Energy in Brazil is a multifaceted giant. In a country with vast resources, continental dimensions, densely populated areas, and robust industrial activity, security of energy supply sits at the top of both government and private‑sector agendas. The development of new infrastructure, regulatory advances, and the need to diversify energy sources keep the sector active year after year.
2026 will be no different: on a number of fronts, we expect opportunities for new projects, regulatory improvements, and expanding markets. In this regard, the oil, gas, and biofuels sectors are likely to account for a large share of these developments.
Here are the top 10 potential developments that, in our view, promise to impact Brazil’s oil, gas and biofuels industries in 2026:
1. Petrobras’ strategy and upcoming elections
It is a known fact that Petrobras is applauded by its world class operations, based on deep technical expertise and high producing upstream assets, particularly within the Brazilian pre-salt area. They are massively the largest player within the local industry and their investment strategies tend to define many of the opportunities available to private players.
As a state-owned company, it is expected to swing on different directions depending on the vision the government in power has for the company. The current government wants Petrobras big, investing not only in upstream, but in the entire oil and gas chain and also diversifying to biofuels, renewable energy and petrochemicals. While this reduces M&A activity coming from Petrobras divestments, it may provide a wealth of opportunities to contractors and others indirectly involved in its supply chain.
During past administrations, Petrobras sought an strategic repositioning, with divestments aimed at debt reduction and portfolio prioritisation, boosting M&A activity in the country. It reshaped the local O&G industry, particularly in respect of upstream mature assets and natural gas infrastructure.
2026 is an election year, so the market speculates whether winds will change direction within Petrobras and the whole industry as a consequence. Will we see Petrobras continuously growing? Or will it be once again focusing on its core assets, with a new divestment cycle?
2. Power Capacity Auction 2026
Beyond Petrobras’ future moves and elections outlook, the Power Capacity Auction is one of the biggest events in the energy outlook in Brazil this year.
The Capacity Reserve Auction in the form of Power (LRCAP), scheduled to March 18, 2026, emerges as one of the main instruments of Brazilian energy planning for the coming years, particularly following the cancellation of the auction originally planned for 2025, which was declared void due to the judicial challenges at the time. The resumption of the auction reflects the need to strengthen the security of the National Interconnected System (SIN) in a context of increasing participation of intermittent sources and greater demand for dispatchable capacity.
Pursuant to the guidelines established by MME Ordinance No. 118/2025, LRCAP 2026 will include the offering of different products, encompassing natural gas-fired thermal power plants (new and existing), existing coal-fired thermal power plants, and hydropower plant expansions, for different supply horizons. With respect to natural gas projects, particular emphasis should be given to the explicit differentiation between plants connected to the gas transmission system and those located outside the grid, which signals an attempt to enhance competition and make room for more flexible and innovative business models, with the potential to mitigate disputes related to transmission costs and access to infrastructure.
Market expectations are that LRCAP 2026, in addition to fulfilling its core role of ensuring capacity contracting under long-term agreements, will act as a catalyst for structural investments across the gas value chain. In this sense, the auction is viewed as capable of unlocking new projects in the facilities required for gas supply, particularly LNG terminals and the expansion of the pipeline transmission grid, thereby contributing to reduce the existing logistical bottlenecks.
3. Gas Transmission System Tariff regulations and PNIGB
The current context of transmission tariff regulation is marked by a board process of regulatory adjustment, driven by the enactment of Law No. 14,134/2021 (the New Gas Law). This matter has gained particular relevance in the current year due to the approaching expiration of legacy contracts held by transmission operators (long term pipeline capacity agreements entered with the incumbent Petrobras) and the commencement of a new regulatory cycle. As a result, these operators will, for the first time , be subject to comprehensive tariff review proceedings, including the valuation of their Regulatory Asset Base (RAB) and the calculation of their Allowed Maximum Revenue (AMR). This is expected to increase efficiency and allow greater transparency to those intending to use the transmission network, contributing to greater liquidity within the Brazilian natural gas market.
