June 25, 2019
New Gas Market: Entry of operators aims to stimulate the economy and cause prices to fall
The National Energy Policy Council (CNPE) has approved a resolution with a series of measures to open up the natural gas market in the country. Today and tomorrow the “New Gas Market” resolution, a federal government project, will be presented to Congress. The expectation is that, with the increase in competitiveness with the opening of the sector, new companies will start operating and this will lead to a 40% to 50% drop in gas prices, according to Economy Minister Paulo Guedes during live broadcast after the board meeting.
“We break a monopoly on production and distribution (of the sector), and this will reduce the price of energy, which can fall to 40% in less than two years,” said Paulo Guedes.
The minister has announced that by bringing into action the plan called “cheap energy shock,” the price of cooking gas will fall by 50%. The state of Rio de Janeiro which holds 50% of the production, has agreed to participate in the New Market.
The government expects that the measures will impact on the price of not only cooking gas but for industry and the production of electricity. There are several thermal plants that use natural gas as fuel in the country and more projects are being studied.
The CNPE approved mandatory annual greenhouse gas emission reduction targets for fuels for the 2020-2029 cycle. The measure, in regulating the National Biofuels Policy (RenovaBio), recognizes the role of biofuels in the matrix energy.
For the minister, the goal is to promote free competition
The government evaluates that with the measures there will be what it calls “unbundling” – outsourcing of services – throughout the natural gas chain and this will create the conditions for access not only to the transportation pipelines, but to all the essential infrastructure of the sector, such as pipelines, processing units and terminals of Liquefied Natural Gas (LNG), providing the opening of the market and the promotion of competition. “We will promote free competition in the Brazilian market,” said Minister of Mines and Energy, Bento Costa Lima.
To begin the New Gas Market, the board recommends that Petrobras, the dominant agent in the sector, define how much capacity it needs to use at each point of entry and exit zone of the natural gas transportation system, thus allowing the access by new agents. In practice it is the breakdown of the state’s monopoly in the sector.
“The Ministries of Mines and Energy and Economy are taking the necessary measures that will strengthen the technical staff of the National Petroleum Agency (ANP), so that the opening of the gas market occurs quickly and effective, “the ministry said in a statement. With the announced measures, the government hopes to encourage the resumption of industrial activity in several sectors, such as petrochemical, glassmaking, ceramics and steel.