ANP Approves Regulatory Impact Analysis Report On Third Party Access To Essential Natural Gas Infrastructure

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On May 16, 2024, the Board of Directors of Brazil's National Agency of Petroleum, Natural Gas and Biofuels ("ANP") approved the Regulatory Impact Analysis Report ("AIR")...
Brazil Energy and Natural Resources
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On May 16, 2024, the Board of Directors of Brazil's National Agency of Petroleum, Natural Gas and Biofuels ("ANP") approved the Regulatory Impact Analysis Report ("AIR") for the regulation of non-discriminatory and negotiated third-arty access to production-flow pipelines, natural gas treatment, or processing facilities and LNG terminals.

The AIR was prepared by the members of the Essential Infrastructure Working Group ("WG") established by ANP Ordinance No. 116/2022, consisting of the Infrastructure and Movement Superintendence (SIM), which coordinates the WG, the Development and Production Superintendence (SDP), the Fuel Production Superintendence (SPC), and the Competition Defense Superintendence (SDC).

According to the AIR, the regulatory issue of access to essential natural gas infrastructure originates with market failures, regulatory failures, and the inherent structure of the natural gas industry, which tend toward verticalization and high concentration of ownership of facilities. In light of this, the primary objective of the regulation under analysis is negotiated and non-discriminatory access, in order to establish minimum parameters for negotiations between agents, and to determine or encourage the behavior of the agents involved in these negotiations.

The AIR also establishes, as secondary objectives: (i) the promotion of competition in commercialization; and (ii) elements that support, or encourage agents to adopt, behaviors consistent with the maturing of the national natural gas market.

The regulation to be issued, which may be implemented through one or more resolutions, must include the following elements: (i) Deverticalization; (ii) Owner Preference; (iii) Negotiation; (iv) Conflict Resolution; (v) Guidelines for Codes of Conduct and Access Practice; (vi) Availability of Information; and (vii) Mechanisms for Managing Congestion and Preventing Capacity Retention.

In addition to the AIR, ANP's Board of Directors also approved Joint Technical Note No. 3/2024/ANP, which refers to the WG's evaluation on regulatory alternatives for the 'Deverticalization' element, as well as Joint Technical Note No. 7/2024/ANP, which presented the main concepts of regulated and negotiated access modalities.

In addition, the completion date of the WG's activities was extended an additional six months, in order to finalize the regulation.

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

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This Mayer Brown 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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