By Board Resolution Nº 368-2021-MINEM/DGH and Board Resolution Nº 369-2021-MINEM/DGH, published on September 21, 2021 in the Official Gazette “El Peruano”, the drafts of the “Operating Procedure for the electronic market of the auctions for the transfer of natural gas supply volume and/or transport capacity (MECAP)” (“MECAP Operating Procedure“) and of the “Operating Procedure for the Transfer of Information in the Natural Gas Market” (“Information Transfer Procedure“), respectively, were published. This, within the framework of the provisions of Supreme Decree No. 046-2010-EM, which adopted the Regulations of the Secondary Natural Gas Market (“Secondary Market Regulations“) to ensure the efficient use of the supply and firm transport capacity of natural gas, which was amended by Supreme Decree No. 012-2021-EM, and introduced provisions to implement the auction mechanism for transactions of supply and firm transport capacity of natural gas.

The draft MECAP Operating Procedure proposes to establish the operating conditions for the operation of MECAP, applicable to all operations of transfer of supply volume and/or transport capacity of natural gas carried out in the Secondary Market with a term of more than two (02) months and a maximum of twelve (12) months. Some of its provisions are listed below:

– The Natural Gas Manager shall qualify Consumers as Bidding and Demanding Consumers so that they may participate in the transfers of supply volume and/or transport capacity of natural gas in the Secondary Market.

– The failure of the Producer and/or Transport Concessionaire to communicate the conformity of the natural gas supply volumes and/or transport capacities made available in the Secondary Market within the maximum term of 1 working day, is considered as a tacit approval for the purposes of the procedure.

– The failure of the Distribution Concessionaire to communicate the availability of the distribution system within the maximum term of 1 working day, is considered as a conformity for the purposes of the procedure. In case of non-availability, the Distribution Concessionaire assumes the responsibility for not expressing itself within the established term.

– For supply auctions in case Bidding and Demanding Consumers have different prices according to the destination of use of the natural gas, the existence of economic benefits must be evaluated.

– The Secondary Market Price, as well as the Maximum Daily Amount Transferred and/or Maximum Daily Capacity Transferred shall be determined on the basis of supply and demand curves and shall be allocated on the basis of the balancing price up to the balancing amount and/or capacity for each of the Demanding Consumers.

– Faced with a situation of excess demand or shortage of supply declared by the Natural Gas Manager, priority shall be given to the attention of Distribution Dealers to meet the demand of residential, commercial and NGV consumers, when they act as Demanding Consumer.

– In the event of declared emergency situations, operations in the Secondary Market shall be governed in accordance with the provisions of Supreme Decree Nº 017-2018- EM. This, without prejudice to the provisions of Article 3 of the Secondary Market Regulations, which provides that, in Congestion Situations within a Congestion Period, declared by the COES, the reallocation of natural gas ordered by Legislative Decree Nº 1041 shall prevail.

– The Natural Gas Manager shall activate the manual auction mechanism in case the MECAP platform is not implemented and/or enabled for its operation, has operational problems or failures that prevent access to Consumers.

The implementation of the MECAP platform shall take place within 120 working days after the publication of the Information Transfer Procedure.

The draft of the Information Transfer Procedure proposes to regulate the operational provisions for the transfer of information to be provided by the agents participating in the Primary Market and the Secondary Market, in order to estimate the availability of natural gas and transport capacity over time and make such information available to users to avoid the existence of asymmetries due to supply contracts and firm transport capacity of natural gas.

The information to be registered in the Natural Gas Manager’s platform shall be the information contained in: (i) the Supply Contracts entered into in the Primary Market, (ii) the Supply Transfer Contracts entered into in the Secondary Market, (iii) the Transport Contracts entered into in the Primary Market, (iv) the Transport Capacity Transfer Contracts entered into in the Secondary Market, (v) the natural gas Nominations, (vi) the Transport Requests, (vii) the Transfer Requests made in the Secondary Market by the Bidding and Demanding Consumers, (viii) daily measurements of natural gas volumes delivered at the Delivery Point to the Distribution Dealer, Delivery Operators and/or Independent Consumers and daily measurements of natural gas volumes delivered to Independent Consumers and regulated market, disaggregated by sector (industries, natural gas vehicles, residential, commercial, power generators and public institutions).

The implementation of the platform shall take place within 120 working days after the publication of this Information Transfer Procedure.

Interested parties may submit their opinions and suggestions in writing to the General Directorate of Hydrocarbons, either through the Bureau of Parties or to the e-mail[email protected],until September 28, 2021.

Any consultation on this matter may be answered by Doctors Jorge Pérez-Taiman ([email protected]), Carolina Noriega ([email protected]),

Piero Scarafone ([email protected]) and/or Talía Hormaeche ([email protected]).