By Brazil Stock Guide – The Instituto Brasileiro de Petróleo, Gás e Biocombustíveis (IBP) urged President Luiz Inácio Lula da Silva to veto a key provision of PLV 10/2025, warning that the bill’s ex-ante limits on natural-gas reinjection threaten the economics of Brazil’s future oil and gas projects. In a letter sent on Monday (Nov. 17), the group said the law change—adding item XIX to Article 2 of the Petroleum Law (9.478/1997)—would give the National Energy Policy Council (CNPE) powers to set reinjection limits even before blocks are auctioned, ignoring technical realities and creating regulatory uncertainty.
The IBP argues the measure runs counter to the public interest by imposing constraints before operators have access to reservoir data, potentially reducing economic returns to the federal government and states. Sylvie D’Apote, the IBP’s Executive Director for Natural Gas, said the bill requires decisions “without all the variables and information that are mandatory for a proper evaluation and that can only be obtained after the bid round and the start of E&P activities.”
Technical and Economic Risks
According to the institute, early-stage reinjection caps overlook the complexity of subsurface modeling. Reinjection strategies depend on extensive geological, engineering and economic studies conducted only after a discovery is appraised. Locking in a maximum volume before that analysis could cut future gas output—precisely the opposite of what PLV 10/2025 seeks to achieve.
The IBP flags three central risks: First, inappropriate reinjection parameters may diminish oil recovery rates, undermining project viability. Second, rather than boosting supply, rigid limits could discourage new exploration and production (E&P) investments, reducing medium-term domestic gas availability. Third, applying restrictions only to new blocks creates an uneven playing field, violating isonomy and distorting competition among operators with similar conditions.
Why the Current ANP Model Works
The institute stresses that Brazil already has a proven system. Under current rules, operators submit a Development Plan (PD) to the National Petroleum Agency (ANP), which assesses reinjection needs on a case-by-case basis. The ANP, IBP says, has the technical expertise to maximize hydrocarbon recovery, whether through water reinjection, gas-water mixtures or pure gas reinjection.
The performance of existing approvals helps make the case. Major new gas-weighted projects—such as Raia and Sergipe Águas Profundas—were cleared under the current framework and are set to deliver more than 34 million cubic meters per day, expanding domestic supply by around 50% without upfront legal mandates. For the IBP, this demonstrates that flexibility and technical scrutiny, not prescriptive caps, are what unlock large-scale gas output.
Call for a Presidential Veto
The institute reiterates that reinjection strategy is central to project economics and that pre-defined legal limits would cripple an already complex value chain. Beyond the risk of reduced supply, the IBP warns of legal uncertainty, potential fiscal losses and diminished E&P appetite. For these reasons, the group is requesting a partial veto of the provision creating item XIX in Article 2 of the Petroleum Law, calling it essential to preserve investment attractiveness, maintain regulatory stability and safeguard Brazil’s energy security.