By Brazil Stock Guide – Brazil’s oil and gas industry group welcomed the government’s decision to veto changes to the country’s oil reference-price formula while warning that a separate measure granting the CNPE power to cap natural-gas reinjection in future exploration areas could threaten project viability.
The Brazilian Petroleum, Gas and Biofuels Institute (IBP) said President Luiz Inácio Lula da Silva’s veto of Article 15 of PLV 10/2025 preserves a technically sound and regulator-driven model for calculating royalties and special participations. The current framework, set by the ANP, uses FOB pricing at the offshore measurement point and excludes freight, insurance and other logistics costs. According to IBP, maintaining this methodology ensures legal certainty, protects investment decisions and supports stable revenue flows for the federal government, states and municipalities.
IBP noted that Brazil’s existing system is both operationally robust and fiscally effective, with recent adjustments projected to add roughly R$1.12 billion per year to government take. The veto, the group said, prevents Brazil from taxing transport and services that occur after production is measured — a shift that would have distorted valuations and introduced instability into long-term upstream planning.
At the same time, IBP expressed concern over the provision maintained in the final legislation that allows the National Council for Energy Policy (CNPE) to set limits on gas reinjection in new exploration blocks. Reinjection is a critical engineering and economic tool for reservoir management and is currently approved on a field-by-field basis in development plans vetted by the ANP.
Imposing generic caps, IBP warned, could reduce oil recovery, weaken project profitability and ultimately lower royalty and special-participation revenues. The institute said it will pursue technical dialogue with CNPE and other stakeholders to ensure that any future rules consider geological conditions, reservoir behavior and economic feasibility.