Brazil LPG usage review due in Nov

Brazil's 33-year-old restrictions on LPG usage are one step closer to ending as hydrocarbons regulator ANP plans to deliver a regulatory impact analysis (RIA) on changing the rules by 7 November or sooner.

Ending the restrictions via a new regulation — which was discussed in a broadcast meeting of government agencies and industry groups in the lower house of congress this week — could increase Brazil's LPG demand by 5pc, according to LPG association Sindigas.

ANP added the RIA to its agenda following pressure from many sides, including Sindigas, LPG distributors, industry and even an official request from ministry of mines and energy (MME).

The government banned certain uses of LPG in 1991 when the first Gulf War led to a significant increase in fuel prices. At the time Brazil relied on imported LPG as a primary cooking fuel, which was heavily subsidized, so there was concern the war would lead to prolonged LPG shortages. The restrictions barred its use in automotive and other engines except for forklifts and industrial cleaning equipment. It is also illegal for saunas, boilers and pool heating, except for medicinal purposes.

LPG for cooking is no longer subsidized by the government and prices are largely set on the open market, although 13kg cylinder prices are still influenced by state-controlled Petrobras.

Although restrictions on LPG use were established by law, there is an understanding from the federal Attorney General's Office that just a resolution from ANP would be sufficient to allow other uses.

The review of the LPG restrictions are part of the ANP mission to give Brazil freedom of choice on energy sources for different applications based on their availability and cost, eliminating market barriers, said Deivson Matos Timbó, general coordinator for market monitoring at the MME.

Currently, LPG represents just 3.2pc of the national energy use — less than firewood and natural gas. "Once the market develops it will mitigate any concerns of supply and demand," said Pedro João Zahran Turqueto, distributor Copa Energia's vice president of operations and strategy.

Congressman Beto Pereira, who organized the meetings this week, said LPG has the potential to be a power generation fuel in remote areas, as well as a backup fuel for intermittent renewable energy generation, with lower transportation and storage costs than liquid hydrocarbons.

The meeting in the lower house included representatives from ANP, MME, Brazil's energy research company EPE, LPG distributor Copa Energia, LPG association Sindigás and the Federal University of Mato Grosso do Sul state (UFMS), located in the center-western region.

By Betina Moura