Brazilian hydrocarbons regulator ANP confirmed on Friday that it had received a letter from state-controlled Petrobras informing that the company was no longer interested in continuing bilateral negotiations with pipeline operator NTS over the extension of legacy natural gas transport contracts.
The regulator therefore decided to lift the 15-day suspension of the gas transport tariff review, which its directors had approved at their latest board meeting on 9 November. The issue will now be taken up again at an extraordinary meeting scheduled for 18 November.
The pause in the tariff review discussions followed a request from the mines and energy ministry (MME), which had brought to ANP a request from NTS and Petrobras for additional time to advance bilateral negotiations.
Petrobras had been awaiting the formal submission of an alternative proposal from NTS to extend the legacy contracts, which the company said did not occur within the established timeframe. NTS did not respond to a request for comment by Argus by the time of publication.
In a letter sent to ANP and made public on Thursday evening, Petrobras said it believed there was "no longer room to continue negotiations [with NTS], which would necessarily have to be approved by the agency, given that ANP itself has already made clear that the solution proposed by NTS runs counter to the interests of transport system users and, consequently, Brazil's natural gas industry".
Petrobras concluded by arguing that any further proposal from NTS should be submitted directly to ANP rather than discussed bilaterally.
The pipeline network operated by NTS extends for more than 2,000km (1,242 miles) and connects the southeastern states of Rio de Janeiro, Minas Gerais and Sao Paulo, which together account for roughly half of Brazil's total gas consumption. It is also connected to major processing facilities handling pre-salt gas production and LNG import terminals, as well as to TAG's pipeline network, which links the southeast and northeast regions, and to TBG's pipeline, which connects Brazil with Bolivia.
The resumed transport tariff review covers Brazil's five gas pipeline operators: NTS, TAG, TBG, GOM and TSB. At its 18 November meeting, ANP is expected to address the tariffs for the 2026-30 cycle.
The current discussion comprises three phases: an investment return rate (WACC), each transporter's regulatory asset base (BRA), and maximum allowed revenues. ANP completed the first two stages and planned to advance to the final phase at its meeting on 9 November, when NTS introduced its proposal, followed by the mines and energy ministry's request for more time to discuss the matter.
The dispute stems from ANP's conclusion that assets linked to NTS' Malha Sudeste legacy contract had already been fully paid for through tariffs, resulting in a zeroed BRA. NTS and representative association Atgas challenged both the methodology and outcome in court. NTS later warned it would halt investments until "a more secure regulatory environment" emerges, drawing criticism within the gas sector.
To avoid a zeroed BRA, NTS sought support from Petrobras and proposed an alternative solution: extend active legacy contracts through 2041, preserve the full R5.3bn asset base, and increase the WACC to 10.09pc from the regulator-approved 7.63pc. It would also maintain contractual arrangements and reserved transport capacity for Petrobras, although 21pc below original contract levels.
Petrobras, however, says it has not received any formal proposal on the matter. "On 10 November 2026, we received the attached letter from NTS in response to our request. However, no proposal was formally submitted to Petrobras, and the letter indicated that additional time would be required, which would make it impossible to complete the tariff review conducted by ANP in 2026", the company's director of energy transition and sustainability, William Nozaki, wrote in a letter to ANP.
Efforts to delay the discussions drew criticism from ANP director Pietro Mendes, rapporteur for the gas transport tariff review. Mendes has publicly pointed to what he sees as attempts by Petrobras, the dominant player in Brazil's gas market, to exert excessive influence over the country's regulatory agenda.
The prolonged tariff review has raised concerns among market participants, who point to the risk of higher transport costs for users, which would ultimately result in more expensive natural gas for end-consumers. Some market participants also warn that further delays would prolong tariff uncertainty in a process nearing two years, making investment decisions more difficult and hampering the development of Brazil's gas market.
