Brazil’s election run-off to help decide Petrobras’ future

Petrobras is Latin America's largest oil producer

WHAT The presidential run-off in Brazil may decide Petrobras’ future

WHY Bolsonaro sees a larger role for private capital than does Lula

WHAT NEXT The run-off between the two men is on October 25

Brazil’s presidential runoff between the left-wing President Luiz Inácio Lula da Silva and right-winger Senator Flávio Bolsonaro offers sharply different visions for state-controlled Petrobras and the role of government in developing one of the world’s biggest oil provinces.

Brazil produced a record 4.9mn barrels of oil equivalent per day of oil and gas in 2025. It is the the world's eighth-largest oil producer.

Both candidates support further oil and gas development, including increased production, making the contest less about whether Brazil should exploit its hydrocarbons than about who should drive investment, how Petrobras should operate and how closely the industry should be tied to state industrial policy.

Lula’s programme gives Petrobras a central role in expanding refining, petrochemicals, natural gas, fertilisers and shipbuilding as well as lower-carbon businesses, according to an analysis of the candidates’ energy proposals by newspaper Folha de S.Paulo. His programme also calls for increased offshore and onshore oil and gas exploration and redevelopment of mature fields, subject to environmental safeguards.

Bolsonaro’s programme puts greater emphasis on private investment, legal certainty and regulatory predictability, Folha reported. It proposes greater exploitation of Brazil’s oil and gas reserves and increased production rather than setting out the progressive replacement of fossil fuels envisaged in Lula’s programme.

The difference is particularly significant for Petrobras, Latin America’s largest oil producer.

Leaner state and privatisations?

Bolsonaro has advocated a leaner state and privatisations, but his campaign has said it does not plan to privatise Petrobras itself.

The senator’s campaign coordinator Senator Rogério Marinho said in August that Petrobras was strategically important to Brazil and that there was no plan for its privatisation. He said state companies would nevertheless be reviewed for efficiency and did not rule out sales of individual Petrobras assets.

That position leaves open the possibility of shrinking Petrobras’s portfolio while maintaining state control of the parent company.

Bolsonaro told Reuters in December 2025 that he favoured tax cuts, privatisations and a smaller government and wanted to modernise state companies including Petrobras. His economic proposals are clearly intended to move Brazil towards a more market-oriented model than Lula’s.

His government programme subsequently proposed restarting Brazil’s National Privatisation Programme and accelerating concessions. It also said management positions at state companies should, wherever possible, be filled through recruitment based on market criteria rather than political considerations, Folha reported.

Or Petrobras as diversified state-owned company

Lula has taken a substantially different approach since returning to power in 2023, encouraging Petrobras to operate as a diversified energy company and an instrument of Brazilian industrial development.

Petrobras’s 2026-2030 business plan calls for $109bn of investment and describes oil and gas as the company’s top priority while simultaneously expanding refining, petrochemicals, fertilisers, biofuels and other lower-carbon businesses.

The plan allocates $15.8bn to refining, transport, marketing, petrochemicals and fertilisers and envisages increasing refining capacity from 1mn million barrels per day (bpd) to 2.1mn bpd by 2030, Petrobras said. It also earmarks $13bn for energy-transition investments, including low-carbon energy, bioproducts and decarbonisation.

Petrobras Chief Executive Magda Chambriard has described the company under the plan as an integrated energy producer that would contribute to national energy security and Brazil’s development. Petrobras said its planned investment was equivalent to about 5% of total investment in the country.

Oil nevertheless remains at the centre of Lula’s strategy.

Petrobras plans $7.1bn of exploration spending between 2026 and 2030 as it seeks to replace reserves, with the Equatorial Margin among the priority areas, according to the company. Petrobras expects oil production to peak at 2.7mn bpd in 2028 under the current plan.

The Equatorial Margin, which stretches along Brazil’s northern and northeastern Atlantic coast, has become one of the clearest examples of Lula’s determination to combine an energy-transition agenda with continued petroleum expansion.

Lula said in September that the region could become a new pre-salt province and argued that Brazil needed to safeguard and develop its petroleum resources, Reuters reported.

Petrobras this month reported another oil discovery at the Morpho well in the Foz do Amazonas basin off Amapá state. The company regards the Equatorial Margin as its most promising new oil exploration frontier, Reuters reported.

Bolsonaro also favours increased oil and gas development but proposes a greater role for private capital.

He said in June that pre-salt acreage in the Equatorial Margin should return to a concession model, Folha reported. His campaign programme more broadly calls for concessions and private investment as part of efforts to expand infrastructure and energy production.

Brazil currently uses both concession and production-sharing systems for oil and gas acreage. In the pre-salt production-sharing system, companies bid partly on the proportion of profit oil that will be transferred to the government.

October 7 oil auctions

The distinction was visible in oil auctions held on October 7. Brazil offered 13 pre-salt areas under production-sharing contracts alongside more than 300 blocks under the concession regime, according to Brazilian media reports.

Natural gas is another area where Bolsonaro has proposed policy changes.

His government programme calls for a National Energy Security Programme that would increase gas supply and infrastructure and permit production of unconventional gas through fracking, CNN Brasil reported. The programme also proposes investment in refining, gas processing and fuel and gas transportation.

Lula’s programme likewise supports expanding natural gas supply but places Petrobras at the centre of the effort. Petrobras’s current investment plan calls for increased domestic gas availability from its own production and development of new gas products, as well as potential new gas-fired power plants at its Boaventura Energy Complex.

The candidates also differ over how oil and gas development fits into the energy transition.

According to Folha’s comparison of their programmes, Lula proposes expanding renewable energy and biofuels, developing low-emission hydrogen and progressively replacing fossil fuels, while tying those policies to Brazil’s industrial strategy. His programme nevertheless explicitly provides for increased oil and gas exploration.

Bolsonaro’s programme also supports solar and wind power, biofuels and green hydrogen, but emphasises exploiting Brazil’s energy resources to increase supply and reduce costs rather than progressively substituting fossil fuels, according to Folha.

That leaves substantial continuity beneath the political divide: neither candidate is proposing to halt Brazil’s oil expansion.

Sharper difference

Lula’s programme envisages a large, integrated, state-controlled Petrobras using oil and gas investment alongside refining, industrial development and lower-carbon businesses. Petrobras itself says its current strategy seeks to reconcile oil and gas expansion with diversification into areas including petrochemicals, fertilisers and biofuels.

Bolsonaro’s programme envisages a more private-sector-driven energy industry, accelerated concessions and a review of state companies. His campaign says Petrobras would remain state-controlled but has left open the sale of individual assets.

For Brazil’s oil industry, the runoff presents two models that both envisage continued oil and gas growth: one in which Petrobras remains a broad instrument of state energy and industrial policy, and another that would seek to give private capital a larger role while narrowing or restructuring parts of the state company’s activities.