Why Brazil’s combative energy minister craves the spotlight

Brazil's mines and energy minister (MME), Alexandre Silveira – who has clashed publicly with Petrobras CEO Jean Paul Prates, much to the chagrin of President Luiz Inácio Lula da Silva – may seek to maintain himself in the spotlight ahead of the country's October municipal elections.

"The minister is a very traditional politician and has his own agenda. Elections are coming up and he needs to draw attention to himself so that he can eventually run for office," an energy industry source tells BNamericas.  

Silveira, who belongs to the social democratic party (PSD), is reportedly allying himself with President Lula's workers' party (PT) by supporting the ruling party's candidates in mayoral elections in his home state of Minas Gerais in exchange for its support to remain at the ministry's helm and an endorsement for a potential senate run in 2026.

One of Silveira's main interests lies in the natural gas segment, where he believes the Lula administration must work in tandem with congress and regulator ANP by issuing decrees to cover legislative and regulatory gaps. 

One issue is access to essential third-party infrastructure (pipelines and gas processing units), including the rates to use Petrobras' infrastructure. It's seen as a critical barrier as suppliers plan how to flow the gas that, in theory, they will no longer reinject in order to expand the national supply, as the MME minister wants. More than half of the 140MMm³/day produced in Brazil is reinjected. 

At the Gas Week conference on April 18, Silveira announced measures for the natural gas sector that have the potential to inject almost 100bn reais (US$19.3bn) into the economy and create more than 430,000 jobs. 

"We know that the reindustrialization of Brazil represents an increase in GDP, an increase in revenue, tax relief, expansion of infrastructure, jobs and income for Brazilians. Let's make better use of the natural gas we produce here. We can't keep reinjecting half of this wealth that is so precious to our people," said the minister.

The MME's proposals are designed to incentivize a gas supply shock, with access to the flow, processing and transportation infrastructure, reducing costs for the whole industry.

The Rota 3 gas pipeline project, which aims to expand the flow from the Santos basin pre-salt, will be brought forward to the second half of this year, offering a further 18Mm³/day.

"We're going to combat abuses and pay a fair price for the gas flow and processing infrastructures, with firmer regulation. We must also consider the depreciation and amortization of assets. You can't keep paying all your life for an infrastructure that’s already been amortized," said Silveira.

The minister's Gas Week speech can be understood as another jab at Petrobras, which owns most of the country's gas infrastructure. 

In addition to Rota 3, Brazil will expand its gas supply with Equinor's Raia project (BM-C-33) and Sergipe Deepwater (SEAP), as well as the exploration of unconventional gas, biomethane and the connection to the Vaca Muerta shale play in Argentina.

Another point put forward by the minister during the event was to facilitate the infrastructure for state-owned company Pré-Sal Petróleo S.A (PPSA) so that the federal government’s gas, as well as the oil, can be sold directly to the market and not just at the "wellhead."

On April 22, Silveira took part in the launch of a diagnostic study of the natural gas sector and a regulatory harmonization roadmap, an initiative of the development, industry, trade and services ministry (MDIC) in partnership with the Competitive Brazil Movement (MBC) and the Getúlio Vargas Foundation (FGV). 

The document presented is in line with the actions of the working group of the MME's federal Gás para empregar (gas for employment) program, which concluded its activities this month.

"Access to infrastructure and fair payment for gas flow and processing, combined with firm and harmonious regulation between federal and state rules, represent a step forward in opening up the natural gas market, creating hundreds of thousands of jobs and developing our country," said the minister. 

Silveira is also concerned about oil prices. He recently set up a working group to monitor the price of the commodity in the face of the Middle East conflict.

"We’re vigilant on the subject and that's why I've ordered the creation of a working group to monitor the fluctuation in the price of Brent oil so that we can take action using the mechanisms we already have at our disposal while always respecting the governance of the companies that operate in Brazil," said Silveira.

The group will produce daily reports on oil prices, both in dollars and reais. The measure, according to the government, aims to provide a diagnosis geared to the Brazilian reality, which is exposed to both the variation in the price of a barrel and the dollar. 

Silveira's concerns about oil and gas prices raised eyebrows among investors, who are worried about the possibility of further federal intervention in Petrobras' fuel pricing policy.  

According to the local fuel importers association Abicom, the average price gap at Petrobras' hubs in relation to the import parity price (PPI) for diesel and gasoline was 9% and 17% on April 23.

ELECTRIC POWER

It's important to note that Silveira doesn't act alone and that his actions also reflect the wishes of his boss, President Lula. Both were pictured together on October 10 at the signing of the provisional measure on renewable energies and the reduction of power rate impacts. 

According to the CEO of electric power corporate association ABCE and energy consumer association Anace, the measure will not solve the problem of rising energy rates in the long term – it will only postpone it. 

Meanwhile, Silveira has been paying special attention to the case of electricity distribution concessions, pressuring distributors such as Enel in São Paulo for service improvements. 

"The distribution sector comes under the most pressure because it is at the cutting edge and deals directly with the population. We need to improve the infrastructure and the indicators so that consumers are well served," he said at the Quality Distribution for Inclusion and Energy Transition Forum in Brasília on April 17.

Silveira has also been active on the international stage, where he has emphasized the energy transition. "We need effective action to ensure that the flow of investment in the energy transition reaches developing countries on a larger scale," Silveira said in his speech at the G20 energy transition working group earlier this week.