Brazil's Machado Meyer Advogados has helped state-owned Petrobras strike a deal with the local subsidiaries of energy companies Shell, Repsol and Petrogal that will allow the three counterparts to use Petrobras' natural gas processing units.
Petrogal, a subsidiary of Portugal's Galp, turned to Lefosse Advogados, while Dutch counterpart Shell hired Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados. Spain's Repsol relied on in-house counsel. The deal was formalised through a virtual event on 30 September.
The agreement established the Integrated Natural Gas Processing System, which allows Shell, Repsol and Petrogal to use Petrobras' natural gas processing units, located in São Paulo and Rio de Janeiro. One of the facilities, which is in Rio de Janeiro, is still under construction; the other two are operational and are the largest in Brazil.
The deal opens the door for Shell, Repsol and Petrogal to process their own natural gas in Brazil that they can subsequently sell directly to customers. Until now, Petrobras has had an almost monopoly over Brazil's natural gas processing infrastructure, owning 14 out of 15 processing plants, which forced other gas companies to sell to Petrobras, while the state-owned company had no obligation to allow third-party access to its processing plants.
The agreement also established a sharing scheme for three gas pipeline routes in the Santos Basin, south of São Paulo and Rio de Janeiro. Petrobras is the sole owner of one of the pipelines, which is still under construction. The other two routes are operational and consist of several different pipelines with different ownership structures between Petrobras, Shell, Galp and Repsol. By treating the three routes as one system, instead of isolated routes, it gives the parties involved more flexibility to use them all.
The plan is for other natural gas producing companies to use the system in the future, provided that there is capacity.
The contracts enable the companies to deliver gas from the Santos Basin's pre-salt fields through any of the three pipelines to the respective processing facilities.
The move aims to foster a more competitive and efficient gas market in Brazil.
The opening of the gas plants is part of Petrobras' 2019 agreement with antitrust regulator CADE to exit the gas transport and distribution industry by the end of 2021. Petrobras has already made big divestments in that sector. Last year, it sold gas pipeline company TAG to French energy group Engie for nearly US$9 billion and fuel distributor BR Distribuidora for US$2.2 billion, following a share offering.
There are other developments in the local gas market. The Brazilian senate is currently reviewing a new natural gas bill, which was recently passed by the chamber of deputies. The bill aims to bring investment to the natural gas transportation industry, something the existing legislation has failed to do. It intends to simplify the construction and operation of gas transportation and remove the current concession regime system.
Counsel to Petrobras
- Machado Meyer Advogados: Partners Daniel Szyfman, Camila Galvão, Gisela Mation and Maria Fernanda Soares, and associates Luisa Cabral de Mello, Diogo Martins Teixeira and Mariele Milhorance
Counsel to Petrogal
- Lefosse Advogados : Partner Felipe Boechem and associate Daniane Carvalho
Counsel to Shell
- Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados : Partners Giovani Loss, Thiago Moreira and Márcio Soares, and associates Bruno Rodrigues Chedid, Marc-Henrik Werner, Beatriz HelenaCotarelli Balzan and Stephanie Scandiuzzi
Jornalista: KARLSSON, Fredrik
(Latin Lawyer - 13.10.2020)