Wary gas industry welcomes transition rules

Wary gas industry welcomes transition rules

Sao Paulo, 9 May (Argus) — Brazilian natural gas market transition rules released last week drew praise from participants as being thorough and well-constructed, but there are doubts they can be fully implemented.

Guidelines in Resolution 3/2022 by the Brazilian national energy policy council (CNPE) call for clear limits between the competitive and the regulated markets; the adoption of measures to avoid regional clusters that impede competition; definitions of market areas and hubs; the reduction of transportation tariff distortions for states far from the southeastern region, similar to a "short haul" discount; and the harmonization of state regulations, among others.

CNPE dictates that terms of use for essential facilities like pipelines and processing plants — mostly owned by state-run Petrobras — must be settled within 180 days by market participants, otherwise oil and gas regulator ANP may step in and define the terms.

"Players can use all the guidelines as [protections] against any others who may be imposing competition barriers," said Adrianno Lorenzon, gas director at large energy consumers' association Abrace. Or, as put by a gas producer, the CNPE guidelines provide "ammunition" for industry participants to face regulators or courts.

The rules also state that the government will supply the market with the