Brazil’s government is planning to give the oil regulator more power over how natural gas projects are run. This move aims to increase gas supply and lower prices for consumers, according to a draft document reviewed by Bloomberg.
The draft decree, which might change before it becomes official, would allow the Brazilian National Agency for Petroleum, Natural Gas and Biofuels to control how much gas oil producers can reinject back into reservoirs. It also sets targets for gas production levels for these projects.
Mines and Energy Minister Alexandre Silveira said the government is in talks with the industry to increase gas supply. He emphasized that the new decree is not meant to interfere with the natural gas market but confirmed that it would give the regulator more control over gas reinjection levels. However, the changes won’t apply to existing projects where investments have already been made.
“We need to align with the international standards for gas reinjection,” Silveira said at a press conference in Brasilia. “Gas is a matter of public policy.”
President Luiz Inacio Lula da Silva’s administration is focused on increasing natural gas supplies and lowering prices to boost industrial activity. However, giving the regulator the power to limit how much gas is reinjected into offshore fields — a method used to maintain underground pressure and boost oil production — could make oil companies more cautious.
“Nobody understands the needs of a project better than the operators themselves. A regulation like this affects investment decisions and adds new risks to the sector,” said Rivaldo Moreira Neto, a director at consultancy A&M Infra.
The draft decree also allows the regulator to review development plans at oil and gas sites, even those already in operation. If companies don’t comply, the government could transfer their operating rights to other companies. The plan also suggests using shared natural gas production hubs to maximize processing capacity.
Additionally, the regulator could limit natural gas exports if they pose a risk to domestic supply, according to the draft.
Petroleo Brasileiro SA is Brazil’s largest oil and gas producer. International companies like Equinor ASA and Shell Plc are also developing offshore oil projects in Brazil that produce large amounts of natural gas.
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