Ministry of Mines and Energy of Brazil sets rules for new natural gas pipeline projects

Energy Alert

By:
  • Luiz Antonio Lemos and Luis Antonio Menezes da Silva, Campos Mello Advogados

Brazil's Ministry of Mines and Energy (MME) has published Ordinance No. 94/2012, which establishes the rules for the submission, by interested parties, of projects for construction and expansion of natural gas transportation pipelines.

The Ordinance, published in mid-March, comes three years after the enactment of the Brazilian Natural Gas Law (Federal Law No. 11,909/09) that aimed at establishing the required legal framework to stimulate the expansion of Brazil's natural gas transportation capacity.

Pursuant to the new Ordinance, between January 1 and March 31 of every year, interested parties may submit to the MME proposals for the construction or expansion of natural gas transport pipelines. In cases of urgency, MME may accept proposals outside this timeframe. 

The proposals shall comprise, among other things: (i) a project indicating the planned pipeline route, (ii) studies that evidence the demand and availability of natural gas, (iii) estimated construction, maintenance and operation costs for the pipeline, (iv) physical-financial program, and (v) social-environmental characteristics of the area to be affected.

Within 90 days after receiving the proposal from the MME, the state Energy Research Company (Empresa de Pesquisa Energética - EPE) will submit a report to the MME with its recommendations as to the implementation of project, in which it will address the quality of the studies presented, the technical and economic feasibility of the project and its impact over the pipeline network.  After considering EPE's report, and within 12 months after the submission of the proposal by the interested party, the MME will decide whether to approve or reject the proposed construction or expansion project.

Should the project be approved, the MME may immediately carry out the public bidding procedures to choose the natural gas transportation company that will implement the project. The MME may also decide to implement the project on a later date and include it in the Decennial Pipeline Network Expansion Plan. The approval of the project will not imply any advantage in the bidding procedure to the interest party that first proposed it.

For more information, please contact:

Luiz Antonio Lemos

Luis Antonio Menezes da Silva

Campos Mello Advogados

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