Petrobras Suspends $1 Billion Gas Pipeline Project Study Amid Regulatory Uncertainty

en.Wedoany.com Reported - Petrobras is reassessing a major natural gas infrastructure investment in Brazil due to regulatory uncertainty stemming from a proposed government plan that could also affect Equinor's Raia project in the Campos Basin.

According to three sources, Petrobras has suspended studies for a $1 billion gas pipeline linked to a deepwater project in the northeastern state of Sergipe, impacted by the aforementioned proposal.

Industry sources said that if the plan materializes, Equinor's Raia project, expected to begin operations in 2028, could also be affected. The project is designed to produce 16 million cubic meters of natural gas per day, meeting approximately 15% of Brazil's demand, and includes a pipeline to Macaé in the state of Rio de Janeiro.

The government proposal, advanced by Brazil's energy regulator ANP, requires large producers to supply part of their natural gas to third parties through auctions to promote competition and lower prices. The ANP is expected to discuss the proposal on Friday, when draft details will be released and a stakeholder consultation period will begin, followed by a vote by the ANP board. If the final version is finalized, it could be implemented as early as next year.

Sources expressed concerns over investment returns: "Who would approve a $1 billion pipeline investment without guarantees that rights will be protected?" Petrobras did not respond to requests for comment; Equinor stated that regulatory predictability and rule stability are crucial for projects requiring billions of dollars in investment and development cycles exceeding ten years.

Petrobras' pipeline plan would transport natural gas from two floating production units in Sergipe to shore, with these units expected to process up to 22 million cubic meters of natural gas and 240,000 barrels of oil per day, with first oil targeted for 2030.

Maintaining low natural gas prices is a key concern for President Luiz Inácio Lula da Silva's administration. Sources noted that the proposal would not increase overall natural gas supply, but merely redistribute volumes among market participants while introducing uncertainty to project returns.