After being implemented in 2006, the joint-venture between Petrobras and White Martins is receiving natural gas directly from a branch of the Brazil Bolivia Natural Gas Pipeline; supplying the gas for liquefaction is the sensitive issue of the project

On Wednesday, May 8, the presentation “The GasLocal Case and Antitrust Law in Partially Liberalized Industries” will be held at the headquarters of the FAPESP Shell Research Centre for Gas Innovation (RCGI). The event will take place at 3:00 p.m. at the RCGI, in the Polytechnic School of the University of São Paulo (Poli/USP, Mechanical Engineering Building, Butantan Campus). There is limited space for the presentation, which is open to the public. To register, at no cost, simply send an e-mail to rcgi.lex@usp.br. This encounter is part of the annual schedule of events organized by researchers connected with RCGILex, a platform that gathers and analyzes the legal and regulatory frameworks applied to the Brazilian natural gas sector.

The speakers will be Hirdan Katarina de Medeiros Costa, attorney, consultant, and professor who has been involved with the energy sector since 2004; and Karina Ninni Ramos, journalist and researcher for the RCGI. They will discuss and analyze the preliminary judicial decision rendered in the case of the Gemini Project (GásLocal), which is a joint-venture between Petrobras and White Martins that was implemented in 2006 for the distribution and commercialization of Liquid Natural Gas (LNG). The liquid gas is sold to consumers located up to 1,000 km of the liquefaction plant established in the city of Paulínia, São Paulo, which has a liquefaction capacity of 440,000 m³/day.

It is possible to distribute compressed natural gas (CNG) and liquefied natural gas (LNG) via gas pipelines. From a legal standpoint, the Federal Constitution established the distribution of piped natural gas (gas distributed via pipelines) as being the responsibility of individual States, and the other activities of the natural gas process as being a Federal responsibility. However, by its interpretation of Law no. 9.478/1997 (Petroleum Law), the National Petroleum, Natural Gas, and Biofuels Agency (ANP) understands that potential interested parties can sell bulk natural gas, specifically LNG.

The controversy surrounding the Gemini Project since its inception is the presence of Petrobras in the GasLocal consortium and the capture of strategic anchor clients, identified as possible damages to competition, says Diogo Lisbona Romeiro, who authored an article about the case in the book The Latest Regulatory News Regarding the Brazilian Natural Gas Market (Atualidades Regulatórias do Mercado de Gás Brasileiro, Synergia, 2018).

This case raised a number of conflicting administrative, regulatory, and legal issues involving institutions like the Federal Government’s Administrative Council for Economic Defense (CADE), which reviewed the initial approval terms of the project, in 2016, imposing fines and penalties. Supplying natural gas to the liquefaction plant is one of the most controversial issues. According to Romeiro, the ANP authorized the delivery to be made via a branch pipeline directly from Gasbol, but the São Paulo Public Works Commission (CSPE) – the regulatory agency at that time (and now ARSESP) – challenged that authorization, charging that the supply of natural gas in a State concession area would be the distribution of a public service, subject to price regulations established by the regulatory agency and to a distribution margin of the São Paulo Gas Company (Comgás).

“The regulatory imbroglio of the Gemini Project is now practically resolved. There were so many decisions by the Federal Supreme Court (STF)…. What is lacking is a plenary decision of the STF, but there are many court injunctions issued by Justice Ellen Gracie and, later, by Justice Carmen Lúcia, which dealt with the merits of the issue. The concept is: if natural gas does not come directly from the producer, by tank truck, to the final consumer, there will always be a pipeline system to deliver it to a factory. And that network is operated by the distributor,” consultant Zevi Kann explained, who was the Director of ARSESP and has broad experience in regulating the energy sector.

“During this event, we intend to deal with the current state of the process and the future prospects of the Project,” Hirdan concluded, remembering that, after the presentations, coffee will be provided for the participants.

Event information:

Presentation: “The GasLocal Case and Antitrust Law in Partially Liberalized Industries”

Date: May 8

Place: RCGI headquarters, in Poli/USP (Av. Professor Mello Moraes, 2231 – Mechanical Engineering Building, Butantan Campus)
Time: 3:00 p.m.
Free registration: rcgi.lex@usp.br.

Image: Freepik