Brazil–China Mega Rail Deal and Expanding Chinese Influence in Brazil’s Infrastructure, Ports, and Energy

Brazil and China have taken a major step toward deepening their strategic partnership with the signing of a new agreement to restart studies for a transcontinental railway linking the Atlantic and Pacific Oceans. The project, often called the Brazil–Peru Bioceanic Railway, would begin on Brazil’s northeastern coast, in Bahia, cross several states, enter Peru, and reach the Port of Chancay, which is a mega–terminal recently inaugurated by Chinese president Xi Jinping and financed through China’s global Belt and Road Initiative.

Although the accord does not authorize construction yet, it revives a plan first studied in 2015 and shelved afterward. Officials from both countries emphasized that updated studies are essential to move the project forward. The railway could cut export transit times from Brazil to Asia from 40 days to about 28, significantly boosting competitiveness for agricultural and mineral shipments.

The initiative aligns with China’s broader strategy in Latin America: using infrastructure investment to expand commercial, logistical, and diplomatic influence. Even though Brazil is not formally part of the Belt and Road Initiative, Chinese capital is already deeply embedded across the country’s key economic sectors.

China’s Expanding Footprint in Brazil

Agriculture:

China has quietly become a dominant player in Brazil’s grain trade. COFCO, China’s state-owned agribusiness giant, is now Brazil’s largest agricultural exporter, handling 17 million tons of soy, corn, and sugar last year. Nearly 80% of Brazilian soy goes to China, and 9% of all soy sacks exported pass through COFCO-operated terminals.

In the Port of Santos, COFCO is boosting its capacity from 4 to 14 million tons per year with its new STS11 terminal, set to become its largest facility outside China.

Ports and Logistics:

China also controls major container and oil logistics hubs:

• CMPorts, China’s biggest port operator, controls the TCP terminal in Paranaguá, responsible for 11% of Brazil’s container movement. The company recently committed R$ 1.5 billion to expand operations.

• CMPorts is set to acquire 70% of the Açu oil terminal, which handles 30% of Brazil’s crude exports and potentially grant China influence over one-fifth of Brazil’s oil outflow.

Rail and Passenger Transport:

Chinese influence has expanded into passenger mobility as well.

The São Paulo–Campinas Intercity Train, auctioned in 2024, is being built by a consortium in which CRRC, China’s state rail manufacturer, holds a 40% stake. The project requires R$ 14 billion and is slated to open in 2031.

CRRC also secured a R$ 3.1 billion contract in 2025 to supply 44 new trains to the São Paulo Metro.

Energy and Industrial Ecosystem:

China’s infrastructure network in Brazil is supported by Chinese-owned energy giants:

• State Grid, controlling CPFL, manages 15% of Brazilian electricity distribution.

• CTG (China Three Gorges) produces 3.5% of Brazil’s energy.

These companies rely heavily on Chinese-made solar panels, which represent 80% of global production.

Meanwhile, part of the oil passing through Açu comes from Chinese offshore operators CNOOC, CNPC, and Sinopec, reinforcing an integrated investment chain.

A Global Strategy That Works

Experts say China’s approach — creating interconnected investments across rail, energy, ports, and agriculture — mirrors what some Brazilian entrepreneurs once dreamed of, but with far greater financial and political backing. Unlike failed private attempts at building integrated industrial ecosystems, China’s state-supported model has succeeded across continents.

What Comes Next?

The revived bioceanic railway studies signal a new phase in Brazil–China relations. If the project moves ahead, it will reshape South American logistics, accelerate trade with Asia, and deepen China’s already significant influence in Brazil’s most strategic sectors — from grains to oil, from electricity to railways.

And although Brazil has not officially joined the Belt and Road Initiative, the scale and depth of Chinese investments suggest that, in practice, the partnership is already well underway.

China, for example, avoided the rise of slums through long-term urban planning that decentralized economic development and controlled internal migration through the hukou system. By creating economic hubs across the country, it reduced the need for mass movement to major cities.

Brazil took the opposite path: jobs concentrated in Rio de Janeiro and São Paulo, triggering disorganized urban growth, the expansion of favelas, and the strengthening of criminal networks, fueled in part by the country’s role as a major drug route.

Experts argue that recurring police operations have failed to address the structural causes of urban disorder. Lasting solutions will require coordinated, long-term public policies that move beyond political polarization and primarily target large infrastructure projects, which are essential because they make domestic production more competitive and attract new businesses. At the same time, they generate direct and indirect jobs, increasing people’s purchasing power and further boosting the economy.

Brazil’s Unemployment Hits Record Low, but Job Creation Slows: Economists Warn of a Productivity Bottleneck

Brazil’s labor market continues to defy expectations as new data released this Friday, November 28, shows the national unemployment rate falling to 5.4%, the lowest level recorded since the current PNAD Contínua survey series began in 2012. Despite global markets operating with reduced liquidity due to the U.S. Thanksgiving holiday, Brazil stands out with what analysts describe as near-full employment.

