Oil and Gas | Featured News – May 2026

PPSA postpones the 6th Federal Government Oil Auction

On May 8, 2026, the Director of Administration, Finance and Commercialization of Pré-Sal Petróleo S.A. (“PPSA”), Samir Awad, confirmed the decision to postpone the 6th Federal Government Oil Auction (the “Auction”), citing the current volatility in the global oil and gas industry as the reason for the change in schedule. The auction is now expected to take place on August 26, 2026, at B3, in São Paulo.

According to PPSA, the Auction is expected to offer more than 100 million barrels of oil through long-term contracts, with the potential to generate over BRL 20 billion in revenues for the Federal Government. The strategy is intended to provide greater revenue predictability and mitigate the effects of price volatility in international markets.

The oil to be auctioned corresponds to the Federal Government’s share under the production sharing agreements for the Mero, Itapu, Atapu, Sépia, Búzios and Bacalhau fields. According to information released by PPSA, liftings are scheduled to take place from March 2027 to February 2028, except for Bacalhau, whose start is scheduled for November 2026.

ARSESP publishes Technical Note on piped gas swap modalities

On May 7, 2026, the São Paulo State Public Services Regulatory Agency (“ARSESP”) published Technical Note GSR 03 (“Technical Note”), focused on studies for defining and outlining gas swap modalities in the State of São Paulo.

In summary, the Technical Note sets out ARSESP’s view on how swap transactions involving distribution concessionaires, free consumers and other natural gas market participants should be structured. It proposes classifications, presents examples of potential arrangements, addresses contractual aspects and provides the rationale for the potential imposition of a swap charge.

The Technical Note organizes swap transactions into two broad categories, further divided into six illustrative modalities:

(i) Operational swaps: involve shared or physically interconnected infrastructure, with the potential to generate efficiency gains and expand available capacity to the market. These transactions are characterized by gas delivery in the opposite direction of the physical gas flow within the pipeline system, through network optimization. Operational swaps may occur between: (a) a distribution company and a free consumer, through the distribution system, where the free consumer purchases gas originating from a different concession area; or (b) distribution companies, through the distribution network, to supply an isolated user via an interconnection point.

(ii) Commercial swaps: arise from bilateral arrangements aimed at reducing complexity and the costs associated with physical delivery (for example, to enable gas supply across different concession areas through the contractual exchange of equivalent gas volumes, or to meet biomethane demand where no direct physical interconnection exists within the distribution network), without necessarily optimizing infrastructure capacity. Commercial swaps may occur between: (a) a distribution company and a free consumer located in areas without physical interconnection; (b) distribution companies, through the transportation network via their respective city gates; (c) free consumers located in different concession areas; or (d) a distribution company and a free consumer through intra-concession volume adjustments to balance isolated distribution subsystems.

In addition, ARSESP indicates that the final step for implementing a swap transaction is the execution of a Gas Swap Distribution System Use Agreement (Contrato de Uso do Sistema de Distribuição para Troca de Gás).

The Technical Note proposes the minimum provisions that should be included in this contractual arrangement, including, among others: (i) identification of the free consumer, self-producer or self-importer; (ii) location of the consumer unit; (iii) identification of the receipt/interconnection and delivery/interconnection points to be used; (iv) contracted capacity; (v) a description of the cost-allocation assumptions applicable to free consumers connected to each distribution system; (vi) the tariff applicable to the gas swap; (vii) a clause conditioning the effectiveness of the agreement upon ARSESP’s approval; and (viii) the procedures applicable in the event of imbalances, as well as the corresponding compensation mechanisms.

Finally, the Technical Note justifies the imposition of a swap charge based on the additional costs and investments incurred by distribution companies, including operational planning, nominations, commercial and contractual reviews, interconnections, metering infrastructure and network adaptations.

ANP approves new methodology for the reference price of diesel and LPG subsidies

On April 30, 2026, Resolution ANP No. 1,000/2026 was published in an extraordinary edition of the Federal Official Gazette, regulating the methodology for calculating the reference price for granting economic subsidies for the sale of diesel oil and the import of liquefied petroleum gas (“LPG”), established by Provisional Presidential Decrees Nos. 1,340/2026 and 1,349/2026. The rule entered into force on May 1, 2026.

