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Brazil's ANP publishes contract, rules for Gasbol pipeline capacity sale

Highlights

Contracts for capacity in 2022-2026

Up to 18 million cu m/d to be available

Access part of New Gas Market rules

Brazil's National Petroleum Agency, or ANP, published the contract and auction rules for a public tender to sell about 18 million cu m/d of transportation capacity on the Gasoduto Bolivia-Brasil, or Gasbol, pipeline for the 2022-2026 period in the latest expansion of access to natural gas infrastructure under the New Gas Market regulatory regime.

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The ANP had expected to hold the sale in 2021, but the tender was delayed by the pandemic and implementation of the new regulatory regime, the ANP said Jan. 13. The ANP will supervise the sale, which will be conducted in the first half of 2022 by Gasbol operator Transportadora Brasileira Gasoduto Bolivia-Brasil SA, or TBG. TBG has not yet set a timeline for the sale.

The sale represents the latest step forward as Brazil implements the complex changes made to its natural gas industry by the New Gas Market, which was signed into law by President Jair Bolsonaro in April 2021. The regulations were approved ahead of an expected surge in Brazil's natural gas production, which is forecast to double to 260 million cu m/d by 2030.

The law continued reforms that first started in 2016, with an eye toward increasing competition, reducing prices and boosting gas consumption as part of the country's energy transition.

The delayed 2021 auction, which would have been the third such capacity sale, also led to an extraordinary public tender in December. But the capacity contracts on offer will replace the contracts from the extraordinary tender that TBG signed with state-led oil company Petrobras for 2022.

"The ANP approved the extraordinary contracts by TBG because there was not enough time to complete the public tender process in 2021," the ANP said.

Petrobras contracted all of the transport capacity available in 2022 under the extraordinary offer, according to TBG. That included 19.77 million cu m/d of entry capacity in Mato Grosso do Sul and Sao Paulo states and 17.73 million cu m/d of exit capacity in Rio Grande do Sul, Santa Catarina and Sao Paulo states.

The extraordinary contracts will allow for continued operations on Gasbol until the public tender can be held and the new transportation contracts signed, according to TBG.

The ANP previously held public tenders for pipeline capacity in 2019 for the 2020-2024 period and in 2020 for the 2021-2025 period. The capacity auctions were part of new rules implemented in the wake of a 2019 antitrust agreement that ended Petrobras' monopoly in the natural gas sector.

Under the accord, Petrobras was required to relinquish capacity on Brazil's network of onshore gas pipelines to other companies in an effort to create competition in Latin America's largest economy. The deal also granted oil companies access to Petrobras' gas-processing facilities under service contracts.

Petrobras freed up 18 million cu m/d on Gasbol as part of the agreement.

Petrobras still dominant

In December, Petrobras also signed new accords and contract addendums that also opened gas-transport capacity on pipelines operated by Transportadora Associada de Gas, or TAG. The capacity became available for use Jan. 1.

Norway's Equinor, Portugal's Galp Energia and Shell were among the nine companies that contracted 5.13 million cu m/d of entrance capacity and 6.59 million cu m/d of exit capacity on the TAG network, the pipeline operator said Dec. 1.

Despite the more-liberal rules, Petrobras has remained the country's dominant natural gas player.

Petrobras won supply contracts last year for five state natural gas distribution companies in the country's center-south, including MSGas in Mato Grosso do Sul, GasBrasiliano in Sao Paulo, Compagas in Parana, SCGas in Santa Catarina and SulGas in Rio Grande do Sul. The four-year supply contracts cover about 3 million cu m/d, with Petrobras winning a 44% price increase.

The contracts went into effect Jan. 1.

Petrobras, however, did face competition as 13 companies submitted 130 different proposals during the public tender held by the five distributors.

In addition, Petrobras faces a legal battle with six state gas distributors that are fighting price increases of 50%-200%. Judges in Alagoas, Rio de Janeiro and Sergipe upheld the injunctions on appeal, while decisions on appeals in Ceara, Espirito Santo and Santa Catarina states were still pending.

Petrobras declined to comment on the cases.