However, beneath the headline and historic number, specialists warn that job creation is decelerating, even as the market remains historically tight.

Slowing Job Creation, Despite Record-Low Unemployment

According to the PNAD Contínua, unemployment is dropping further and is expected to reach 5.3% by the end of 2025, according to projections from labor-market economist Bruno Imaizumi of 4intelligence. But seasonally adjusted data reveals a more nuanced picture: once temporary or calendar-related effects are removed, Brazil’s unemployment rate stands at 5.8%, a low level, but one that has remained flat since July, indicating stabilization rather than continued improvement.

Economists also foresee a temporary rise in unemployment in early 2026, driven by the annual reversal of holiday-season hiring. Companies typically lay off workers in the first quarter after expanding production and sales for the Christmas period. Still, even with this seasonal uptick, Imaizumi expects the early-2026 unemployment rate to remain below the level seen in the first quarter of 2025.

Caged Data Confirms Labor-Market Cooldown

Signs of deceleration are also visible in the latest Caged report, which tracks formal employment based on company filings. In October, Brazil created 85,000 formal jobs, a 35% decline compared with October 2024 and the weakest result for the month in the past five years. The slowdown reinforces economists’ assessment that while the labor market is still hot, its momentum is gradually easing.

A Heated Labor Market Still Showing Structural Weakness

Brazil’s job market remains historically strong. Companies report difficulty finding workers, voluntary resignations have hit multi-year highs, and admission wages have risen 7%, indicating strong competition for labor. Real wages are up 4% year over year, and the real wage mass has increased by 5.5%, helping 1 million families leave the Bolsa Família program as average monthly household income climbed from R$3,000 to R$3,500.

But economists as Paulo Gala warn that Brazil’s growth is concentrated in low-complexity service sectors, with only modest industrial recovery and limited gains in productivity or technological sophistication. This pattern reflects a neoclassical growth model, where employment expands but productivity stagnates, creating structural limits for wage increases and fueling inflationary pressure.

Without productivity gains, companies protect margins by raising prices, risking an economy that may stall under inflation, unable to sustain current levels of wage growth and job creation over the long term.

Monetary Policy Outlook

Given the combination of record-low unemployment and slowing, but still tight, labor indicators, analysts argue that Brazil’s Central Bank is unlikely to begin cutting interest rates in January. A possible move may come in March or April, depending on how inflation, productivity, and labor-market dynamics evolve.

The Challenge Ahead

Brazil’s economy is generating jobs, lifting incomes, and reducing dependency on social programs — all milestones worth celebrating. But economists stress that without a shift toward higher productivity, reindustrialization, and greater economic complexity, the current cycle may be difficult to sustain.

The country now faces the critical challenge of transforming today’s labor-market strength into long-term, productivity-driven, sustainable growth.

What Is SEGOB? How Brazil’s New Biomethane Certificate Market Will Work in 2026

Brazil’s new SEGOB system is set to reshape the biomethane market in 2026, creating a regulated pathway for producers to generate and sell environmental certificates tied to biomethane production. Today, much of the biomethane used for self-consumption is not registered with ANP because producers do not need to meet strict fuel-quality standards when using the gas internally. With SEGOB, however, internal users can monetize environmental attributes, as long as their plants comply with ANP specifications and certification rules.

This change in regulations has made it very significant for the biogas professional. The installations will have to purchase chromatographs, have lab reports, and install monitoring systems (all these upgrades could together cost up to R$ 2 million). The large producers will be able to adapt without much of a problem, but the small ones might find it hard to bear the compliance costs.

One of the main doubts is whether double counting will happen or not. The ANP has to decide whether SEGOB can be used alongside other environmental certificates, for example, Guarantees of Origin or RenovaBio CBIOs. The matter is very crucial for landfill-based biomethane as theoretically the same molecule could give rise to two different certificates.

The first mandatory target of 240,000 m³/day of biomethane is seen as small and not creating a new wave of projects. Biomethane-producing facilities are constructed because the buyers need the molecule and not just the certificate. In any case, the mandate can prove advantageous for financing as it allows for long-term contracts with gas distributors having high credit ratings.

In 2026, the SEGOB market will enter a learning phase. Producers, certifiers, and registrars will need to adapt quickly, and the system’s evolution will depend on ANP’s final definitions, especially on validity rules, autoconsumption verification, environmental claims, and double-counting prevention. Broader discussion is expected throughout 2026, including at industry events such as IRC Day, when the regulatory framework and market behavior will be clearer.

