Lula’s Push for Natural Gas Raises Intervention Fears in Brazil

President Luiz Inacio Lula da Silva’s push for more and cheaper natural gas is generating concern that Brazil is turning to interventionist policies in a move that could discourage investments by oil majors including Petroleo Brasileiro SA, Equinor ASA and Shell Plc.

A decree published Tuesday allows Brazil’s oil regulator, known as the ANP, to set the amount of natural gas that oil producers reinject into reservoirs. More than 90% of Brazil’s oil and gas production is at offshore fields, where it can cost billions to transport gas to shore through pipelines. As a result, more than 50% of gas production gets reinjected in a process that also increases reservoir pressure to help produce more oil. The new decree could end up forcing that figure lower, to instead divert more gas to the fuel market.