Publications - 26/07/21

Changes stated by Decree No. 10,712/2021 and the Brazilian New Gas Law

In order to increase competitiveness and attract investments to the Brazilian natural gas market, as well as an attempt to reduce the cost of production and, consequently, achieve reduction in the final price of the product, Law No. 14.134, of April 8th, 2021, was enacted, also known as the “Brazilian New Gas Law”, replacing Law No. 11.909/2009.

The Brazilian New Gas Law is just one of the steps foreseen – and expected – in relation to the government’s intention to expand this segment in the country. Decree No. 10.712/2021, published by the Federal Official Gazette on June 4th, 2021 (“Decree”), represents another step towards opening up the Brazilian natural gas market, as it brings details and clarity on topics covered by the Brazilian New Gas Law and serves as a guide to the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (“ANP”) and other interested and/or related parties operating in the market.

One of the first and most significant changes introduced by the Brazilian New Gas Law is the replacement of the public concession regime for that of authorization by ANP for the activities of construction, expansion, operation, maintenance of facilities and transport of natural gas.

One of the main points of the Decree is the equivalence, provided for in Article 4, with natural gas extended to biomethane and to other gases interchangeable with natural gas, for the purposes of appliance of the rules and guidelines of the Brazilian New Gas Law.

Another interesting determination of the Decree is provided for in article 9, which is the need for a state regulation that allows the direct connection of the end user to the natural gas transport network.

Article 27, are introduced the obligation of communication between the Ministry of Mines and Energy and the ANP amongst the  Brazilian states and the Federal District, as well as the creation of the National Pact for the Development of the Natural Gas Market, as an instrument for formalizing the voluntary adhesion of the Brazilian states interested in working together to establish harmony within state and national regulations, as well as to boost the development of the Brazilian natural gas market.

The term for adaptation of the agreements in force in relation to the rules and conditions provided for in the Brazilian New Gas Law is five (5) years from the respective publication.

In addition to the guidelines contained in the Decree, further regulation is still awaited, especially, the rules to be issued by ANP and by state regulatory agencies for a full understanding of the consequences of the New Gas Law.