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Memorandum | Oil and Gas: CNPE issues strategic guidelines for a new natural gas market in Brazil

Oil and Gas; Infrastructure and Energy
On April 17, 2017, as part of the Gás para Crescer (freely translated to “Gas for Growth”) Program1, the Brazilian National Energy Policy Council (“CNPE”) issued Resolution No. 10/2016 (“Resolution”), establishing strategic guidelines and rules for the national natural gas market new regulatory framework and creating the Technical Committee for the Development of the Natural Gas Industry in Brazil.

The “Gas for Growth” guidelines seek to align current regulations to a new market with multiple agents, proposing effective measures to improve industry standards targeting such new market, and increasing competition among market players and access to information. They also seek to encourage access to the natural gas market by new and diverse players.

Strategic guidelines for a new regulatory framework

  • The Resolution2 targets gaps and bottlenecks in current regulations. It stipulates the following:

  • Removal of economic and regulatory barriers related to natural gas exploration and production;

  • Promotion of bidding rounds for exploratory blocks on a regular basis, including areas dedicated to natural gas production, especially onshore;

  • Implementation of measures to stimulate competition and loose market concentration, thereby effectively promoting competition through the natural gas supply chain;

  • Development of natural gas/capacity secondary and spot markets;

  • Development of transporters commercial and operational autonomy;

  • Unbundling policies for competitive activities (production and marketing) from monopolistic activities (transport and distribution);

  • Fostering natural gas storage facilities and promotion of non-discriminatory access to pipelines,processing units and regasification terminals; 

  • Modeling a tax structure for the natural gas sector in Brazil and balancing federal and state legislation targeting the best regulatory practices;

  • Integration between the natural gas and power sectors, aiming at balanced allocation of risks, adequacy of the natural gas supply model for thermoelectric generation and gas-to-power planning; and

  • Promotion of a safe transition to the natural gas new regulatory framework. 

The Technical Committee for Natural Gas Industry Development in Brazil - CT-GN

The Resolution also created the Technical Committee for the Natural Gas Industry Development (“CT-GN”). The CT-GN, which is comprised by several governmental offices and entities related
to the energy, technology and regulations, such as the MME, ANP, EPE and the National Electrical Power Agency (“ANEEL”), and is designed to ensure the gradual and safe transition of the natural gas
market while maintaining an adequate operation of the natural gas sector.

The Resolution also establishes 120 (one hundred and twenty) days for the CT-GN to provide the MME the necessary measures for the development of the natural gas market, which must observe the
aforementioned guidelines. It permits the CT-GN to invite other public and private parties to assist with specialized opinions on specific issues regarding said guidelines.

The enactment of this Resolution by the CNPE represents the continuation of an important institutional rearrangement initiated by the federal government in 2015, envisaging the promotion of a more market-oriented regulation.
1 On October 03, 2016, the Brazilian Ministry of Mines and Energy (Ministério de Minas e Energia – “MME”) opened for public consultation a proposal for new guidelines regarding natural gas regulation in Brazil which was jointly prepared by the MME, the Energy Research Company (Empresa de Pesquisa Energética – “EPE”) and the National Petroleum, Natural Gas and Biofuels Agency (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – “ANP”).

2 (i) Adoption of the best international practices; (ii) Investment attraction; (iii) Diversification of market players; (iv) Enhancement of dynamism and access to information; (v) Active participation of market players; (vi) Development of competition in the supply of natural gas; and (vii) Compliance with ongoing agreements.

For additional information, please contact:

Bruno Werneck
T +55 11 3147-2584

Fabiano Luz de Brito
T +55 11 3147-7726

Felipe Feres
T +55 21 3231-8126

Giovani Loss
T +55 21 3231-8246

Pablo Sorj
T +55 21 3231-8241

Thiago Fernandes Moreira
T +55 21 3231 8115
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