Brazil advances natural gas sector with new market programme and cooperation deals

January 2026  |  SPECIAL REPORT: ENERGY & UTILITIES

Financier Worldwide Magazine

January 2026 Issue

The governance of Brazil’s natural gas sector is characterised by a division of responsibilities between the federal and state governments – a direct result of the federative structure established by the 1988 Federal Constitution.

The federal government holds a monopoly over exploration and production activities, as well as the import, export and transportation of natural gas. States, in turn, have the authority to operate local piped gas distribution services.

This federative arrangement has created a fragmented regulatory environment marked by overlapping rules, regulatory inefficiencies and legal uncertainty. These conditions increase investment costs, hinder predictability in decision making and complicate risk assessments for investors. The lack of regulatory uniformity remains one of the main obstacles to the efficient development of infrastructure and the creation of a competitive market in the natural gas sector.

Within this context, Federal Law No. 14,134/2021, known as the New Gas Law, stands out for redesigning the sector’s regulatory framework by strengthening competition, ensuring non-discriminatory access to essential infrastructure and modernising regulatory practices. The legislation introduced significant structural changes, such as organising the gas pipeline network into transportation systems, and reinforced the federal government’s role in coordinating the national natural gas policy – particularly in its interaction with states and the federal district to harmonise and improve applicable rules, including the regulation of free consumers.

The new legislation triggered a systemic restructuring of Brazil’s natural gas market. By establishing clear guidelines for transportation, commercialisation and access to essential infrastructure, it created space for the entry of new players and the adoption of practices aligned with competitive market environments.

A central objective of the law is the opening of the market under non-discriminatory conditions to enhance competition and stimulate sectoral development. Achieving this goal depends directly on a regulatory environment that is uniform and predictable. For this reason, harmonisation between state and federal rules remains essential to avoid overlapping responsibilities and ensure legal certainty for market participants.

Amid this scenario of regulatory fragmentation and uncertainty, new initiatives have emerged to mitigate the challenges. Notably, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) has recently pursued the execution of ‘technical cooperation agreements’ (TCAs) with state regulatory agencies. These instruments have become an institutional response to the challenge of regulatory convergence in a sector marked by overlapping responsibilities, normative divergences and significant heterogeneity among state regulations.

The coordination effort between the Ministry of Mines and Energy, the ANP and subnational entities is expressly provided for in Federal Law No. 14,134/2021 (New Gas Law). The legislation highlights the need for federative cooperation to improve rules applicable to the natural gas industry, recognising that the lack of alignment between federal and state levels undermines efficient market development.

This alignment is especially important for structural themes such as the regulation of free consumers (under article 45), the effectiveness of which depends on consistency between federal rules and state regulations. The TCAS executed by the ANP do not replace legal frameworks nor directly impose uniformity on state regimes. Nonetheless, they represent a concrete step toward reducing regulatory fragmentation.

Their purpose is to create permanent mechanisms of cooperation and institutional dialogue through which federal and state entities can conduct joint studies, exchange information, align technical understandings and develop more consistent regulatory solutions. In this sense, the TCAS operate as cooperative governance instruments aimed at eliminating gaps and fostering a more predictable and integrated regulatory environment.

By establishing a formal and ongoing channel of communication between state regulators and the ANP, the TYCAs contribute to more coherent regulatory decisions – both horizontally (across states) and vertically (between states and the federal government). They also enable a more integrated interpretation of federal legislation, facilitating the understanding of legal provisions, the development of shared technical references and the adoption of convergent regulatory guidelines. This process tends to reduce asymmetries and gaps that have historically hindered the implementation of public policies in the sector.

To date, the ANP has entered into TCAs with four state regulatory agencies: (i) Agenersa (the Rio de Janeiro State Energy and Basic Sanitation Regulatory Agency); (ii) Agrese (the Sergipe State Public Services Regulatory Agency); (iii) Arsepam (the Amazonas State Delegated Public Services Regulatory Agency); and (iv) Agems (the Mato Grosso do Sul State Public Services Regulatory Agency).