The new Resolution broadly results from adjustments made by ANP following contributions received under Public Consultation No. 04/2026 and from requirements set out in the decrees regulating the subsidy program. According to the Agency, the methodology was improved to more accurately reflect the price formation dynamics of imported diesel, including the influence of the U.S. market on import pricing.

For diesel, Resolution ANP No. 1,000/2026 establishes a new methodology for calculating the reference price, considering elements such as regional sales prices, variation in import parity prices and specific rules for agents acting simultaneously as producers and importers. The rule also provides for retroactive effects for certain methodological adjustments and weighting rules applicable to qualified agents.

For LPG, the rule establishes a specific methodology for calculating the reference price of the import subsidy, based on the Import Parity Price. Section 5 of the Resolution, which addresses the methodology applicable to LPG, was submitted to Public Consultation No. 07/2026, held from May 4 to 8, 2026, to receive contributions from the market and other interested parties.

Subsequently, on May 13, 2026, Resolution ANP No. 1,002/2026 was published, amending Resolution ANP No. 1,000/2026 to adjust the methodology applicable to diesel oil, especially with respect to producers that refine their own domestic crude oil during the Emergency Domestic Fuel Supply Regime, in force from April 7 to May 31, 2026.

Among the main adjustments, the rule introduced a specific formula for calculating the reference price applicable to these agents, with a fixed increase of BRL 0.80/liter related to the economic subsidy, as well as a condition designed to limit the difference in relation to the reference price applicable to importers and producers that refine imported crude oil or domestic crude oil acquired from third parties.

In practical terms, the new rule seeks to align the subsidy calculation methodology with the actual supply and import conditions observed in the market, with potential impacts on the economic attractiveness of the program, the participation of qualified agents and the competitive dynamics among importers, producers and distributors.

ANP to hold workshop to accelerate the exploration phase

On May 21, 2026, from 2:30 p.m. to 6:00 p.m., ANP held the workshop “Acceleration of the Exploration Phase”, aimed at discussing measures to speed up the exploration phase and make the Minimum Exploratory Program (“PEM”) more efficient.

The initiative is part of ANP’s 2025-2026 Regulatory Agenda and assessed measures to accelerate the exploration phase and the PEM, considering optimization of the use of time during the phase, technological advances in the oil and natural gas exploration and production segment, aspects related to the decarbonization of the industry and challenges to improving performance during the exploration phase.

According to ANP, the workshop is expected to support the ongoing Regulatory Impact Analysis (“AIR”), aimed at proposing alternatives to address the regulatory problem identified by the Agency: the late performance of exploration phase milestones under concession agreements for the exploration and production of oil and natural gas.

The topics discussed include:

I. optimization of contractual time and reduction of bottlenecks;
II. technological innovations applied to the E&P segment;
III. decarbonization challenges in the oil and gas industry; and
IV. performance improvement in the initial stages of contracts.

The workshop recording (link) is available on ANP’s YouTube channel.

MME and MMA establish minimum share of waste oils and fats in biodiesel and SAF production

On May 13, 2026, MME and MMA issued Interministerial Ordinance MME/MMA No. 3/2026, which establishes the mandatory use of waste oils and fats (“OGR”) as feedstock in the production of biodiesel, sustainable aviation fuel (“SAF”) and renewable diesel.

The rule sets a minimum percentage of 1% of the total renewable feedstocks used by each producer, in line with the guidelines of CNPE Resolution No. 13/2024. The requirement will be voluntary in 2026 and 2027, becoming mandatory as of January 1, 2028, and will apply only to producers that use oils and fats as production inputs.

Annual compliance will be verified by ANP, which must regulate the monitoring mechanisms, including potential flexibility in cases of insufficient OGR supply.

The Ordinance also provides for triennial reviews of the target, the possibility of offsetting surplus volumes between years and incentives for integrating recycling cooperatives into the supply chain, reinforcing environmental, social and traceability objectives within Brazil’s biofuels policy.

