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July 04, 2019

Opportunities in Oil & Gas

Oil & Gas

New Gas Market – Gas Liberalization 
 
The Federal Government, via the National Energy Policy Council (CNPE), has launched the main lines of the so-called New Gas Market (Resolution No. 16/2019), a gas market liberalization program that aims to introduce free competition in a currently almost fully monopolized market.

Main principles

Underlying principles of the new model include the avoidance of new monopolistic markets, the coordination of the transportation of gas, the liquidity of virtual hubs, and the respect to contracts and companies’ governance.

Open access and gas release

By the same token, the regulation of the new market will ensure transparent and non-discriminatory access to gas, by offloading and processing infrastructures, as well as it will create mandatory gas sales programs (gas release programs) by the dominant player (Petrobras).

Gas distributors (free consumers and privatization)

The Resolution determines an unbundling of the gas commercialization and grid services, and privatization of the distributors (most of them jointly owned by Petrobras). This will be implemented together with incentives for the States to boost the free consuming market (allowing buyers to freely choose their gas suppliers as opposed to being captive to the relevant local distributor), and appropriate pricing rules.

Petrobras

In addition to the open access and gas release, the CNPE requires the dominant player (Petrobras) to no longer interfere in the governance of the gas distribution companies that it owns shares of, and to start fully divesting from the sector. The Resolution further requires Petrobras to remodel its gas transportation policies and behavior, in order to allow the actual access of other players.

Tax

Without entering into the specifics, the Resolution requires that those incentives to the States will also take into account the need for a new tax arrangement to ensure the feasibility of the new gas market.

The above initiatives will open a wide array of new opportunities throughout the gas chain, spanning from gas sales/trading, to new gas infrastructure projects (including but not limited to LNG) and privatization of gas distributors.

Our Oil & Gas team has industry expertise and it is constantly mapping potential business opportunities, studying and getting involved on legal and regulatory discussions. We have broad experience in oil & gas matters and transactions and in complementary areas of law, as well as on the liaison with the relevant authorities.

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