The National Council for Energy Policy (“CNPE”) recently published Resolution CNPE No. 16/2019, setting out guidelines with the purpose of opening up the natural gas market in Brazil and reducing the cost of energy in the country.
CNPE’s Resolution No. 16/2019 determines several principles and guidelines, some of which are worth highlighting below:
- implementation of measures to optimize the use of transport infrastructure, such as coordination of system operation, creation of market areas, provision of transport services on a broad and non-discriminatory basis, cooperation for transitioning into an entry-exit model, among others;
- unbundling of the natural gas chain, with guidelines for the sale of Petrobras’s equity stake held in transporters and distributors, and independence in the management of such companies until Petrobras’s divestment is fully carried out;
- privatization of state-owned gas distributors;
- establishing clear rules for non-discriminatory access to essential facilities, gas processing plants and LNG terminals;
- free gas market regulation at the state level as a way to effectively implement it; and
- progressive gas release by an agent holding relevant stake.
Aside from the rules to be implemented at federal and state levels, such guidelines involve a large number of operations involving the likely privatization of distributors and sale of equity stake in transporters and distributors. These operations promise to warm up the Brazilian natural gas market following the entrance of new investors.
Our Oil & Gas team is available for any further information on this matter.