New regulations should also provide certainty for investment decisions concerning the expansion of the transmission system. To date, network expansion is being carried out in a predominantly reactive and marginal manner, based on the specific connection requests submitted by consumption or production (E&P) agents, which limits a systemic and long-term view of infrastructure development. No relevant greenfield gas grid pipeline project has achieved final investment decision at least for the last 15 years.
Law No. 14,134/2021 introduced the concept of coordinated development plans for the transmission system, to be proposed by the operators and approved by ANP, with a ten-year planning horizon. In turn, Decree No. 12,153/2024 established the National Integrated Natural Gas and Biomethane Plan (PNIIGB), which forecasts infrastructure and facilities require for the market expansion. Initial plans were submitted by ANP and EPE for public consultation in the second half of 2025, and their final versions have not yet been published.
4. Open access regulations to LNG Terminals, Gas Processing Plants and Offshore Gathering Pipelines
In an unprecedented move within the Brazilian legal framework, Law No. 14,134/2021 established non-discriminatory and negotiated third-party access to E&P pipelines, natural gas processing units (UPGNs) and LNG terminals, ensuring, in all cases, the preferential rights of the respective owner.
The regulation of access to LNG terminals features as a priority item in ANP’s regulatory agenda for 2025-2026 and has been discussed within the scope of Public Consultation No. 06/2025, which has not yet been concluded. The draft submitted for public participation has sparked intense debate within the sector, particularly in light of the structural specificities of LNG terminals in Brazil and the still limited liquidity of the Brazilian natural gas market.
On the one hand, most existing LNG terminals were designed to supply specific thermoelectric projects – at least in their original conception – based on dedicated contractual and logistical arrangements, the preservation of which is essential to maintaining the legal and economic security of the investments made. On the other hand, the development of greenfield terminals requires a regulatory framework that provides predictability and adequate conditions for project finance. In this context, the criteria for characterizing the idleness of these infrastructures and the delineation of the scope of the owner’s preferential rights (including covered legal entities, applicable deadlines and potential revisions) emerge as both key elements and sensitive issues in the ongoing regulatory debate.
In turn, E&P pipelines and processing facilities were regulated by Decree No. 12,153/2024, which expanded the scope of government intervention in the access regime applicable to these essential facilities, notably through strengthening of ANP’s competencies. Market participants are debating the new rules questioning ANP’s authority to determine “fair and adequate remuneration” for the owners of such facilities, its ability to require the expansion of these facilities, the application of rules governing natural gas transmission (subject to a different regime), among other points. How these regulatory provisions will be effectively implemented and operationalized remains uncertain, and their practical implications are therefore expected to unfold over the course of 2026.
5. Gas release
Brazil’s gas market opening gained momentum with the Commitment Agreement (Termo de Compromisso de Cessação) signed with CADE on 8 July 2019, which set expectations for deconcentration via divestments, capacity access, and supply unbundling. The subsequent Natural Gas Law (Law 14,134/2021) empowered ANP under Article 33 to monitor market conditions and adopt measures to reduce concentration in supply, including compulsory capacity release (transportation, evacuation, and processing), a gas-release program mandating auctions by high-share marketers with parameters set by ANP, restrictions on producer-to-producer sales in producing areas, and prior consultation with the Brazilian Competition Defense System.
Decree 10,712/2021 detailed this mandate by requiring transparency and setting design principles for gas release: simultaneous release of relevant transport capacity for released volumes, free negotiability of gas and capacity in secondary markets, and regular offerings across daily to annual tenors. It also requires ANP to produce a market concentration diagnostic, monitor results, and periodically reassess measures to stimulate competition.
