Juliana Pizzolato Furtado Senna[1]

                                                                                                                                                                                                                                                        Paulo Campos Fernandes[2]

The National Agency of Petroleum, Natural Gas and Biofuels (ANP) recently published public consultation notices that are of interest to the biogas sector. We present below a summary of these consultations.

1. Notice of Consultation and Public Hearing n. 1/2023 - Conditioning and Handling of LNG

ANP OPENS PUBLIC CONSULTATION FOR STANDARD ON LNG PACKAGING AND HANDLING

The aforementioned public consultation aims to obtain subsidies on the draft resolution to discipline authorizations for the activity of packaging and logistical operations for the movement of liquefied natural gas (LNG) in bulk by alternative modes to the pipeline.

Once approved, the new resolution will revoke ANP Ordinance n. 118/2000 which regulates bulk LNG distribution activities and the construction, expansion and operation of LNG distribution centers.

The proposed rule aims to modernize the current regulation, which is already over twenty years old, adjusting it to the business models currently adopted, to favor the development of small-scale LNG projects, especially in regions that are not served by gas pipelines .

It is worth highlighting the following innovations in the proposed resolution in relation to the ordinance to be revoked:

In line with the provisions of the New Gas Law and its regulatory decree, the proposed resolution establishes that biomethane is treated in a similar way to natural gas.

The period for receiving contributions will end on 13/03/2023.

The public hearing will be virtual and will take place on 26/04/2023.

2. Notice of Consultation and Public Hearing n. 3/2023 - Authorization for the Exercise of Biofuel Production Activity

The purpose of this public consultation is to obtain subsidies for the Preliminary Report on the Analysis of Regulatory Impact (RPAIR), with a view to revising ANP Resolution n. 734/2018, which establishes the necessary requirements for granting the authorization to carry out the activity of producing biofuels and the authorization to operate the facility producing biofuels.

Resolution no. 734/2018 includes the following facilities: biodiesel production; biomethane production; or ethanol production.

The regulatory problem identified refers to the minimum conditions for the operational safety of biofuel production facilities.

The safety items of the referred companies dealt with in the report are:

1. a) requirement of change management study for changes in the production facility;
2. b) requirement to present a Fire Department Inspection Report (AVCB) for all ethanol producers, setting a deadline for installations without the document to comply with the requirement (proposed as a transitional provision in the resolution);
3. c) Minimum tankage requirement for liquid biofuel producers that includes storage capacity equivalent to three days of fuel production at the facility;
4. d) Establishment of a criterion for revoking the operating authorization if the production facility has not effectively produced biofuels for more than two years.

The regulatory alternatives analyzed discuss the implementation or not of these alternatives.

The period for receiving contributions will end on 20/03/2023.

3. Prior Consultation Notice n. 2/2023 – AIR to deal with the amendment of the norm on hydrocarbon content in natural gas established by ANP Resolution n. 16/2008.

This prior consultation is intended to obtain contributions on the preliminary report of the Regulatory Impact Analysis (AIR) that discusses possible solutions to face the regulatory problem arising from the fact that the hydrocarbon contents present in natural gas from different sources and suppliers do not fit into the current rule, ANP Resolution n.16/2008.

The focus of the regulatory problem is, in particular, the gas produced in the pre-salt that is drained by the gas pipelines Route 1 and the future Route 3, which have higher ethane and lower methane contents.

The regulatory alternatives identified and analyzed in the report are:

1. a) maintain the current specification of natural gas established in ANP Resolution n.16/2008;
2. b) maintain the current specification of natural gas established in ANP Resolution n.16/2008, however providing for a device that allows authorizations or changes in limits for specific cases;
3. c) Failure to set the limits for hydrocarbons in the specification of natural gas.

All options bring possible economic and environmental impacts.

From an economic point of view, depending on the solution adopted, the producer or consumer will have the cost of adapting their facilities, which may be the natural gas processing unit or industrial consumption equipment, as the case may be.

On the other hand, from an environmental perspective, the presence of higher ethane contents can generate higher pollutant and GHG emissions after combustion of the product.

Although the aforementioned report does not mention biomethane, It is important to highlight that this discussion has an impact on the biogas sector, since the regulatory decree of the New Gas Law establishes that “biomethane and other gases interchangeable with natural gas will have regulatory treatment equivalent to natural gas, provided that the specifications established by the ANP are met”.

The period for receiving contributions will end on 30/03/2023.

Our office is available to CIBIOGAS and its associates to advise on the evaluation of consultations and on the structuring of eventual contributions.

[1] Partner at Kincaid Mendes Vianna Advogados, member of the Biogas Club

[2] Lawyer at Kincaid Mendes Vianna Advogados