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Decree No. 9.616/2018 – Government implements the entry-exit regime and other proposals from “Gás para Crescer” (Gas to Grow) Project for the natural gas industry

Oil and Gas

​President Michel Temer enacted, on December 18, 2018, Decree No. 9.616/2018 (“Decree”) regulating the Gas Law and implements proposals from the “Gás para Crescer” Project through an alternative that does not implicate amendments to the legislation.

After long discussions between public and private agents in the natural gas industry, “Gás para Crescer” turned into a bill of law that is has been pending  a vote from the  National Congress since the end of 2017. With the end of Temer's mandate approaching and the idleness of the Congress, the government saw in the Decree an alternative to implement some of the Project's proposals directly.

The most relevant change introduced by the Decree is the entry-exit regime for the natural gas transportation activity, in which network users should be able book and use entry and exit capacity independently from each other. 

This model encourages the liquidity of the market and maximizes the number of agents which are able to negotiate among themselves.

Through this new model, the natural gas transportation fees will be proposed by the transporting companies and approved by the National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – "ANP" or the "Agency"). The Agency will be the main body in charge of the regulating and mediating of the transportation industry, focusing on the promotion of free-trade, transparency of information, non-discriminatory access to pipelines and the efficient use of the infrastructure.

In addition to establishing that the expansion of transportation capacity is a form of third party access to the pipeline network, the Decree grants  ANP the responsibility to determine the permissible levels of vertical integration between the agents in transportation activities and other sectors of the natural gas value chain.

The text the Decree also grants the Agency a part in the third-party access to essential infrastructure (production outflow facilities, processing units and LNG terminals), allowing it to act as an arbitrator for any conflict arising from unsuccessful access negotiations.

Another potentially positive innovation to the industry consists in establishing that the National Energy Company (Empresa Energética Nacional - EPE) must carry out studies dedicated to the expansion of the country's pipeline network.

We highlight that the changes introduced by the Decree in the transportation sector do not affect the rights arising from existing transportation agreements and is subject to further regulation by the ANP in order to become effective.

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