Despite this framework, ANP has not yet implemented a binding gas-release program. There have been exchanges between the Ministry of Mines and Energy and ANP, but no enforceable release auctions have occurred. Congress revisited the topic in a bill led by Senator Laercio, though the provisions were removed to avoid affecting the PATEN agenda. The issue has returned via a new proposal by Deputy Kim Kataguiri, which revives mandatory gas-release auctions and complementary capacity-release measures; the policy focus remains on balancing deconcentration with supply security and investment signals for upstream and midstream infrastructure.
6. Revision of Local Content Rules
Brazil’s local content (LC) obligations in upstream oil and gas have undergone repeated redesigns over the last decade in response to compliance challenges and policy criticism. Historically, this regime evolved from bid-scoring incentives through early bidding rounds to mandatory minimum percentages with detailed itemization, which created complexity for investors and contractors.
Accordingly, over the last years, the regulatory approach has shifted from rigid, highly prescriptive local content commitments toward a more flexible, administratively streamlined model that retains national supply incentives while addressing investor concerns about predictability and compliance burden. The flexibility embedded in regulatory changes occurred over recent years reflects a policy adjustment that seek to align industrial capacity with contractual requirements in a manner more attuned to operational realities.
Ongoing and scheduled actions through 2026 suggest continued clarification of rules, standardization of certifications, and structured incentives that together may improve the investment environment for both domestic and international participants in Brazil’s oil and gas sector. It is worth mentioning in this regard a legislative initiative that plans to create a “Local Content Bonus Inventory” to encourage greater use of Brazilian goods and services by allowing credits earned through local procurement to be deployed as a competitive advantage in future bid rounds.
7. Equatorial Margin
In 2026, offshore exploration activity in Brazil’s Equatorial Margin is expected to be dominated by Petrobras’ first deepwater drilling campaign in the Foz do Amazonas Basin (off Amapá) and the operational build-out that accompanies it. The Equatorial Margin has long been framed as a high-potential frontier because it shares geological traits with the Guyana–Suriname basin, where world-class discoveries were made in recent years. At the same time, the area has faced sustained environmental-licensing friction.
Petrobras had to complete extensive licensing steps before receiving IBAMA’s operating license in October 2025. Immediately after licensing, Petrobras started well operations but drilling activities were halted in early January 2026 after a drilling-related fluid leak, refueling the environmental debate.
Notwithstanding, Petrobras’ business plan signals an ambitious escalation for the Equatorial Margin, with US$2.5 billion in planned investments over five years and the drilling of 15 wells, suggesting opportunities relating to contracting activity for rigs, logistics and other services. It is still to be seen if more Equatorial Margin blocks will be made available for bidding for upcoming licensing rounds.
8. Decommissioning
The decommissioning sector is expected to be active in 2026, with significant developments in both project execution and regulatory oversight. Petrobras’s ongoing decommissioning programme includes substantial work on well plugging and abandonment, platform removal, subsea system disconnections, and the sustainable disposal of equipment. Industry data for the 2024-2033 period already positions Brazil as the second-largest offshore decommissioning market globally based on projected investment levels.
Data from the ANP projects that decommissioning investments will reach approximately R$17.4 billion in 2026, reflecting the maturation of end-of-life obligations for offshore E&P assets. These activities create concrete opportunities across the Brazilian decommissioning supply chain, including in well services, offshore logistics, heavy-lift operations, subsea engineering, waste management, and environmental monitoring.
Offshore decommissioning increasingly integrates traditional well services with industrial-scale scrap destination and recycling activities, creating an interdependent end-of-life execution chain. Participants must weigh their opportunities against the risks and liabilities of this entire work cycle, particularly those related to compliance with applicable environmental laws.
Regulatory developments in late 2025 and early 2026 reinforce this trend of heightened oversight across all upstream activities, including decommissioning. For instance, on January 5, 2026, the ANP approved its inspection and enforcement plans for the year, which set specific targets for overseeing exploration and production, including the proper decommissioning of fields and installations, alongside related safety and environmental obligations.
