New Gas Law Approved. Now what?

This week, the House of Representatives approved Bill 4476/2020 (previous number 6407/2013) with the New Gas Law, which follows for presidential sanction.

Much was debated on the subject and countless versions of the bill and amendments were discussed until it came to a vote. All the last proposed amendments were rejected, including those presented by the Federal Senate.

Undoubtedly the New Gas Law reinforces important principles to enable market opening, such as:

  • deverticalization: independence between operators of gas networks and other market agents operating in other links of the chain, who may not share the same controller or governing body.
  • Access to essential facilities : establishes public calls for access to transport capacity and negotiated non-discriminatory access to other structures such as offloading, processing and LNG terminals.
  • Entry and exit to transport: changes the current point-to-point model to an entry and exit capacity model, independently.

Many relevant issues have been delegated to future regulation by the ANP, which, on the one hand, brings greater flexibility for the legislation to adapt to market developments, but, on the other hand, causes some uncertainties to persist.

It should be remembered that the development of the natural gas industry often requires the expansion of existing infrastructure and the negotiation of medium and long-term commitments, which requires high investments and the need for legal certainty, incompatible with some of the uncertainties of the New Gas Law, pending ANP regulation.

The experience of the public call for Gasbol transport capacity, promoted by TBG in 2019, clearly demonstrated the need to coordinate the supply of transport capacity with the supply of the molecule, since a large part of the qualified agents did not proceed in the public call, in the guaranteed phase, mainly due to the lack of commercial agreements with YPFB for the purchase of the molecule.

Also, it became evident the need to coordinate with the contracting of capacity in the other interconnected transmission systems, in order to make the path of the molecule to the buyer truly viable, expanding the portfolio of potential distributors and interested free consumers.

This topic refers to other fundamental points for the good functioning of the open market, such as the creation of a network code for the operation of the transmission system, the creation of a supplier of last resort to guarantee supply and energy security, greater clarity regarding the responsibility of each agent for situations of over or under injection or withdrawal, non-compliant gas, metering, etc.

This scenario generates an intense regulatory agenda to be met by ANP soon or else the positive impacts on the sector will not be felt.

In any case, this approval represents a breakthrough for a sector with a vocation to boost the recovery of the Brazilian economy. We shall see!

For more information, contact our Infrastructure and Energy team - [email protected].