Brazil opens federal gas market to auctions, giving fertilizer producers first priority

Brazil’s National Energy Policy Council (CNPE) approved a resolution on July 30 authorizing the sale of federally owned natural gas directly to the liberalized market through competitive auctions, a move the government said could cut industrial gas prices by more than 50%. Fertilizer, steel and chemical producers are designated as priority buyers.

The measure updates Brazil’s policy for marketing state-owned gas and authorizes state-owned PPSA to hold short-term auctions from 2026 through 2030 and long-term auctions starting in 2030. Gas will be offered on a competitive basis, breaking Petrobras’s near-monopoly as the dominant buyer of the government’s physical share of pre-salt production.

Brazil’s fertilizer industry depends heavily on imported natural gas as feedstock for nitrogen production. The country imports roughly 80% of its fertilizer needs, and domestic nitrogen output has been constrained by high energy costs. Petrobras restarted some nitrogen fertilizer capacity in 2025, targeting about 20% of domestic demand, but cheaper gas could incentivize further investment.

The first auction is expected in the final two months of 2026, according to the Ministry of Mines and Energy. The resolution also separates the government’s role as resource owner from that of dominant buyer, a distinction market reformers have long considered essential for genuine competition in Brazil’s gas market.

For the fertilizer sector, the timing is notable. Brazil remains the world’s largest fertilizer importer, and supply access has been a growing concern as the Hormuz disruption and Chinese export restrictions tighten global availability of key nutrients.

Source: Argus Media