Model for the development of competition in the natural gas industry in Brazil

For the last 20 years, several countries have been carrying out structural reforms in the natural gas industry, trying to achieve efficiency and economic rationality with the introduction of competition. This paper presents a model that seeks to stimulate competition in Brazil's natural gas industry on the basis of a market projection to 2011, on the international experience and on the characteristics of the the country's market, infrastructure and regulatory framework. Possible impacts of this model are also provided. According to the market projection carried out in this paper, in 2011 there will be a possible surplus of natural gas in the country. This surplus, allied to trade liberalization in the states of São Paulo and Rio de Janeiro, can stimulate the development of competition, if some changes are made in the current regulation. The model proposed herein seeks to stimulate non-discriminatory open access through regulation focused on information transparency and tariff regulation to help the development of competition. This would possibly reduce the prices to the end-user through the improvement of economic efficiency and provide additional supply and demand flexibility mechanisms.