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The Controversy In The Energy Sector: Decree That Authorizes The Intervention Of The ANP In The Natural Gas Production Faces Divisions In The Government And May Generate Questioning
The government of Luiz Inácio Lula da Silva (PT) is in the final stages of drafting a decree that will allow the National Agency of Petroleum, Natural Gas and Biofuels (ANP) to intervene directly in the natural gas market.
This measure is part of the program “Gas To Employ,” one of the central initiatives of the Ministry of Mines and Energy (MME) under the leadership of Minister Alexandre Silveira. The goal of the program is to reduce the price of natural gas in Brazil, a vital input for various industries.
According to sources close to the government, the decree is still undergoing final adjustments before being submitted to the National Energy Policy Council (CNPE) in a meeting scheduled for next Monday (26).
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The content of the proposal, already confirmed by people involved in the discussions, provides authorization for the ANP to require companies to increase natural gas production, which may include reducing the reinjection of gas into oil wells and increasing production in fields already in operation, including those considered mature.
Reduction Of The Reinjection Of Natural Gas As A Strategy
The technique of reinjecting gas, which involves returning natural gas to the wells to maintain the pressure of the oil reservoirs and optimize oil extraction, is pointed out by the MME as one of the factors contributing to the high price of natural gas in Brazil.
Data from the ANP show that, in June, 56% of natural gas production was reinjected, mainly in pre-salt fields. This percentage is significantly above the international average, which hovers around 25%.
The MME argues that reducing gas reinjection and the consequent increase in the supply of this input in the Brazilian market can help reduce costs for the industry. Additionally, the ministry advocates the need to expand infrastructure for transporting natural gas to the mainland, which could increase the available supply in the market.
Impact Of The New Gas Law On Governmental Intervention
However, the measure is not unanimous within the government. A group of technicians warns that ANP’s intervention in companies’ production decisions could be interpreted as a breach of contract, especially concerning fields that already have established development plans.
Some technicians from the ANP itself assess that the decree may exceed the competencies established by the New Gas Law, approved in 2021, by creating new obligations and restricting the rights of producers.
The decree also provides that the ANP may determine the revision of the development plans of ongoing fields, which would affect companies like Petrobras, responsible for more than 87% of oil and gas production in Brazil, as well as other foreign companies operating in the country.
If companies do not meet the new requirements, the decree allows the operator to voluntarily transfer the rights of the field to third parties or, in case of non-compliance with the clauses, for the ANP to initiate proceedings to terminate the concession.
Natural Gas Infrastructure And Tariff Regulation
The forced revision of development plans can be considered a breach of contract, as pointed out by some government technicians. The choice to extract more or less natural gas is usually made based on an economic feasibility analysis that takes into account the construction of pipelines to transport gas to the mainland or its reinjection to accelerate oil extraction. Any governmental interference in this decision would require adjustments to the extraction platforms, resulting in additional costs for companies and could impact prices.
Furthermore, there is a risk that this intervention may discourage new investments in the oil and gas sector, especially in the development of new fields. However, supporters of the decree argue that the ANP already has the competence to monitor and revise the development plans of the fields and that the proposed changes aim only to adapt projects to the government’s new guidelines.
The decree also provides that the ANP may order the adjustment of the operational capacity of infrastructures for production, flow, treatment, processing, and transportation of natural gas. In practice, this means that the agency could determine the construction or expansion of infrastructures, which, according to critics, represents a significant intervention in business decisions.
Another controversial aspect of the decree is the regulation of the tariffs paid by third parties to access offshore pipelines, which are currently negotiated directly between the parties. With the new decree, the ANP would have the power to regulate these tariffs, which could increase competitiveness in the sector, especially concerning Petrobras, which dominates a large part of the pipeline infrastructure.
Despite the divergences, the program “Gas To Employ” has been supported by representatives of the industry, who see in the measure an opportunity to revitalize the natural gas sector in Brazil. Abrace (Association of Large Energy Consumers and Free Consumers) highlights that the initiative can reignite market optimism and drive energy transition in the country.
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