23/09/26
Gas agenda overshadowed in Brazil's presidential plans
Both candidates are currently focusing their attention on driving up oil
production, write Lucas Parolin, Marcos Mortari and Maria Frazatto London, 23
September (Argus) — Energy has not emerged as a prominent topic in Brazil's 2026
presidential race, but policy differences may become clearer after the vote
through the new president's early appointments and decisions. This may be
crucial for natural gas, a key subject of the ongoing regulatory debate. The
upcoming election is of paramount importance for the increasingly polarised
country. President Luiz Inacio Lula da Silva — vying for a fourth,
non-consecutive term — and challenger Flavio Bolsonaro — the son of former
president Jair Bolsonaro, who is currently under house arrest for a coup attempt
conviction — are leading the race within the polls' margin of error. Together,
the two account for more than 70pc of voting intentions — a 17 September poll
from Datafolha has Lula with 39pc of the vote in the first round and Bolsonaro
at 36pc. If no candidate wins more than 50pc of votes in the first round on 4
October, Brazilians will head to the ballot boxes again on 25 October to vote on
a run-off. The poll projects that Lula would secure 46pc of the votes in a
run-off, versus Bolsonaro's 44pc. Neither have placed energy as a priority in
their campaigns. Only a few paragraphs were devoted to energy policy in the
candidates' platforms — a pattern seen in several recent election cycles.
Instead, voters' attention has been mostly turned to labour issues and an
investigation related to fraud allegations at a failed lender with possible
links to major political figures, including Flavio Bolsonaro and a judge seen as
a Lula ally. Both candidates promise to keep driving oil production up — which
consequently means increasing gas production, as more than 90pc of the country's
output is oil-associated. But the two candidates' plans for the sector diverge
substantially. Energy research firm Epe expects Brazil's crude production to
peak at 5.1mn b/d in 2032, up from current production estimated at nearly 4.5mn
b/d, according to hydrocarbons regulator ANP data. Gross gas production would
similarly peak at 309mn m³/d in 2033, up from about 215mn m³/d at present,
according to ANP. Net production, after deducting own consumption, flaring,
losses, and reinjection, is expected to reach 127mn m³/d in 2035, compared with
the current 66mn m³/d effectively made available to the market. Since the new
gas law came into force in 2021 under Jair Bolsonaro's administration, Brazil
has taken significant steps toward developing its gas market, attracting new
investments and participants across different segments of the value chain.
Despite the ideological differences between the two governments, this process
continued under Lula's administration, which oversaw a series of regulatory
advances. These include discussions on third-party access to LNG, gas processing
and transport infrastructure, new transportation tariffs, a proposed gas release
programme and the federal government's own natural gas auctions. These
initiatives shared a common objective of encouraging new entrants into the
market, fostering competition and curbing prices for buyers. Compare and
contrast Lula's platform keeps state-owned Petrobras at the centre of Brazil's
energy strategy. The incumbent president pledges to expand investments in
upstream oil and gas, refining and LNG logistics, while maintaining natural gas
and biomethane as key transition fuels to support industrial development and
power system reliability. His proposals also call for further expansion of gas
transportation and distribution infrastructure, stronger regional gas
integration and the reinforcement of local content requirements. "The role of
natural gas and biomethane as complementary sources to renewable energy will
continue to be encouraged, enhancing energy security, increasing power system
flexibility and strengthening the competitiveness of the Brazilian economy,"
Lula's platform states. "The new Brazil we seek to build will advance energy
security and the energy transition in parallel." By contrast, Bolsonaro frames
energy policy around market competition and private investment. His programme
focuses on continuing the gas market liberalisation initiated under his father's
administration — with a focus on regulatory stability, lower energy costs and
infrastructure expansion driven by private capital. One of his key energy
proposals is to simplify electricity bills and lower power costs, which he
argues would attract investment in data centres and artificial intelligence
projects. "Brazil is producing growing volumes of natural gas from the pre-salt
fields, but part of that supply is being wasted due to insufficient gas
transporting infrastructure, even as the country continues to import costly gas
from abroad," Bolsonaro's plans state. "We will support the expansion of gas
gathering and transportation networks, allowing currently disconnected states to
be integrated into the grid and helping lower energy costs for industry and
households." Reducing gas reinjections into oil fields had been a key policy
pledge of Lula's energy minister Alexandre Silveira when he took office in 2023.
But progress on tackling the issue has been slow, despite the commissioning of
additional gas pipelines intended to deliver more associated gas from Brazil's
pre-salt fields to consumers. The country's gross natural gas production was
65.4bn m³ in 2025, but as much as 35.6bn m³ — or 54pc — was reinjected into oil
fields. This share has even widened compared with the 50pc of gas supply that
was reinjected in 2022. The proposed regulatory changes on third-party access to
processing and transport infrastructure could allow a greater share of domestic
production to reach the market, some participants say. But producers argue there
are also technical reasons related to pre-salt production that partly explain
high reinjection rates in the country. That said, the proposed third-party
access rules to gas infrastructure are mostly focused on reducing prices for
domestic users through increased competitiveness, meaning they may not translate
into higher supply, the government says. Bolsonaro also backs the development of
unconventional gas resources through hydraulic fracturing (fracking), arguing
that greater domestic supply would strengthen energy security and industrial
competitiveness. The measure, supported by oil and gas producers, is currently
being challenged in the courts. Lula does not address the controversial matter
in his plan. Father and son Bolsonaro's administration sought to reduce
Petrobras' role, selling assets and opening the market to more competition.
Petrobras' average share of natural gas sales in the country has shrunk to 59pc
in 2025, according to ANP data, down from 100pc in 2018 — the year when Jair
Bolsonaro took office, before the opening of Brazil's gas market began. His
son's plan does not indicate that he would take the same route, but instead sets
a goal of providing "total energy security at the lowest possible price for the
consumer". Flavio Bolsonaro and his team have not explicitly called for
Petrobras' privatisation, as his father did before, and have gone as far as
calling the firm a "strategic asset to Brazil". But Adolfo Sachsida — his
campaign's economy co-ordinator and a former energy minister under Jair
Bolsonaro — is a vocal supporter of that idea, which raises questions over the
company's future under a new Bolsonaro administration. Flavio Bolsonaro has also
recently vowed to revoke the temporary oil export tax — set by Lula's
administration in the context of fuel price hikes related to the Middle East war
— arguing that it has reduced output and investment. Send comments and request
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