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Mercados

Brazil lower house approves reform of natural gas sector

BRASILIA, Sept 1 (Reuters) - Brazil’s lower house approved on Tuesday the basic text of a bill to further open up the natural gas market to private competition and break the monopoly held by state-controlled oil company Petroleo Brasileiro SA (Petrobras).

The bill passed by 351 votes for to 101 against.

The new legal framework changes natural gas distribution from a regime of concessions by the government to one of authorizations by the country’s oil and gas regulator ANP, thus reducing bureaucracy for building pipelines.

The bill, which still needs to pass the Senate, would also open up competition by changing the vertical structure of the gas sector so producers cannot be distributors and vice-versa.

Mines and Energy Minister Bento Albuquerque expects the law to unlock 40 billion reais ($7.41 billion) in private investment for the gas sector, while Economy Minister Paulo Guedes said it will bring a “shock of cheap energy” for Brazilian industries.

Congressman Laercio Oliveira, who presented the bill in the House, told Reuters last week it would reduce the cost of gas in Brazil that is more than double international prices.

“We have the most expensive gas in the world, which forced hundreds of industries to shut down in Brazil or change their source of energy,” the legislator said in an interview.

For Abrace, the association of industries that are large consumers of electricity, the law will allow for a “freer market” for companies to freely access gas pipelines and other infrastructure, from LNG terminals (liquefied natural gas) to processing plants. ($1 = 5.3985 reais) (Reporting by Anthony Boadle; Editing by Ana Nicolaci da Costa)

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