Brazilian Senate Committee Okays Natgas Bill

Brazil's senate infrastructure committee has approved one version of the natural gas bill that regulates gas transport, trading, exports and storage in the country, according to the senate information service.

Proposed by center-right PFL party senator Rodolpho Tourinho, the bill is designed to pave the way for new investments in the gas sector. The bill does not need to go before the full senate. Instead, the bill now goes to the lower house, where lawmakers are expected to merge it with a similar bill proposed by the mines and energy ministry, a ministry spokesperson told BNamericas. The ministry's legislation is considered to less market-oriented.

Congress is due enter its year-end recess and will resume gas bill discussions before mid-February.


Tourinho's bill would create a national gas operator dubbed ONGAS - similar to the national grid operator ONS - that would oversee the use of the country's 4,000km of natural gas pipelines. The bill gives priority to gas supply for power generation in case of shortage of the fuel. The same bill also would have hydrocarbons regulator ANP plan new transport pipelines according to demand and national energy policy. Pipelines would be awarded as concessions.

Currently, ANP authorizes pipeline construction and operations without specific concession terms and conditions. The bill would mandate that only gas transport companies can build and operate the pipelines. Operators of existing pipelines would need to sign new concession contracts with ANP, ensuring return on investments, according to the legislation.

The bill would have gas transport companies hold auctions to offer capacity not used in existing pipelines. Under the bill, concessionaires would not have to offer space in pipelines given that they have enough gas to reach full capacity.

Brazil's federal energy company Petrobras (NYSE: PBR) is against new regulation of the gas sector, which it believes would hurt its investments.

Petrobras and ministry officials declined to comment on the bill.

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