Apart from that, the new provisions explicitly state that it is not sufficient for environmental declarations to merely procure physical biomethane. Along with it, the companies have to acquire the respective origin certificate as well. This move not only aligns with the Greenhouse Gas (GHG) protocol but also empowers the voluntary market by giving corporations the authority to retire the certificates as part of their decarbonization plans.

Biogas vs. Biomethane: Key Differences and Why They Matter for Brazil’s Clean Energy Future

Biogas and biomethane, are you familiar with them? They are not identical products, though their names are quite alike. Nonetheless, by these means the waste of daily life could be transformed into energy that is both clean and renewable.

In Brazil, organic waste is a problem that is often associated with environment. Yet this very material can turn out to be one of the major energy solutions of the country.

What Is Biogas?

Biogas is produced naturally when organic matter decomposes in environments without oxygen. This includes food scraps, animal manure, agricultural waste, vinasse from ethanol production, and the organic fraction of urban waste that ends up in landfills.

During decomposition, microorganisms break down this material and release biogas, a mixture primarily composed of carbon dioxide (CO₂) and methane (CH₄).

And here’s the key point:

Methane is a greenhouse gas about 25 times more powerful than CO₂.

If released into the atmosphere, it accelerates global warming. But when captured and treated, methane becomes a renewable energy source with significant environmental and economic value.

Today, biogas is widely used around the world to produce electricity, heat, and fuel. In Europe, industrial plants convert agricultural waste into energy capable of supplying entire communities.

Brazil’s Untapped Potential

With a strong agricultural sector and a high volume of urban waste, Brazil has one of the world’s largest potentials for biogas and biomethane production.

Because the country already has a predominantly clean electricity mix, the greatest opportunity lies in upgrading biogas to biomethane.

What Is Biomethane?

To produce biomethane, biogas undergoes purification. During this process, impurities are removed, humidity is eliminated, and CO₂ and nitrogen are separated.

The result is biomethane, a gas containing around 95% methane, with high calorific value and performance comparable to natural gas. In other words, a 100% renewable fuel capable of replacing fossil fuels in industry and transportation.

Biomethane can:

• Supply boilers, furnaces, burners, and other industrial equipment
• Fuel light and heavy vehicle fleets, including buses and trucks
• Reduce dependence on diesel and natural gas
• Lower emissions and improve energy efficiency
• Double Environmental Benefit
• Using biomethane offers two major environmental gains:
• It prevents methane from waste from reaching the atmosphere.
• It replaces fossil fuels, significantly reducing greenhouse gas emissions.

Replacing the diesel used by a single truck is comparable to planting more than 100 trees per year, showing how large-scale adoption can generate massive climate benefits.

Driving Local Development

Produced in Brazil, biomethane strengthens the local economy, creates green jobs, and stimulates new value chains. Every ton of CO₂ avoided contributes directly to national decarbonization and the global energy transition.

Biogas + Biomethane: A Circular Economy Solution

To sum up:

Biogas is generated from the decomposition of organic waste.

Biomethane is the upgraded, purified version of biogas, a high-efficiency, 100% renewable fuel capable of replacing fossil sources in industry and transportation.

This technology brings together circular economy principles, sustainability, and innovation, positioning Brazil as a global leader in clean energy.

Unioeste Boosts Renewable Energy Innovation in Western Paraná

Unioeste (Toledo campus) is emerging as a key research center for renewable energy in western Paraná, in the southern region of Brazil, a region dominated by agroindustry and high waste production. Led by professor Carlos Eduardo Borba, the university is developing advanced technologies to convert locally abundant biogas into biomethane and hydrogen, clean fuels essential for Brazil’s energy transition.

The team focuses on two core areas:

Biomethane production through selective adsorption that removes CO₂ and H₂S, creating a renewable fuel comparable to natural gas.

Hydrogen-rich syngas generation using dry reforming and shift reactions to transform methane and CO₂ into high-value industrial gases.

The research integrates major innovation networks such as NAPI-H2 and NAPI-Biogás and uses advanced mathematical models to determine the most efficient and economical use of biogas in each scenario.

These technologies help reduce methane emissions, convert agricultural waste into energy, and support cleaner transportation and industrial processes. Unioeste strengthens the regional circular economy by turning scientific research into real-world sustainable solutions.

New Oil Discovery in Campos Basin Boosts Petrobras’ (PETR3; PETR4) 2025 Exploration Record

Petrobras revealed a new oil discovery this week in the Campos Basin, off the coast of Rio de Janeiro, reinforcing momentum in what has become one of its strongest exploration cycles in years. The find, located 108 kilometers from the coast in the southwestern portion of the Tartaruga Verde field, sits in the post-salt layer at a relatively shallow depth of 734 meters, conditions the company says will help reduce extraction costs.

This marks Petrobras’ third oil discovery of 2025, following earlier announcements in February and May in the prolific Santos Basin. Unlike those pre-salt finds, located nearly 2,000 meters underwater, the latest discovery is in a more accessible geological layer.

