OECD countries have promoted important reforms in the natural gas sector, in a similar way as in their electricity sectors, breaking the prevailing vertical integration model, characterised by territorial monopolies. In OECD countries, the transition to a low carbon economy has relied on the natural gas, as an option capable of balancing the objectives of sustainability, efficiency and energetic security. In the last thirty years, the importance of natural gas can be attested by the substantial increase in the world energy matrix, reaching 24,2% of the total primary energy, contributing to decrease carbon emissions. (BP, 2021). In Brazil, the participation of natural gas as a primary source of energy only accounts for 12,2% in its matrix. The 2021 New Gas Law is the result of earlier attempts to liberalise the natural gas sector in Brazil, allowing its expansion with the expected result of increasing its participation in the Brazilian energy matrix, following a reduction in prices. In this context, a comparative analysis of OECD Product Market Regulation indicators for the natural gas sector is undertaken, in order to compare the differences between Brazil and OECD countries so that to provide subsidies for further reforms.
Following methodology already used by Gutierrez ( 2021 ) for the electricity sector, here being applied to the natural gas sector, OECD states the best practices and policies to be implemented in a liberalization process in energy markets dominated by monopolies, expressing a balance between the state as a regulatory stance and competitive markets in the appropriate segments of the market ( Kahn, 1971).
The OECD Product Market Indicator ( PMR ) encompasses factors expressing the state control ( public ownership and participation in commercial activities ); barriers to entry in a market, to trade and to foreign investments; transparency in tariffs. PMR indicators are estimated for the economy as a whole or for specific setors, in particular, network industries, as it is the case of energy markets. The PMR indicators are calculated using an extensive database, built with the responses of national authorities to detailed questionanaires on regulatory and legal aspects prevailing in each OECD country, as well as non-member countries, including Brazil.
The estimation of the indicators is undertaken by the transformation of qualitative data into quantitative one, attributing a numerical value for each response, in the 0-6 range, following the best international practices, as summarised in the PMR Schematas ( Indicators of Product Market Regulation - OECD , 2022). As a general result, a lower PMR value indicates a more competition-friendly environment and a lesser rate of state share control. The estimated indicators are then aggregated in a bottom-up framework for economy-wide indicators and for sectoral ones, in particular energy markets, disaggregated into the electricity and natural gas segments.
This study will analyse natural gas sector PMR indicators for Brazil compared to those for OECD countries, focusing on state propriety, unbundling of segments (transport, distribution, generation), third-party access to infrastructures, wholesale market development, freedom of choice of consumers, tariff regulation.
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