Brazil: ANP Regulates Third-Party Access To Gas Transportation Pipelines, Assignment Of Transportation Capacity And Gas Swaps

On March 18, 2016, the National Agency of Petroleum, Natural Gas and Biofuels – ANP published Resolution No. 11, which regulates (i) the performance of transportation services by authorized agents or concessionaires of natural gas transportation activities; (ii) the assignment of contracted transportation capacity under the firm modality; (iii) natural gas swaps; (iv) the standard, approval and registry of natural gas transportation service agreements; (v) the promotion of public calls for the contracting of natural gas transportation capacity; and (vi) the reclassification of transference pipelines as transportation pipelines; pursuant to the guidelines of Law No. 9,478/1997 (Petroleum Law), Law No. 11,909/2009 (Gas Law) and Decree No. 7,382/2010 (Gas Law Regulation).

Under the terms of the resolution, the transporter must inform the conditions of access to its pipelines through the Terms of Access, whichcontainins the terms and conditions of access, including descriptions of the available transportation services and applicable rates. The transporters  must submit the first draft of the Terms of Access for ANP's approval within 180 (one hundred and eighty) days counted  from the date of publication of the resolution. The resolution also rules that the transporter  must provide a free and public electronic platform with information on the availability, access possibilities and reference to the Terms of Access within 270 (two hundred and seventy) days counted  from the date of publication of the resolution.

The transportation services may be offered in the following modalities: (i) fixed, in which the service may not be interrupted and the transporter will have the obligation to transport the volume requested by the carrier up to the contracted capacity, through a public call conducted by ANP or by the transporter under the supervision of ANP; (ii) interruptible, in which the service may be interrupted by the transporter due to scheduling priority under the firm modality; or (iii) extraordinary, with a maximum term of 1 (one) year, in which the service will be terminated in case another contract is made under the fixed modality.

The resolution prohibits the transporter to execute the transportation service agreements with (i) a company or consortium which holds authorization or concession for the performance of natural gas transportation activity; or (ii) a carrier under the same corporate control or a carrier that is affiliated with the transporter, in case the transportation service agreements are related to the pipelines under the concession regime.The carriers with transportation service agreements in the fixed modality will have the opportunity to assign its right to the use of the contracted capacity, entirely or partially, to a third-party that is not a transporter. The compensation for such an assignment will have to be compatible with rate regulations and with the non-discriminatory and transparent conditions for third-party access to the pipelines.

The resolution also regulates the natural gas swap, which allows for the contracting of capacity in the opposite direction of the physical flow. This is subject to the schedule of the carriers and allows for efficiency gains in the operation of the pipelines, under the exclusive responsibility of the transporter.

Finally, the resolution establishes applicable rules for the reclassification of transference pipelines as transportation pipelines. The owner of the reclassified pipeline will have preemptive rights for contracting the fixed capacity, without public call, with the transporter of their choice. Such transporter will take over the ownership, operation and maintenance of the pipeline.

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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2016. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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