Brazil’s state-run oil company Petrobras has suspended studies for a $1 billion natural gas pipeline due to regulatory uncertainty surrounding a proposed government plan to boost market competition, according to sources familiar with the matter.
The proposal, which Brazil’s energy regulator ANP is scheduled to discuss Friday, would require large producers to auction a portion of their natural gas to third parties to lower prices and increase competition—a key priority for President Luiz Inacio Lula da Silva’s administration.
While the initiative is aimed at lowering energy prices, industry insiders warn the measure will merely redistribute existing volumes rather than increase total supply.
The regulatory shift threatens major offshore infrastructure investments designed to bring natural gas to shore.
Petrobras halted studies on the pipeline linked to its deepwater Sergipe project in northeastern Brazil.
The proposed pipeline is intended to connect two planned floating production units capable of processing up to 22 million cubic meters of natural gas and 240,000 barrels of oil daily, with first production anticipated in 2030.
“Who would authorize a $1 billion pipeline investment without assurances that their rights are protected?” said one source, who spoke on the condition of anonymity due to the sensitivity of the discussions.
The regulatory uncertainty could also affect Norwegian energy firm Equinor’s Raia project in the Campos Basin.
Scheduled to begin operations in 2028, Raia includes its own pipeline to Macaé in Rio de Janeiro state and is designed to produce 16 million cubic meters of gas per day—enough to cover roughly 15% of domestic demand.
Equinor stated that regulatory predictability and stable rules are essential for long-term investments requiring billions of dollars and development timelines exceeding a decade.
Details of the ANP draft regulation will be unveiled Friday, launching a public consultation period before the regulator’s board votes on a final version. If approved, implementation could begin as early as next year.
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