Brazil faces an energy paradox: despite vast natural gas reserves, prices remain high. Unconventional gas, or fracking, emerges as a solution, now awaiting a landmark decision by the STJ to overcome regulatory hurdles and unlock the market.
Brazil is confronting an intriguing contradiction in its energy landscape: it possesses vast natural gas reserves, yet consumers—from thermoelectric plants to the petrochemical industry—still face high costs. This situation is primarily driven by a reliance on associated gas produced alongside oil, extracted largely from the pre-salt fields.
Data from the ANP reveal that, in the third quarter of 2025, approximately 89.7% of the nation’s gas was a byproduct of oil exploration, a proportion that the EPE projects will persist through 2026.
This tight linkage means that the domestic gas supply is not driven by actual demand, but by the pace of oil production. Such a structure does not reflect Brazil’s geological abundance, but rather the rigidity of a system focused on oil monetization, leaving the potential of gas underutilized and the market lacking robust competition among supply sources.
Brazil’s Gas Paradox
The current reality of the gas market in Brazil mirrors this dependency. With the pre-salt accounting for 78% of national production, the extracted gas has a high gas-to-oil ratio, yet reinjecting it into reservoirs is often a key strategy to maximize oil recovery.
While economically logical for operators, this dynamic drastically limits the availability of gas for consumption and industrialization. The cost of this dependency is passed on to the end consumer, who pays a price detached from the country’s actual production capacity.
To advance its energy transition and ensure greater energy security, Brazil urgently needs new supply routes that decouple the gas market from the shadow of oil production.
Limitations of Current Solutions
Discussions regarding opening the gas market have focused on pillars such as restricting the reinjection of associated gas, accessing essential infrastructure like pipelines and regasification terminals, and harmonizing regulations across states.
Although valid, these measures face complex challenges and, in practice, do not address the root of the problem: the insufficiency of an independent gas supply. Imposing limits on reinjection, for example, could be seen as undue interference in the production strategies of concessionaires, creating legal uncertainty and discouraging new investments.
Global experience points to a more effective solution: genuine “gas-on-gas competition,” where different supply sources compete, which has been proven to lead to sustainable and long-lasting price reductions.
The Promise of Unconventional Gas
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If the central issue is the lack of a large-scale supply route not tied to the oil cycle, the most direct answer lies in exploring unconventional gas through hydraulic fracturing, known as fracking.
The exploration of unconventional gas, or shale gas, is not a gamble, but a reality proven by international experience. The United States, for instance, transformed its energy market starting in 2005, moving from an importer to one of the world’s largest natural gas exporters by 2022.
Prices at Henry Hub fell significantly, from levels above $10/MMBtu to the $2 to $4/MMBtu range, fueling the reindustrialization of the petrochemical sector and reconfiguring the global LNG market.
Argentina offers an even more relevant example for Brazil, given the geological similarities. The Vaca Muerta formation, in the Neuquén basin, revolutionized the country’s energy matrix in less than a decade, turning it into a net exporter and recording an energy surplus of $7.8 billion in 2025.
Brazil holds similar potential, with estimates from the U.S. Energy Information Administration (EIA) indicating 245 trillion cubic feet (Tcf) of technically recoverable shale gas, positioning the country as the tenth-largest holder of this resource worldwide. Our proven conventional reserves total only about 20 Tcf.
The Legal Hurdle and the STJ’s Role
The true barrier to exploring unconventional gas in Brazil is not technological or geological, but legal and regulatory. More than 500 municipalities and at least 17 states, including Paraná, have instituted bans on hydraulic fracturing.
Much of this opposition is driven by prejudice regarding the environmental and social risks of fracking, ignoring the significant evolution and safety of the technology over the last 15 years. This overlap of subnational legislation creates a complex legal knot.
The Federal Constitution is clear: underground mineral resources belong to the Union. The regime for oil and natural gas exploration is federal, with the ANP responsible for technical and operational regulation, and Ibama for federal environmental licensing.
It is in this context that the judgment of Case IAC No. 21 by the Superior Court of Justice (STJ) becomes a watershed moment. Scheduled for September 9, 2026, the decision has the potential to resolve this federal controversy and restore legal certainty.
The Future of Natural Gas in Brazil
For unconventional gas to become a vehicle for competition, the country needs a proactive agenda. This includes coordinated environmental licensing, integrating onshore gas into national planning, and a regulatory framework with predictability.
The potential benefits are immense: an independent gas supply will introduce genuine “gas-on-gas competition.” Furthermore, onshore exploration will generate jobs and income in inland regions, something that offshore production does not provide.
This strategy will also pave the way for a broad energy shift, allowing industries to swap diesel for gas, contributing to a low-carbon economy and boosting the energy transition.
While Brazil deliberates, nations like Argentina and the United States are already reaping the rewards of their bets. Authorizing fracking, under strict technical oversight and adequate regulation, is a matter of public policy pragmatism, and the opportunity should not be missed.
