By Brazil Stock Guide — Brazil’s oil and gas regulator ANP plans to move ahead with a program that could significantly reduce Petrobras’ share of the country’s natural gas market, despite resistance from the state-controlled company, which argues the measure is unnecessary for now and could affect investment decisions.
The clash came into focus at the ANP’s second workshop on the proposed gas release program, a mechanism provided for under Brazil’s Gas Law that allows companies with a large market share to be required to sell part of their gas volumes through auctions.
The issue matters well beyond Petrobras. Natural gas is a key input for energy-intensive industries, and the ANP and the federal government are betting that more suppliers and stronger competition can reduce the market power of dominant players and put downward pressure on prices. Petrobras argues that a poorly calibrated intervention could weaken incentives for new investment and ultimately constrain future supply.
According to the ANP, Petrobras accounted for an average 59% of the non-power wholesale gas market connected to Brazil’s integrated pipeline network in 2025. Despite the entry of new suppliers, the regulator still considers the market highly concentrated and sees a risk that the recent decline in concentration could reverse if current conditions persist.
To measure concentration, the ANP uses the Herfindahl-Hirschman Index, or HHI, a standard measure used by competition authorities. The index takes into account each company’s market share and gives greater weight to larger players: the higher the HHI, the more concentrated the market. A monopoly, for example, would have an HHI of 10,000.
In the market analyzed by the ANP, the index fell from 10,000 in 2021 to 3,747 in 2025, showing that the market has opened up but remains above the 2,500-point threshold the agency uses as the boundary for a highly concentrated market.
The gas release program aims to bring the HHI down to 2,500. Under the regulator’s simulations, if other suppliers’ shares increase proportionally, Petrobras’ market share would need to fall to about 44.6%. If new competitors enter the market, Petrobras could retain a larger share while still meeting the concentration target.
The program would be phased in gradually. The first regulatory cycle is planned for 2027 through 2030, with the first auction scheduled for 2027 and deliveries beginning the following year. Petrobras would be the company subject to the mechanism during that initial cycle.
Petrobras disputes the need for intervention.
“There is no need for gas release, not at this time,” said Álvaro Tupiaçu, Petrobras’ executive manager for gas and energy.
According to Tupiaçu, Petrobras’ share of the non-power market has already fallen from about 90% to roughly 55% over three years. The company also says that between 10.8 million and 11 million cubic meters per day of third-party gas already passes through Petrobras processing facilities and is sold directly into the market.
In Petrobras’ view, entry barriers have largely been removed through the market-opening process and an agreement previously reached with Brazil’s antitrust regulator Cade. The priority, the company argues, should therefore be to increase physical gas supply rather than impose another mandatory deconcentration measure.
Petrobras has also asked for more time to discuss the proposal and called for greater Cade involvement in drafting the rules. The company said the proposal should have undergone broader competition analysis before Petrobras was designated as the company subject to the program.
The company’s main economic argument centers on offshore investment. Tupiaçu said large Brazilian projects depend on scale and the aggregation of gas volumes to become economically viable.
He cited combined capacity of 44 million cubic meters per day across the three pre-salt pipeline routes, 16 million cubic meters per day for the Raia project and 18 million cubic meters per day for the future Sergipe project.
“As you introduce more and more uncertainty, investment tends to decline,” he said.
The ANP rejects the argument that delaying the regulation would reduce uncertainty.
ANP director Pietro Mendes questioned whether postponing a decision on the rules would instead prolong uncertainty for investors. Referring to the Sergipe Deepwater project, he challenged the argument that a lack of clarity over future gas release cycles justified putting investment decisions on hold.
Mendes also mounted a broader defense of the regulator’s role. He said the ANP cannot design rules to maximize the interests of a single market participant and instead must seek greater competition and broader benefits for the economy.
He also questioned why gas sold in Brazil remains heavily linked to international benchmarks such as Brent crude and liquefied natural gas prices even as domestic production expands.
Brazil’s Mines and Energy Ministry backed the regulator’s approach.
Marcelo Weidt, director of the ministry’s Natural Gas Department, said the country still faces high prices, limited rivalry among suppliers and concentrated supply. He pointed to developments in Brazil’s Northeast, where the entry of new producers was accompanied by higher output and lower prices.
“In our view, adopting this tool is essential if we are to reach a more competitive market,” he said.
Industrial consumers took an even tougher stance on the current market structure.
Lucien Belmonte, president of glassmakers association Abividro, said Petrobras remains the main obstacle to a more open gas market.
“The obstacle is very easy to identify: it is Petrobras,” he said.
Belmonte backed a combination of gas release and capacity release measures to strengthen competition and argued that even an HHI target of 2,500 would still leave the market moderately concentrated.
Abrace, which represents large energy consumers, also supported moving ahead with the proposal but called for safeguards to prevent volumes released by Petrobras from simply becoming concentrated in the hands of other large traders.
The group has advocated measures including traceability in secondary-market transactions, standardized products, a broader pool of eligible buyers and the reoffering of unused volumes.
Independent producers took a more nuanced position.
The Brazilian Association of Independent Oil and Gas Producers, or ABPIP, said it supports the objectives of the gas release program but argued that deconcentration must go hand in hand with effective rules governing access to gathering, processing and transportation infrastructure.
For independent producers, putting more gas on the market does not create effective competition unless suppliers can also gain access to the infrastructure needed to bring that gas to customers.
The ANP’s proposed design seeks to address some of Petrobras’ concerns by protecting the company’s own production during the first regulatory cycle.
The program would focus primarily on gas Petrobras buys from third parties, imports through the Bolivia-Brazil Gas Pipeline, or Gasbol, and, on a supplementary basis, gas belonging to the federal government. According to the ANP’s modeling, those volumes would be sufficient to meet the deconcentration target without forcing Petrobras to release gas from its own production.
A public hearing on the proposal is scheduled for October 21, and the ANP aims to complete the regulation by the end of this year.
At the heart of the dispute is a question broader than Petrobras’ market share: whether lower gas prices in Brazil will come first from stronger competition among suppliers or from additional investment and physical supply. The answer could shape the next phase of the country’s gas-market opening.
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