However, the Ministry of Mines and Energy will continue to monitor the fuel market and evaluate the promotion of adjustments that are necessary.

CNPE examined quarterly report on the evolution of the Novo Mercado do Gás

The Natural Gas Monitoring Committee presented CNPE members with a third quarterly assessment report on the structuring measures for the new gas market in the country. The document presented evaluated the progress of the work on the pillars of promoting competition, regulatory harmonization, removal of tax barriers and integration with the electricity sector. This more executive version of the report also included a chapter assessing the effects of the pandemic on the natural gas sector. The report includes information up to the 1st quarter of 2020. In summary, the evaluation of the progress of the works is positive, observing the time cut, as the process of unbundling has advanced, the engagement of the states in the adhesion of the new gas market has increased, in addition to the discussions foreseen on the integration of gas with the electricity sector, observing future auctions.