Government publishes Provisional Measure No. 1,358/2026 creating fuel subsidies

An extra edition of the Federal Official Gazette dated May 13, 2026 issued the Provisional Measure No. 1,358/2026 (“MP”), which authorizes the granting of an economic subsidy equivalent to the amount of federal taxes deducted from the sale price of petroleum-derived fuels. The measure aims to mitigate the economic impacts on domestic gasoline and diesel prices resulting from the conflict in the Middle East.

The adopted model allows for an economic subsidy corresponding to the amounts deducted from portions of PIS/Cofins and CIDE levied on the production and importation of gasoline and its components, as well as PIS/Cofins levied on the production and importation of road diesel. The specific amounts will be defined by an act of the Minister of Finance.

To qualify for the benefit, economic agents must, among other requirements, adhere to the program, deduct the subsidy amount from the sale price, and identify the discount in electronic invoices. They must also provide information to the ANP, which will be responsible for calculating and paying the subsidy amounts within up to 30 days of the request. The MP further provides that the expenses resulting from the subsidy are discretionary and will be funded through ANP budget allocations, subject to budgetary and financial availability.

The subsidy will initially remain in force for two months and may be extended.

CARF Recognizes the Application of Repetro-Sped to an Offshore Support Vessel with Accommodation Function (Flotel)

On April 15, 2026, CARF made public a decision cancelling a tax assessment related to the importation of an offshore support vessel with accommodation function (flotel) under the Repetro-Sped regime.

The tax authorities had taken the position that the vessel should be characterized as a flotel, rather than as a Maintenance and Safety Unit (UMS), which would prevent the application of the special regime.

CARF, however, concluded that vessels intended to support, maintain and ensure the safety of oil and natural gas exploration and production activities may be admitted under Repetro-Sped, even if they also perform an accommodation function for offshore workers.

The panel emphasized that, in this context, onboard accommodation is functionally connected to offshore activities and does not undermine the essential nature of the vessel, particularly considering the logistical challenges involved in the daily transportation of crews. The decision also considered evidence that the unit performed other operational support activities, such as cargo handling, use of cranes, workshops and access to the FPSO.

CARF rejects transfer pricing adjustments in platform chartering, but upholds stand‑alone penalty on monthly estimated taxes

On April 10, 2026, CARF released a decision concerning fiscal year 2019, which discussed, among other issues, IRPJ and CSLL assessments arising from transfer pricing adjustments in platform charter agreements.

With respect to transfer pricing, CARF upheld the cancellation of the tax disallowance. The tax authorities had used the initial term of the charter agreements as a proxy for the lessors’ investment payback period. According to the panel, this criterion could only be adopted upon technical evidence demonstrating its alignment with the economic useful life of the assets, which was not established.

STF reviews redistribution of oil royalties, but judgment is suspended following a request for further review

On May 6, 2026, the Brazilian Federal Supreme Court (“STF”) began the judgment of Direct Actions of Unconstitutionality (“ADIs”) Nos. 4916, 4917, 4918, 4920, and 5038, which challenge provisions of Law No. 12,734/2012 (“Royalties Law”). The statute altered the criteria for distributing royalties and special participations between producing and non-producing entities. The application of these rules has remained suspended by injunction since 2013.

In the vote granted at the subsequent session, Reporting Justice Cármen Lúcia argued that the legislative changes went beyond a simple adjustment of percentages, creating an imbalance in the federal pact. In her view, the legislation departed from the constitutional logic of compensation directed at entities directly affected by the exploitation activity.

In conclusion, Justice Cármen Lúcia found that a structural change in the royalty distribution framework would require a constitutional amendment.

Following the reporting vote, the trial was suspended due to a request for further review (pedido de vista) by Justice Flavio Dino, justified by the need for a more detailed analysis of issues where potential divergence was identified, especially in light of legislative changes over the past two decades. If the Court upholds the constitutionality of the law and revokes the injunction, a significant fiscal impact is expected for the Federal Government and producing states, with estimated losses in the billions of Reais. There is currently no date set for the resumption of the judgment.

