Lessons learned from Brazilian natural gas industry reform

Energy Policy, 2009

For the last 20 years, countless countries have been carrying out structural reforms in the natural gas industry, trying to achieve efficiency and economic rationality with the introduction of competition. The objective of the paper is to present an approach to the development of competition and infrastructure of the Brazilian natural gas industry. This approach is based on a market projection to 2011, on the international experience and on the characteristics of the Brazilian market, infrastructure and regulatory framework. Possible impacts of the proposed measures are also provided. According to the market projection carried out in this paper, in 2011 there will be a possible surplus of natural gas in the country, which includes a dependence diminishing of the Bolivian gas supply. This gas surplus, allied to an upcoming Gas Law and the trade liberalization in the states of São Paulo and Rio de Janeiro, can stimulate the development of competition, if some changes that proposed in this paper are made in the current Gas Bills. The approach proposed herein seeks to stimulate non-discriminatory open access, focused on information transparency and tariff regulation to help the development of infrastructure and competition.

Energy Policy, 2012

A B S T R A C T The aim of this paper is to present the main challenges for the development of the natural gas industry in the Brazilian state of Espírito Santo; in so doing, the paper identifies the strategies that are currently employed by industry players to encourage the use of this resource and to thus diversify the state's energy matrix. For these purposes, the following methodology was adopted: (i) analyzing bibliographic references that address the issues of infrastructure industry, regulation and the natural gas industry in Brazil – including in the Brazilian states; and (ii) employing secondary data from governmental and regulatory institutions to demonstrate the evolution of this industry in recent years in Brazil and particularly in Espírito Santo. The study concludes that, although there are challenges in expanding the gas transportation (carrier) and distribution segments ("natural monopolies") and the formation of a "consumption-anchor" for natural gas, the present is the right time to use public policies to encourage the use of natural gas and renewable sources for technological, environmental and energy security reasons.

Oil and Gas, Natural Resources, and Energy Journal, 2021

This article offers a brief analysis for better understanding the current Brazilian regulatory framework regarding the distribution of natural gas (NG), especially considering the innovations introduced by the Gas Law (11.909/2009) and the current debate concerning the New Market Program. The methodology consisted of a literature review and survey of various data to analyze the Brazilian gas sector from the perspective of political risk and the New Institutional Economics (NIE) analysis. By using this methodology, it is clear that the current regulatory framework creates a disparity of scenarios throughout the Brazilian territory. In essence, that legal uncertainty prevents greater investment in the gas sector.

Energy Policy, 2019

The study comprises an analysis of the most relevant oil and gas (O&G) legislation and policy, focusing on the development of natural gas (NG) infrastructure and market in Brazil. The paradigms for the study were the regulatory frameworks of the O&G industry in Brazil and Argentina, since they are relevant members of the Mercosul economic block. A comparative assessment was performed in order to better understand the bottlenecks and drawbacks for the NG market expansion in Brazil, considering successful examples of recent legislation advances of other countries. Also, the sanction imposed by ANEEL Resolution n. 583 of 2013 on natural gas suppliers, due to the lack of supply for thermoelectric utilities was evaluated. Since current calculations have introduced asymmetries concerning the indicators employed, while using parameters intrinsic to the electricity sector, an alternative formula was proposed, decreasing the sanction value on the supplier without compromising the contract neutrality. The regulatory framework analysis indicates that further strategic planning and investment, as well as adequate policy changes are required, in order to ensure a long-term energy policy aimed at the sustainable development of the NG industry in Brazil. This process is aligned with a transition towards a lower emission energy system, and should consider the expansion of energy integration in Mercosul to explore the potential of its members' comparative advantages.

Regulation of the natural gas industry is recent in Brazil. The agencies regulating this industry, both in Federal and state levels, were set up only in the late 90's. shows the current natural gas industry organization in Brazil. This paper proposes a new regulatory framework to pave the way to competition in retail trade of natural gas in the state of Sao Paulo from 2011. At this year, a regulatory mark in the state will liberalize the retail trade for industry and electricity generation. Market planning of natural gas in Sao Paulo State is done through a market outlook. Demand is projected using simple logistic curve estimation. On the supply side, projection considers Petrobras Strategy Planning. Proposed regulatory framework considers international experience and Brazilian characteristics, both in upstream and downstream levels. Brazilian natural gas market is concentrated in the Southwest part of Brazil, and the interstate system is interconnected in the major markets. It means that a natural gas oversupply in Brazil would directly reflect in Sao Paulo State, that is located in the Sothwest. In the optimistic (aggressive) scenario considered for 2011, Brazil would have an oversupply of 0.4 bcf/day. This oversupply together with Bill 334/07 for the upstream, and the downstream framework proposed in this paper, would help competition development in the state of Sao Paulo; it would probably: 1) create a wholesale and a retail gas market; 2) stimulate risk management tools, i.e. derivative instruments; 3) promote a shift from long-term to short-term contracts between LDC's and shippers; 4) create a spot and future markets; 5) promote a move towards spot and futures gas price indexation in mid-and long-term supply contracts.

