New regulations could boost Brazil's gas market

Brazil could increase gas supply by 25Mm3/d with new regulations, Rodrigo Garcia, energy analyst at national industry federation CNI told BNamericas.

Aiming to increase investments and reduce prices, the federation wants to propose new measures for the gas market and get all candidates for the next presidential elections aboard.

According to CNI, gas prices for industrial use in Brazil reached US$14/MBTU in July 2017, more than three times the US$4/MBTU in the US in the same period. Garcia estimates the national gas market would be two to three times bigger if prices were around US$7/MBTU.

"We need to keep in mind that this new gas policy will transcend governments and that it is important for Brazilian society because it is capable of increasing attraction for investments and generating jobs. There are investments being held and delayed because we do not have a policy like that," Garcia said.

Among CNI's proposed measures count initiatives to spur competition and reduce inefficiencies.

"Our proposals aim at the growth of supply, higher transparency and bigger transport capacity, in addition to empowering regulators and separating the commercialization from distribution activity. The goal is to have a market with clearer bases for negotiations and to have a bigger number of buyers, which will lead to optimizations in the supply chain and benefits for the whole industry," Garcia added.

The proposals are aligned with the Gás para Crescer (Gas to Grow) program, which is being analyzed by the current government. Garcia, however, believes it will be difficult to implement the measures until the end of the current presidential term.

"All subjects related to the energy market are finding lots of difficulties to advance in congress," he said.