Brazilian Govt to Create NatGas Transport Operator

Brazil's federal government plans to create a national operator for the country's natural gas pipeline network to control transport as part of new legislation for the sector, a mines and energy spokesperson told BNamericas, confirming local press reports.

The operator would have a similar role to the national power grid operator ONS which decides when and where power generators should inject power into the country's 84,000MW transmission network, the spokesperson said.

The gas bill will also create what the ministry calls a secondary gas market in which gas-fired generators will be allowed to sell the gas they are not using to generate power, giving them a chance to increase revenues. A special trading chamber would oversee the secondary market, local press reported.

There is no schedule for voting on the gas bill in congress, but it could be before year-end, the spokesperson said.

The government planned to present the bill to congress at the end of last year but delayed doing so. The ministry did not give an official explanation for delaying sending the bill to congress, but the spokesperson said that ministry officials needed more time to look at details of the bill to make it as far reaching as possible.

Gas distribution companies and trade groups have continually lobbied in favor of the bill. The new legislation will need to be approved by the end of 2007 due to projected higher gas demand. Diesel-fired power plants must all be converted to also burn gas by mid-2007. Over 3,000km of gas pipelines that federal energy company Petrobras (NYSE: PBR) is building to link the southeastern and northeastern regions are also scheduled to start commercial operations that year.

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