Energy Law and Regulation in Brazil, 2018

Over the last decades, the world's energy market has undergone deep changes. Progressive exhaustion of non-renewable resources and growing demand raised debates regarding the development of public policies directed into promoting energy efficiency. It also raised concerns towards diversification of power sources in order to increase energy security of present and future consumers. Faced in this scenario, Brazilian natural gas industry has been highlighted in international geopolitical context due the important role of natural gas as an element of transition towards a greater presence of renewable sources (Santos et al. 2002). According to BP (2013), in 2012, natural gas presented an average share of 23.9% worldwide. This demonstrates a set of changes in consumption standards and a gradual displacement for oil byproducts. In the second half of the twentieth century, although Petrobras was established as the Brazilian's national company, the growth of natural gas industry was still left as a minor priority by energy planners. Since natural gas was considered a byproduct, it was employed as raw material for chemical, fertilizer industry and for productivity increase in oil exploration wells. The first natural gas discoveries in Brazil were associated with oil exploration and on shore production. Yet natural gas' share in Brazilian energy matrix was still a recent historical event and facing struggles to develop exclusive consumer markets. In the 1980s, natural gas production became more relevant because of discoveries in Campos Basin (Rio de Janeiro state), made possible due investments in deep-sea prospection and in the construction of gas pipelines. So, natural gas was able to

The discovery of the Presalt bounty has repositioned Brazil in the global oil and gas scenery. From an oil and gas importer, Brazil has now the potential to become a large oil producer. Nevertheless, to turn this potential into reality, Brazil will have to face important challenges to mobilize the necessary financial, technological and human resources, in a new and unfavorable external and domestic environment. After the liberalization of the Brazilian oil and gas (O&G) industry in the late 1990s, the level of investments has increased at a very fast pace until 2013. The investment dynamics during this period was characterized by the increase in the number of players in the industry, but maintaining Petrobras dominance. A new phase of the Brazilian oil and gas started after the dramatic decrease in oil and gas prices in second half of 2014. Petrobras’ severe financial crisis will give a larger role for private players in the Brazilian oil and gas sector. However, the future role of the private investors will depend very much on the attractiveness of Brazilian upstream sector. This paper analyzes the necessary measures to restore a healthy investment environment in the Brazilian O&G industry. After analyzing the barriers to the investment in the O&G industry in Brazil, we set a roadmap to increase the country’s upstream attractiveness, which includes:  Reducing the restrictions to the private investment in Presalt;  Reducing the regulatory costs associated with the diversity of contracts and fiscal regimes;  Adjusting government take to the current international O&G sector conditions;  Returning to regular E&P bidding rounds;  Improving the local content regulatory framework;  Addressing some regulatory and market barriers for private producers to access the natural gas market; and lastly,  Reducing the risk for private investors to enter the downstream sector with the introduction of competition within a transparent fuel price environment.

The challenges of the 1990s were faced by the Brazilian economy with a drive towards decreasing the share of the statefs participation. The large privatization program initiated in the early 1990s set forth the basis and was strengthened with the approval of the so-called Concessions Law in 1995.1 This law, on which we shall comment further in this article, allowed a framework to attract foreign and national private capital to big projects of electric generation, telecommunication, transportation, and other projects, which were formerly under state control. In a way, this process may be viewed as a revival of the concession already encountered in Brazilian law in earlier stages.(...)

The recently announced discovery of potential large-scale reserves in the Brazilian so called pre-salt layer has resulted in a new legal framework for the country. In this new architecture, old and new regulation share the legal arena. Exploring this context, this paper provides an overview of the emergence and evolution of the oil and gas market in Brazil, and discusses the new legal configuration where the prevailing Concession System co-exists with the Production Sharing System and the Onerous Assignment. The conclusion pinpoints the challenges that the country faces in dealing with two energy sources-oil and gas-that will play an increasing role in Brazil's future. It also indicates that the introduction of competition also has brought new features and improvements to oil and gas industry in Brazil. Structuring a robust legal framework that will foster the necessary investments is not only a challenge for the Brazilian economy, but also one that has to be tackled by many emergent economies with newly hydrocarbon discoveries.