ANP director opposes technical area and tries to release Comgás gas pipeline

The largest gas pipeline operators in the country decided to go to court to try to suspend negotiations to release the operation of the Subida da Serra Gas Pipeline, owned by Comgás, a distributor that supplies the metropolitan region of São Paulo.

The negotiations were opened by the director of the ANP (National Agency for Petroleum, Gas and Biofuels) Fernando Moura, contrary to the agency’s technical opinions against the gas pipeline construction model.

For the sector, Moura’s proposal overrides decisions of the previous board of the regulatory body, which in January approved a request to the AGU (Advocacy General of the Union) for action in the STF (Supreme Federal Court) decree of the government of São Paulo that supports the project.

The target of the dispute is the Subida da Serra Gas Pipeline, which will connect a natural gas import terminal on the coast of São Paulo to the metropolitan region of the capital. From there, Compass will be able to import the fuel and sell it directly to its subsidiary Comgás.

The project is known as “island of gas”, for the potential to disconnect São Paulo from the rest of the Brazilian pipeline network and is anchored in a decree by former governor João Doria, who classified the pipeline as an asset of Comgás and not a transport of gas.

The Gas Law prohibits the same economic group from operating in the fuel transport and distribution segments, in order to avoid verticalization in the sector. Without the decree, therefore, neither Comgás nor Compass could make the investment.

The current arrangement is defended by Fiesp (Federation of Industries of São Paulo) but criticized by associations of large gas consumers, ANP and by SEAE (Secretariat of Economic Monitoring of the Ministry of Economy).

For the secretariat of the Ministry of Economy, the current arrangement, which includes the gas pipeline and the renewal of the Comgás concession, harms all other gas consumers in the country, who will have to share the costs of the gas pipeline infrastructure without the help of consumers in São Paul.

“Our position has always been against it, not only because of the technical issues of the gas pipeline but mainly because of its deleterious effects on the national gas market”, says Adrianno Lorenzon, director of Natural Gas at Abrace (Brazilian Association of Energy Consumers).

In approving the appeal to the STF against state decrees that advance its competence, in January, the director general of the agency, Rodolfo Saboia, highlighted “the importance of this initiative in order to obtain the necessary legal certainty, which is an essential factor for attracting investment to the sector”.

In a letter on June 20, however, Moura defended the reopening of negotiations with Comgás. He proposes maintaining the Doria classification as long as Comgás operates the pipeline with some limitations, both in terms of transported volume and connections with other pipelines.

The ANP director claims that the ANP’s previous opinion “highlights the existence of elements of convenience and opportunity involved in the case, and indicates the possibility of seeking conciliation or mediation”. Any agreement, he says, must go through a public hearing before being ratified.

With no previous experience in the oil sector, Moura was executive secretary of the Ministry of the Environment when he was appointed by the government to head the ANP.

Before that, he worked at the General Secretariat of the Presidency of the Republic and at the Ministry of Citizenship, accompanying Onyx Lorenzoni, a first-time supporter of President Jair Bolsonaro and today a candidate for the government of Rio Grande do Sul by the PL.

In the lawsuit, the gas pipeline owners say that the negotiation proposal, “in addition to containing irremediable legal defects, contradicts, without motivation, all the decisions made in the records of the respective administrative process”.

They also claim that, “even having been notified about the illegality of the project, Comgás never ceased the works”, which would require swift action by the agency to resolve the impasse.

Sought, the ANP has not yet responded to the interview request. Compass said it will not comment on the matter.