MME – Government launches the “New Gas Market”, a milestone for Brazil

July 24, 2019

An open, dynamic and competitive natural gas market, aiming at the resumption of economic growth and regional development, which will promote a true energy and industrial revolution in the sector. To this end, Minister of Mines and Energy, Bento Albuquerque, participated in the launching of the “New Gas Market” program, with the signing by President Jair Bolsonaro of the Decree establishing the Market Opening Monitoring Committee of Natural Gas. The program’s launching ceremony took place at the Planalto Palace and was attended by authorities, parliamentarians, representatives of companies, managers of public agencies and other segments of the sector.

Seeking to overcome challenges arising from more than 20 years of delay in effectively opening the gas market and in line with one of the government’s priority policies, the “New Gas Market” aims to improve the use of pre-salt gas from the Basin of Sergipe / Alagoas and other discoveries, expand investments in natural gas flow, processing, transportation and distribution infrastructure, increase gas-fired thermoelectric generation and also resume the industry’s competitiveness in the pulp, ceramics, petrochemical fertilizers, steel and glass segments , among others. The Committee’s actions will be implemented in partnership with the Executive Branch, the Ministry of Economy, the Administrative Council for Economic Defense (CADE), the National Petroleum Agency (ANP), and the Energy Research Company (EPE).

Gas Market Opening Monitoring Committee

“Today we are taking another step towards ensuring the effectiveness of public policies, with the signing of the Decree establishing the Natural Gas Market Opening Monitoring Committee (CMGN) and establishing program governance, in order to follow the resolution of the National Council of Energy Policy (CNPE), the term of cessation of conduct signed between CADE and Petrobras, the regulatory agenda of the ANP for the coming years, the economic and tax instruments and the regulatory evolution of the states, ”said the Minister. .

“In this sense,” he added, “states have a primary role to play because under the Constitution, the operation of the local piped gas service is up to these federative entities. That is why we have often been talking to encourage the harmonization and improvement of state regulations, ”said the Minister.

The Committee will be composed of members of the Executive Brach and the Ministries of Economy, Mines and Energy, CADE, ANP and EPE. It will coordinate the actions and activities of the various state agents that will act to effectively break the country’s oil and natural gas monopoly. Its responsibilities include monitoring the actions required to open the gas market and proposing measures to the CNPE. The pillars of the New Gas Market program are: promoting competition, harmonizing state and federal regulations in the sector, encouraging the integration of the gas sector with the electric and industrial sectors, and removing tariff barriers that impede market opening and competition. .

In his speech, Bento Albuquerque also recalled that in all regions of the country there are good initiatives related to the new gas market. “From a larger and more diverse gas supply, by 2029 our production will go from the current 124 to 267 million cubic meters per day. By achieving more competitive prices, our country will be able to generate more jobs and income for our population, ”he noted.

Bento Albuquerque exemplified the initiatives by highlighting some of them, such as in the northern region, with the Azulão gas field in the heart of the Amazon, which will supply Roraima as a result of the recent auction. He cited the Northeast, where a LNG terminal capable of re-gasifying up to 21 million m3 per day (the country’s first private terminal), and a potential offshore production of around 20 million m3 / day in 2025. “Associated with the improvement of regulation in order to favor investments and low tariffs, the state of Sergipe has become one of the largest gas hubs in the country, leveraging supply in the region,” said the Minister.

According to the Minister, in the Midwest region, negotiations are underway to import Bolivian gas at attractive prices, which may benefit the states in the region. In the Southeast region, according to Bento Albuquerque, the pre-salt discoveries off the coast of the states of São Paulo, Rio de Janeiro and Espirito Santo, will leave the region in a relevant position for the exploitation of this wealth.

The Minister also recalled the southern region of the country, where new liquefied natural gas terminal projects are being studied. “Energy integration between Brazil and Argentina could create opportunities in view of the large pre-salt gas reserves in Brazil and the discoveries in Vaca Muerta, Argentina,” he said.

Bento Albuquerque also gave a brief retrospective on the breakdown of the state monopoly on oil and natural gas. And going back to the 1990s, he recalled that, despite the enactment of Amendment No. 9/95, which offered the initial conditions for an environment of free competition, and “even though the country had chosen to open these markets because it understood that demand investment was greater than the ability of a single company to invest, ”the break in monopoly did not, in fact, happen. “Thus – analyzed the Minister – the lack of competition resulted in a high price of gas offered, directly affecting the costs of domestic companies compared to their foreign competitors.”

“It is worth noting that natural gas significantly impacts the industrial segment and, in some of them, may represent more than 30% of the final cost,” said Bento Albuquerque, noting that the price of natural gas in the country today is one of most expensive among the top G20 references.

The Minister also compared the reality of gas in Brazil with that of countries such as Argentina, the United States and Japan. Bento Albuquerque noted that while in the US gas delivered to distributors costs on average $ 3.13 / million / BTU, here in Brazil the price is above 10 dollars / million / BTU, “even higher than the prices in Japan, a country that imports all the gas consumed”. He also compared Brazil’s and Argentina’s gas pipelines, noting how the Brazilian infrastructure is underdeveloped: “We have only 9,400 kilometers of gas transportation pipelines, while in Argentina there are about 29,000 kilometers of pipelines.” .

CNPE will project the country

Measures taken by the National Council of Energy Policy – CNPE, were also highlighted in the statement of Minister Bento Albuquerque. Among them, the adoption of 16 resolutions aimed at both the natural gas industry and the opening of the fuel refining and distribution market, as well as the Transfer of Rights Assignment, whose negotiations dragged on for five years. “These measures will put the country at the center of investment attraction and, at the same time, project the country into positions never thought of, for example, to be among the five largest oil and gas producers in the world by 2030, a milestone in the chapter on the development of Brazil ”.

REATE 2020

Recalling the importance of exploration and production activity in terrestrial areas, Bento Albuquerque cited the REATE 2020 program for the Revitalization of Exploration and Production Activity in Terrestrial Areas.

REATE is a national policy to promote this activity in order to promote local and regional development, increase the competitiveness of the national onshore oil industries and encourage the use of resources in low permeability reservoirs.

Bento Albuquerque concluded by addressing the President of the Republic, stating: “Mr. President, considering that mission given is mission accomplished, today we face the challenge of implementing one more of the relevant goals of your government by striding towards expand the participation of natural gas, fuel of the energy transition, in our matrix; conquest, as a result of the determination, integration and engagement of the various participating agencies to materialize this transformative as well as timely public policy ”.

Minister Bento Albuquerque’s speech

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