ANP approves the report on the analysis of the impact of regulations on third party access to essential gas infrastructure

On May 16, 2024, the Board of Directors of the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (“ANP”) approved the Regulatory Impact Analysis Report (“AIR”) on the regulation of non-discriminatory and negotiated third-party access to production pipelines, natural gas purification or LNG processing facilities and terminals.

AIR was prepared by members of the Working Group on Core Infrastructure (“WG”) established by ANP Order No. 116/2022, consisting of the Infrastructure and Traffic Supervision (SIM), which coordinates the Working Group, the Development and Production Supervision (SDP), Supervision of Fuel Production (SPC) and Supervision of Competition Protection (SDC).

According to AIR, the regulatory issue regarding access to core gas infrastructure is rooted in market failures, regulatory failures and the inherent structure of the natural gas industry, which lead to verticalization and high concentration of facility ownership. In light of this, the main goal of the analyzed regulation is negotiated and non-discriminatory access, in order to establish minimum parameters for negotiations between agents and to determine or encourage the behavior of agents participating in these negotiations.

AIR also establishes secondary objectives: (i) promoting competition in commercialization; and (ii) elements that support or encourage agents to adopt behaviors consistent with the maturation of the domestic natural gas market.

The issued regulation, which may be implemented by one or more resolutions, must contain the following elements: (i) Devertalization; (ii) owner preferences; (iii) Negotiations; (iv) Conflict resolution; (v) Guidance on codes of conduct and access practices; (vi) Availability of information; and (vii) mechanisms for managing congestion and preventing capacity hogging.

In addition to AIR, the ANP Board of Directors also approved Joint Technical Note No. 3/2024/ANP, which refers to the assessment of the Working Group on regulatory alternatives for the ‘Devertalization’ element, as well as Joint Technical Note No. 7/2024/ANP, which presents the main concepts regulated and negotiated means of access.

In addition, the deadline for completing WP activities has been extended by an additional six months to finalize the regulation.

The AIR and approved technical notes are available on the ANP website.