Lower House reviews bill allowing use of oil revenues to reduce fuel prices

The Chamber of Deputies may vote on Complementary Bill No. 114/2026, which authorizes the use of oil and gas revenues to offset reductions in fuel-related taxes, by creating an exception to the Fiscal Responsibility Law (“LRF”). The proposal is being treated as a priority by the government.

The reporting congresswoman, Marussa Boldrin (Republicanos-GO party), is expected to submit an opinion with adjustments, including strengthening the rule requiring the maintenance of ethanol’s competitiveness relative to gasoline.

The Bill provides for the use of resources such as royalties, the Pre-Salt Social Fund, Corporate Income Tax (IRPJ) and Social Contribution on Net Profits (CSLL) from the sector, dividends from state-owned companies, and the export tax introduced in March. There is pressure to expand the allocation of these funds to finance rural debt, but the measure faces resistance from the federal executive branch.

STJ postpones judgment on PIS/Cofins tax credits in the fuel sector

The 1st Section of the Superior Court of Justice (“STJ”) has postponed the resumption of the trial of Theme 1339, which addresses the right to maintain PIS/Cofins tax credits in light of the changes introduced by Complementary Law No. 192/2022 to the tax regime applicable to fuels. The case (Special Appeal No. 2,124,940) is expected to return to trial in June.

Complementary Law No. 192/2022 introduced relevant changes to fuel taxation and gave rise to controversy regarding the effects of zero-rate reductions of PIS and Cofins contributions to certain fuels, particularly in regard to the possibility for economic agents to take advantage of tax credits in the subsequent stages of the chain following the producer or importer..

So far, only Reporting Justice Gurgel de Faria has presented a vote, unfavorable to taxpayers. In his view, the legislation did not eliminate the single-phase regime, nor did it exceptionally authorize the appropriation of credits by downstream economic agents.

Taxpayers argue that the statute effectively, at least temporarily, relieved the fuel supply chain, thereby allowing the generation of credits during its period of effectiveness.Lower House reviews bill allowing use of oil revenues to reduce fuel prices

The Chamber of Deputies may vote on Complementary Bill No. 114/2026, which authorizes the use of oil and gas revenues to offset reductions in fuel-related taxes, by creating an exception to the Fiscal Responsibility Law (“LRF”). The proposal is being treated as a priority by the government.

The reporting congresswoman, Marussa Boldrin (Republicanos-GO party), is expected to submit an opinion with adjustments, including strengthening the rule requiring the maintenance of ethanol’s competitiveness relative to gasoline.

The Bill provides for the use of resources such as royalties, the Pre-Salt Social Fund, Corporate Income Tax (IRPJ) and Social Contribution on Net Profits (CSLL) from the sector, dividends from state-owned companies, and the export tax introduced in March. There is pressure to expand the allocation of these funds to finance rural debt, but the measure faces resistance from the federal executive branch.

STJ postpones judgment on PIS/Cofins tax credits in the fuel sector

The 1st Section of the Superior Court of Justice (“STJ”) has postponed the resumption of the trial of Theme 1339, which addresses the right to maintain PIS/Cofins tax credits in light of the changes introduced by Complementary Law No. 192/2022 to the tax regime applicable to fuels. The case (Special Appeal No. 2,124,940) is expected to return to trial in June.

Complementary Law No. 192/2022 introduced relevant changes to fuel taxation and gave rise to controversy regarding the effects of zero-rate reductions of PIS and Cofins contributions to certain fuels, particularly in regard to the possibility for economic agents to take advantage of tax credits in the subsequent stages of the chain following the producer or importer..

So far, only Reporting Justice Gurgel de Faria has presented a vote, unfavorable to taxpayers. In his view, the legislation did not eliminate the single-phase regime, nor did it exceptionally authorize the appropriation of credits by downstream economic agents.

Taxpayers argue that the statute effectively, at least temporarily, relieved the fuel supply chain, thereby allowing the generation of credits during its period of effectiveness.

This content is part of the Oil and Gas Newsletter for the month of May 2026, gathering the main sector highlights of the period. We emphasize that this material is for informational purposes only. Our team is available to provide additional information on these and other topics.