Development of a competitive natural gas market

Abstract

Since 1997, Brazil has been flirting with the idea of creating a market for natural gas. However, the industry requires a vision and solutions beyond engineering challenges: it requires a market design underpinned by a modern regulatory framework that is able to respond to those new challenges. Implementing those goals involves trade-offs, some of which conflict with the goal of promoting a liquid market with a high volume of transactions/trades and a large number of players on both the supply and demand sides. Those goals may also confirm there is an uneven understanding of and contradictions to what a gas market really is. The international experience shows that no gas market is perfect at the moment of inception. There are alternatives and they deserve proper assessment. We have identified three main ideas that guide our contribution to the debate. These contributions stem from the two-day discussion on the international experiences that are relevant to the challenges the government, Natural Gas agents, and stakeholders are about to face. Three points should drive our attention: (a) What market and level of competition do we really want? (b) Are we prepared to embrace this new market without resorting to political interference? and (c) Are we prepared to pay the price to implement this market?