By Brazil Stock Guide – Petrobras (PETR3, PETR4) is moving back into Brazil’s liquefied petroleum gas (LPG) distribution business, four years after selling Liquigás to Copagaz for R$4 billion. The decision, disclosed by NeoFeed, comes amid regulatory disputes between the national oil regulator ANP and private distributors over bottling rules and exclusivity. Market participants warn that the company’s return could create a conflict of interest, since Petrobras already holds a monopoly on domestic LPG production and wholesale supply.
The move triggered immediate investor backlash. Since the August 7 announcement, Petrobras has lost more than R$35 billion in market value, according to consultancy Elos Ayta. Common shares PETR3 fell 8.45%, while preferred shares PETR4 dropped 7.25%, cutting the company’s market capitalization from R$442.2 billion to R$406.9 billion in just eight days.
Executives and analysts question the logic behind the strategy. “It’s very strange. It makes no sense to go back to the old ‘well to pump’ model that doesn’t exist anywhere in the world. For shareholders, it has no logic. It borders on populism, but using investor money,” a source familiar with the plan told NeoFeed. Another industry executive added: “The president [Magda Chambriard] argues margins are too high, but then says the company should enter the business to reduce them. Nobody buys into a sector to cut its profitability.”
Adriano Pires, founder of the Brazilian Infrastructure Center (CBIE) and former ANP superintendent, was blunt: “Petrobras suffers from the rearview mirror syndrome, looking back instead of forward. It’s a major setback. The big business of an oil company is not downstream but upstream, exploring pre-salt and soon the Equatorial Margin.”
The company confirmed that its board approved evaluating opportunities in LPG distribution, stating in a note that the decision allows it “to assess opportunities in this stage of the commercialization chain that may contribute to value generation and results.” The announcement coincides with preparations by Brazil’s Ministry of Mines and Energy to launch the “Gás para Todos” social program, which will subsidize 16.6 million families through 2027.
Yet recent Petrobras actions have fueled more skepticism. Since November 2024, the company has been holding monthly LPG auctions, initially to sell surplus supply. In practice, distributors say, the move restricted direct allocations and forced companies to buy more expensive volumes via auction, pushing final prices higher. According to Sérgio Bandeira de Mello, head of Sindigás, the national distributors’ association, the practice effectively reduced availability while driving up costs. In São Paulo, prices rose 19%, and in Pernambuco, as much as 30%.
With Petrobras controlling 90% of LPG production in Brazil, industry leaders see its return to retail as a threat to fair competition. Critics argue the decision risks diverting billions of reais from more profitable upstream projects, while adding regulatory and political uncertainty to the company’s balance sheet.
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