The execution of these TCAs is particularly relevant because it involves states with different levels of regulatory maturity, diverse infrastructure conditions and varied models for regulating local piped gas distribution services. By bringing these agencies to the same table, the ANP fosters the development of a common technical agenda that promotes learning, standardisation of methodologies and dissemination of best practices.

Additionally, these instruments strengthen states’ ability to keep pace with federal regulatory developments, facilitating the alignment of state laws and regulations with the guidelines of the New Gas Law. This alignment is essential for Brazil to advance toward a more integrated market, reducing regulatory barriers that affect the viability of gathering, processing, transportation and distribution projects.

The TCAs also contribute to increasing legal certainty in the sector. By improving alignment among regulators, they reduce the likelihood of conflicting interpretations, parallel rulemaking and divergent decisions on sensitive matters – factors that heighten regulatory risk and directly impact investor confidence. Regulatory predictability, therefore, becomes strengthened not only through legislation but also through collaborative implementation by responsible agencies.

Although these TCAs are not a definitive solution to all sectoral challenges, they represent a significant step toward more coordinated governance. They constitute a medium and long term institutional strategy, the effectiveness of which depends on deepening joint analyses, maintaining strong engagement from state agencies and converting dialogue into practical regulatory guidance.

In summary, the TCAs executed by the ANP mark an important milestone in efforts to bring the different regulatory levels of Brazil’s natural gas sector closer together. Their relevance lies less in their formal nature and more in their strategic function: creating a regulatory environment that is more aligned, transparent and conducive to investment, consistent with the objectives of the New Gas Law.

Aligned with the New Gas Law, the New Gas Market Program (NGMP) seeks to consolidate a more competitive, dynamic and efficient environment for the sector, with a focus on reducing input costs and stimulating national economic development. Coordinated by the Ministry of Mines and Energy, together with the Civil Cabinet, the Ministry of Finance, the ANP, the Energy Research Office and the Administrative Council for Economic Defense, the NGMP acts across the entire natural gas value chain – from production flow to distribution – while respecting state authority over local piped gas services.

Among its key aims are optimising existing infrastructure, encouraging new market entrants and promoting competition. However, achieving these objectives requires states to adopt regulations consistent with the principles of market opening and non-discriminatory access established by the New Gas Law.

Thus, both the NGMP and the TCAs advance in the same direction: creating more integrated and coherent regulatory conditions to enable investment, improve system efficiency and allow natural gas to play a more prominent role in industrial competitiveness and economic development in Brazil.

The New Gas Law, the TCAs executed by the ANP and the guidelines of the NGMP together reflect a coordinated movement toward regulatory harmonisation and institutional strengthening of Brazil’s natural gas sector. These initiatives address longstanding challenges associated with regulatory fragmentation and the lack of predictability that have limited sectoral competitiveness and increased perceived investor risk. By promoting stronger alignment between federal and state authorities, they represent important steps toward reducing asymmetries, creating clearer conditions for new market entrants and enabling strategic infrastructure investments.

Expectations are that these coordinated actions will contribute to a more integrated, transparent and efficient regulatory environment. The harmonisation of federal and state rules, combined with the promotion of competitive practices and regulatory modernisation, has the potential to reduce costs, increase natural gas supply and drive industrial sectors that rely heavily on this input. By establishing more solid governance and predictability, Brazil moves closer to a more competitive natural gas market aligned with international standards.

 

Juliana Deguirmendjian is a partner, Julio Barboza is a senior associate and Isadora Alcântara is a law clerk at Tauil & Chequer Advogados in association with Mayer Brown. Ms Deguirmendjian can be contacted on +55 (11) 2504 4605 or by email: jdeguirmendjian@mayerbrown.com. Mr Barboza can be contacted on +55 (11) 2504 4265 or by email: jbarboza@mayerbrown.com. Ms Alcântara can be contacted on +55 (11) 2504 4664 or by email: isilva2@mayerbrown.com.

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BY

Juliana Deguirmendjian, Julio Barboza and Isadora Alcântara

Tauil & Chequer Advogados

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