Brazil gas regulator presses Petrobras to open the market

Brazil’s oil and gas regulator has taken a formal step toward forcing greater competition in the country’s natural gas market, setting up a confrontation with Petrobras over how much control the state controlled oil major should retain over supply.

The National Agency of Petroleum, Natural Gas and Biofuels, known as ANP, approved on Friday, August 7, a 45-day public consultation on a proposal widely referred to in the industry as “gas release”. The mechanism would require Petrobras to sell volumes of natural gas through public auctions to other market participants, including industrial consumers, thermal power plants, distributors and gas trading companies.

ANP will review comments submitted during the consultation before taking a final resolution to a vote. No date has been set for that decision.

At stake is one of the most politically sensitive parts of Brazil’s energy agenda, how to lower the cost of gas in a market where Petrobras remains the central buyer, processor, infrastructure owner and seller, despite reforms designed to attract private players.

A market opening written into law

The current dispute traces back to Brazil’s New Gas Law, Law 14,134 of 2021. Article 33 requires measures to reduce concentration in the natural gas market and gives ANP responsibility for regulating how that process should take place.

The law was approved during the administration of former president Jair Bolsonaro, when then economy minister Paulo Guedes promoted the idea of a sharp reduction in energy costs. Under President Luiz Inácio Lula da Silva, the political emphasis has changed, but the objective of cheaper gas for industry and consumers has remained.

The legal mandate goes further than the 2019 agreement between Petrobras and Cade, Brazil’s antitrust authority, which was also intended to curb the company’s market power.

Petrobras currently has about 60% of Brazil’s natural gas market, down from more than 90% in the past. Even so, regulators and many buyers still see the market as highly concentrated. The company also controls much of the infrastructure needed to bring gas from offshore platforms to shore and to process it in natural gas processing units.

ANP says the market wants action. According to a survey by the agency, 95% of the participants consulted said gas release is either essential or important for increasing competition in Brazil.

Regulator challenges Petrobras pricing role

During Friday’s meeting, ANP director Pietro Mendes, the rapporteur for the case, directly challenged Petrobras’ argument that replacing its role with other traders would not necessarily reduce prices.

Mendes said Petrobras itself operates as the market’s main intermediary. He cited April data showing that the company bought 3.5 million cubic metres per day of unprocessed gas from 12 producers at US$3.80 per million BTUs, an energy unit commonly used in gas contracts. That gas was then combined with Petrobras’ own production and resold to distributors and free consumers at US$12.40 per million BTUs, he said.

“The biggest middleman in the gas market is Petrobras itself, which demonizes the actions of those in other links of the chain,” Mendes said.

Mendes, who previously served as oil, gas and biofuels secretary at the Ministry of Mines and Energy and chaired Petrobras’ board, argued that the gas release model could create “genuine” competitors.

“What we want is to create effective competition in the market, expand liquidity and discipline price formation,” he said.

Industry participants have pointed to Brazil’s Northeast as an example of how a broader supplier base can put pressure on prices, as more sellers compete for customers.

Petrobras says competition already exists

Petrobras has pushed back strongly against the plan. Company president Magda Chambriard has repeatedly said that gas will not become cheaper simply because it changes hands.

On Friday, Chambriard warned that a new regulatory framework for gas sales could force Petrobras to reassess projects already underway. “We are not an NGO, we are a company, we have to make a profit,” she said.

Angélica Laureano, Petrobras’ director of commercialization and logistics, said the company’s market share is 56%, a level she argued shows that Petrobras should not be treated as dominant because the market already has competition.

“There is no basis for talking about gas release in a market that already has competition,” Laureano said.

The debate has also produced political unease. Some market sources have questioned why the Ministry of Mines and Energy, under a left leaning government, is supporting a market deconcentration agenda more commonly associated with liberal economic policy. Others say the ministry is backing the measure because lower gas prices remain a priority for industrial competitiveness.

One part of the government’s strategy involves Pré-Sal Petróleo, or PPSA, the state company that manages production sharing contracts in Brazil’s pre-salt fields. The idea is for PPSA to sell the federal government’s share of gas through public auctions, adding another source of supply outside Petrobras’ commercial control.

Why this matters for Brazil investors

Brazil’s gas market is entering a decisive regulatory phase, with consequences for energy costs, industrial margins, infrastructure investment and Petrobras’ commercial strategy. For companies assessing Brazil as a manufacturing base, power market, gas trading opportunity or infrastructure play, the outcome of ANP’s consultation will be worth close attention.

Brazil Business Club connects international investors and operators with local insight, sector specialists and decision makers. If you are exploring opportunities in Brazil’s energy market or planning to do business in the country, connect with the club to understand where policy, capital and commercial demand are moving next.