9. Hydrogen, CCS and SAF
Brazil remains strategically positioned for low-carbon hydrogen (H2) investments. The country’s fundamentals include abundant renewable resources for green hydrogen, a competitive bioeconomy for renewable hydrogen, and viable pathways for blue hydrogen integrated with carbon capture and storage (CCS). Brazil is also developing a legal framework for the sector, including a dedicated hydrogen law (Law No. 14,948/2024) and inter-ministerial coordination. An implementing decree is anticipated in 2026 to provide definitions, incentives, and governance. The investment case for hydrogen is supported by cross-sector decarbonization policies creating domestic demand in areas such as industrial feedstock, refining, fertilizers, and low-carbon fuels, shifting focus from hydrogen exports to a diversified offtake of low-carbon byproducts.
This same logic applies to Sustainable Aviation Fuel (SAF). Brazil’s biomass availability supports multiple SAF production routes, and low-carbon hydrogen can expand the available technologies. The Future Fuel Act establishes a compliance market with escalating usage targets for domestic flight operators and a robust framework for certification and traceability. These regulatory features are designed to make SAF a scalable, financeable commodity by ensuring mandate enforceability, credible sustainability claims, and certificate fungibility. Brazil is also positioned as a potential SAF exporter, as projected domestic offtake is expected to be less than half of its production potential, which has driven recent investments in the sector.
CCS is the third element connecting Brazil’s oil and gas to a low-carbon future. In 2026, the focus will shift from “whether” CCS will be regulated to “how”. The Future Fuel Act provides a statutory anchor for a national CCS policy, and the Ministry of Mines and Energy is expected to issue a related decree following ae market is now awaiting its publication – an inflection point that should materially reduce legal uncertainty around authorisation pathways, governance, interaction with carbon markets and general obligations. Once the decree is issued, attention will likely shift quickly to operationalisation: licensing interfaces, monitoring–reporting–verification standards, and long-term liability. This progression frames CCS as emerging regulated infrastructure capable of supporting integrated value chains and shared networks.
10. Fight against organized crime in the fuel industry
Organized crime participation in the fuel retail sector is increasingly on the focus of several government authorities in Brazil, prompting the implementation of preventive measures, such as new laws and regulations, heavier scrutiny in administrative procedures, audits and investigations, as well as police raids and structured crime-fighting operations.
One significant development in this regard is the recent enactment of the “Law of the Habitual Debtor” which establishes a legal framework to distinguish ordinary tax delinquency from systematic and unjustified non-payment used as a business strategy (seen in the fuel sector as a common strategy used by organized crime). The new law authorizes tax authorities to impose administrative sanctions, such as loss of tax benefits, restrictions on public procurement, and registration inaptitude. At the same time, the law seeks to protect fair competition and legal certainty by targeting only recurrent, material, and unjustified non-compliance, while preserving incentives and cooperative compliance mechanisms for regular and good-faith taxpayers.
2025 has seen unprecedented coordination by Brazilian authorities to disrupt organized crime’s infiltration of the fuel supply chain, involving federal, state, and prosecutorial agencies in a nationwide investigation that executed hundreds of search and seizure warrants and froze more than R$1 billion in assets tied to elaborate schemes of tax evasion, money laundering, and product adulteration spanning importation, production, distribution, and retail of fuels (“Hidden Carbon Operation”). The operation exposed the use of fintechs, layered corporate structures and other sophisticated tactics to conceal illicit proceeds and distort market competition.
The impacts on the industry’s activities are a concern to many of its actors, who should be ready to perform rigorous KYC and similar procedures and be prepared for additional complexities when subject to government scrutiny of their activities. For instance, we have been seeing delays in the incorporation of new legal entities set up to operate in the sector, given the level of information requested and assessments by tax authorities prior to granting the relevant registrations. At the same time, measures are very welcome as they aim at leveling the playing field and ensure fair competition in the market.