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Brazil finally passes gas law

March 10, 2009

SAEM – After a long and winding path, President Luiz Inacio Lula de Silva signed in early March into law Brazil’s first ever gas law (in Portugese). Prior to the law, Brazil’s gas markets were regulated by a hydrocarbons law dating back to 1997.

One of the positive matters about the new law is that it sets a framework for the country’s ever-growing gas markets. Some important points of the new law are that it grants private energy companies the right to have concessions for up to 30 years to build and operate a trunkline, construct and manage regasification and liquefaction plants as well as export and import gas.  Another important point in the law is third-party access to trunklines.

One of the fears of the law has been that it will not effectively address Petrobras’ near-monopoly of the country’s gas markets. Time will tell if Petrobras will be able to push its weight as easily as before. Everything suggests, however, that private energy majors operating in the country will continue to play a backseat role in developing and taping the country’s promising gas future.

So what is the good news? As one analyst in Rio de Janeiro put it: “At least we have a regulatory framework now in place.”

The article can be reprinted as long as as the source is cited.

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