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Regulation of the Gas Industry

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Energy Law in Brazil

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Abstract

This chapter aims to present a general description and an analysis of the new regulatory framework applied to the Brazilian gas industry introduced by the Brazilian Gas Law (Federal Law No. 11.909/2009). The Brazilian Gas Law was the result of two main issues: the inadequacy of the Brazilian Oil Law (Federal Law No. 9.478/1997) to the gas industry and the lack of competition. The Brazilian Gas Law was devised to take account of these issues, and for this reason it has introduced several legal changes for the gas regulatory framework. The most changes were applied to gas transportation regulation by introducing the concession system as the primary means of a company to explore transportation activity, as well by introducing competition instruments (open access) in order to reduce entry barriers. Besides, the Brazilian Gas Law deals with other topics like import, export and distribution in order to replace or complement the legislation that already exists concerning these themes.

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Notes

  1. 1.

    See Xavier (2010).

  2. 2.

    It is important to observe that, as in Brazil, the gas industry in many parts of the world was always linked to the oil industry. Regulation was not specific, and natural gas was often wasted (Maritain 1992, p. 75).

  3. 3.

    Xavier and Lanzillo (2012).

  4. 4.

    Natural gas in Brazil does not have a significant number of internal sources up to the mid-1990s (Leite 2007, p. 413).

  5. 5.

    Santos (2002).

  6. 6.

    Gabler (1988), p. 1834.

  7. 7.

    Góis (2005) and Silva (2003a, b).

  8. 8.

    The ANP created a number of resolutions concerning the transport of natural gas and free access between the year of the institution of the Oil Law and the Gas Law.

  9. 9.

    In fact, the creation of regulatory agencies and regulatory instruments in Brazil resulted in a situation where several laws contained abstract rules, transferring responsibility over a number of issues to different regulatory entities, that is, a type of “delegalization” (Souto 2002, p. 47). However, this does not mean that these regulatory entities can make decisions contrary to the laws instituted by regulatory authorities or claim a nonexistent regulatory power due to the principle of legality as a guide to administrative activity in the Brazilian State (Barroso 2006, pp. 51–53).

  10. 10.

    Xavier and Lanzillo (2012).

  11. 11.

    Sobreira and Almeida (2009).

  12. 12.

    1988 Federal Constitution, Art. 177. The following is a monopoly of the Union: I – exploration and production of oil and natural gas and other fluid hydrocarbons; II – refining of national or foreign oil; III – the import and export of products and basic derivatives contained in previous provisions; IV – maritime transport of national crude oil or basic derivatives, as well as the transport of crude oil, its derivatives and natural gas of any origin through pipelines (Brazil 2014a).

  13. 13.

    The notion of public service in Brazilian law involves activities exercised directly by the State or its delegates. These activities are regulated by law or considered by certain characteristics related to the needs of the population that are not satisfactorily met by private companies. In relation to public service activities, these must comply with guidelines such as efficiency, continuity, comprehensive service, affordable tariffs, among others, which results in obligations that do not exist in activities in Brazil and are considered strictly economic (Medauar 2011, pp. 334–337).

  14. 14.

    Economic activity in the strict sense is that where the economic field is treated constitutionally as the preferential exercise of private agents (Grau 2006).

  15. 15.

    Art. 1, § 1, § 2, Federal Law No. 11.909/2009.

  16. 16.

    Di Pietro (2011), p. 290.

  17. 17.

    The call for bids is a means of guaranteeing the equal participation of all those interested in the contractual procedures promoted by public administration in Brazil (Mukai 2004, p. 340).

  18. 18.

    Figueiredo (2006), p. 183.

  19. 19.

    Farias (2005), pp. 66–69.

  20. 20.

    Art. 2, Federal Law No. 11.909/2009.

  21. 21.

    The Oil Law qualifies the ANP as a special autarchy. ANP qualification as a special autarchy means that it is a legal person with public rights, a legal entity in itself, with rights and obligations, and its own public patrimony (Justen Filho 2002, p. 387; Bucheb 2007, p. 33).

  22. 22.

    Art. 36, Federal Law No. 11.909/2009.

  23. 23.

    The use of associations of companies in the oil and gas industries, known as joint ventures, is quite common. The preferred legal form is joint operation agreements. With respect to consortiums, in general, the law states that joint operation agreements in Brazil must adapt to provisions contained in the Law of Public Limited Companies (Federal Law No. 6.404/1976) (Bueno 2002; Ribeiro 2003).

  24. 24.

    Art. 37 to 42, Federal law 11.909/2009.

  25. 25.

    Long-term contracts in the natural gas industry are quite common as a form of financing, as contained in take-or-pay, make-up rights and carry forward clauses (Miranda 2002; Ramos 2005).

  26. 26.

    Art. 43 to 45, Federal Law No. 11.909/2009.

  27. 27.

    Art. 43 to 45, Federal Law No. 11.909/2009.

  28. 28.

    Art. 50 to 55, Federal Law No. 11.909/2009.

  29. 29.

    Art. 3 to 31, Federal Law No. 11.909/2009.

  30. 30.

    Coelho (2011), Fázzio Júnior (2014), Mamede (2013), Diniz (2011), Vido (2013), Gomes (2013), and Requião (2012).

  31. 31.

    Cechi (2001), pp. 28–29; Schmalensee (1979), p. 03.

  32. 32.

    Pinto Junior et al. (2007), pp. 232–244.

  33. 33.

    Xavier and Lanzillo (2012).

  34. 34.

    The Oil Law regulated transport through arts. 56 to 59.

  35. 35.

    Art. 32 to 35, Federal Law No. 11.909/2009.

  36. 36.

    Xavier and Lanzillo (2012).

  37. 37.

    Brazil has a natural gas transport grid of 9,244 km, most of which is owned by Transpetro, a subsidiary of Petrobras (MME 2014).

  38. 38.

    1988 Federal Constitution Art. 25. The States organize themselves and rule by the Constitutions and laws adopted, observing the principles of this Constitution. § 2 – It is up to the States to explore directly, or by concession, local piped gas services, in accordance with law; the issue of provisional executive orders for regulatory purposes is expressly prohibited (Brazil 2014a).

  39. 39.

    The existence of different regulatory structures poses potential risks, which may have an impact on investments when planning a project (Loss 2007, p. 222).

  40. 40.

    Art. 46 to 49, Federal Law No. 11.909/2009.

  41. 41.

    The Gas Law states that the rights are available, since availability is required for a legal relationship to be resolved by arbitration in Brazil (Nunes Pinto 2005).

  42. 42.

    Santos (2002).

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Authors and Affiliations

  1. Department of Private Law, Federal University of Rio Grande do Norte, Natal, Brazil

    Anderson Souza da Silva Lanzillo

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  1. Anderson Souza da Silva Lanzillo
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Correspondence to Anderson Souza da Silva Lanzillo .

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Editors and Affiliations

  1. Department for Public Law, Federal University of Rio Grande do Norte, Natal, Rio Grande do Norte, Brazil

    Yanko Marcius de Alencar Xavier

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da Silva Lanzillo, A.S. (2015). Regulation of the Gas Industry. In: de Alencar Xavier, Y. (eds) Energy Law in Brazil. Springer, Cham. https://doi.org/10.1007/978-3-319-14268-5_5

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