Paulo César Ribeiro de Lima says that Brazil should be forming joint ventures, in order to increase its infrastructure for the flow, transportation, and processing of Natural Gas

As an expert with over 40 years of experience in the petroleum and natural gas sector, the former legislative counsel of the Federal House of Representatives and Senate and former Petrobras employee, engineer Paulo César Ribeiro de Lima stated, in his presentation made last July 31, at the headquarters of the FAPESP Shell Research Centre for Gas Innovation (RCGI), in São Paulo, that the  privatizations recently carried out in the natural gas transportation sector will not cause a reduction in the price of this energy source. He also said that Brazil should be forming joint ventures with interested companies, in order to increase the infrastructure for the flow, transportation, and processing of natural gas. According to him, the Gas Law (Law no. 11.909/2009), despite establishing important mechanisms, has not brought about the desired effect in the natural gas (NG) transportation sector.

“I have always thought that this concession process set up by the Gas Law was exceedingly complicated and bureaucratic. But it seemed to me that the natural gas market would develop despite the Gas Law. I felt that so much natural gas would be offered that it would be impossible for the market NOT to develop. But there was no concession formed, the Law had no effect, and the transportation is a truly important activity,” he points out. “The Law should have given priority to the currently existing natural gas pipelines, focused on open access. I argue for open access to the gas pipelines for the flow and to the UPGNs. For example, there are many idle UPGNs around the country and that is absurd, in my opinion.”

On the other hand, Ribeiro de Lima challenges the idea that the privatization of the natural gas transportation companies will reduce the price of the energy source in Brazil. He was referring to the sale of the NTS (Nova Transportadora do Sudeste) and of the TAG (Transportadora Associada de Gás), which recently took place. In his opinion, instead of privatization, we should follow the example of Norway and create joint ventures for financing and enabling the infrastructure for the flow, transportation, and processing of NG. “Privatization does not make a bit of sense. Petrobras built the natural gas pipelines and, as he sees it, they have already been written off. But the new buyers will have to write off their investments. For that reason, there is not even the slightest possibility of reducing the cost of transportation fees through privatization.”

According to the expert, the National Petroleum, Natural Gas, and Biofuels Agency (ANP) did not act to regulate the Government’s monopoly and failed the natural gas sector. “It should have made more demands with regard to the monetization of natural gas. We must not approve projects and petroleum E&P without establishing what will be done to monetize natural gas.”

In his opinion, in Brazil, the petroleum production has not been able to improve the quality of life of the population in general. “The payment of royalties on petroleum production is recorded as a cost for the companies, which reduces the basis for calculating taxes whose amounts would be divided between the various municipalities. Royalties only remain in the municipalities impacted by exploration and production,” he explained.

The presentation, which was organized by the RCGILex team, coordinated by Professor Hirdan Katarina de Medeiros Costa and linked to the RCGI’s Project 21, was attended by engineer Oscar Serrate, a member of the staff of the RCGI, and by a number of other people interested in the NG regulatory sector.