According to sources familiar with the project, Petrobras plans to accelerate development by leveraging existing platforms and infrastructure. A dedicated working group will design the production strategy, which is expected to rely on pipeline connections to nearby facilities with available processing capacity.

The new discovery fits perfectly with Petrobras' main plan to restore the Campos Basin which used to lead Brazil's oil production but currently produces only around 20% of the country's total output. According to analysts production levels have the potential to increase from 820000 barrels per day to reach 1 million barrels per day. 

The announcement comes as production levels reach their highest point. In the third quarter of 2025, Petrobras’ operated output reached 4.5 million barrels of oil equivalent per day, with the company itself producing 3.1 million barrels, a significant increase compared to the same period in 2024. 

The company plans to increase its exploration activities on the Equatorial Margin which scientists estimate contains 30 billion barrels of oil that exceed Petrobras' current reserves by almost three times. 

The company directs large financial resources toward maintaining its fast exploration and production growth. The third quarter saw CAPEX reach its highest level at US$5.5 billion which represents a 28.6% increase in total investments from the previous year.

The company has achieved strong performance results which provide benefits to its shareholders. 

Petrobras distributed more than R$ 32 billion in dividends across the first three quarters of 2025 and is projected to deliver an annual dividend yield above 9% at current share prices. 

Through recent discoveries and increased production efforts and substantial funding dedicated to unexplored areas Petrobras continues to strengthen its position as a top-performing global oil producer.

Brazil’s Biogas Sector Accelerates, With Biomethane Set to Surge by 2032

National policies for transforming waste into energy were a highlight of the roundtable “Applications of Biogas in the Brazilian Agro-Industry,” held in Belém (PA) this month. The discussion took place at the House of Science, a space hosted by the Ministry of Science, Technology and Innovation (MCTI) at the United Nations Climate Change Conference (COP30).

In recent years, Brazil has been undergoing a true revolution with regard to biogas and bioethanol. The former is a renewable energy source generated from the decomposition of organic waste produced in different economic activities. The latter is a flammable biofuel produced from the fermentation of plant biomass, such as sugarcane, corn, and beet, and their residues, such as bagasse.

Brazil's biogas industry will experience a period of quick growth according to the 2024 Biogas Outlook from SEI Biogás. The report shows that the country operates 1,633 biogas plants which represents an 18% increase in renewable gas production comparing to 2023. 

Therefore Brazil's renewable energy landscape is undergoing a significant transformation, driven by the burgeoning potential of biogas, biomethane, and waste-derived fuels. Recent policy discussions and market data underscore the country's ambition to leverage organic waste and residues to enhance energy security, reduce reliance on fossil fuels, and meet environmental sustainability goals. This report synthesizes the current state, future projections, and key regulatory dynamics shaping Brazil's waste-to-energy sector.

The Biogas and Biomethane Revolution

Biogas, a renewable energy source generated from the decomposition of organic waste, and bioethanol, a flammable biofuel produced from plant biomass, are at the forefront of this energy shift. Brazil's biogas industry is poised for a period of rapid expansion, fueled by improved regulations, favorable economic conditions, and the growth of integrated waste management systems.

According to the 2024 Biogas Outlook from SEI Biogás, the country currently operates 1,633 biogas plants, representing an 18% increase in renewable gas production compared to 2023. This growth is a direct result of three primary factors:

1. Improved Regulatory Frameworks: Creating a more predictable and attractive investment environment;

2. Favorable Economic Conditions: Making biogas projects increasingly competitive;

3. Integrated Waste Management: Expanding the availability of feedstock for biogas production.

Looking ahead, specialists project a profound energy transformation. Talyta Viana, Regulatory Technical Coordinator at ABIOGÁS, projected that Brazil could reach 200 biomethane plants by 2032. These facilities would be capable of generating 7.92 million cubic meters of biomethane per day, which is enough to supply over 10% of the nation’s 2024 natural gas demand.

The sugar-energy sector is expected to be a crucial anchor for this growth, with Viana noting that "More than 52% of upcoming projects will rely on sugarcane residues such as vinasse, filter cake, and potentially bagasse and straw, which are under technological assessment." With strong feedstock availability and a favorable regulatory landscape, analysts predict that biomethane production could triple by 2026, positioning Brazil as a global leader in renewable gas.

Regulatory Momentum and Industry Leadership

The sector's positive trajectory was a key highlight at the roundtable “Applications of Biogas in the Brazilian Agro-Industry,” held in Belém (PA) during the United Nations Climate Change Conference (COP30).

The Brazilian Association of Waste-to-Energy (BREM) is playing a central role in advocating for and shaping the regulatory environment. A discussion hosted by Gás Orgânico, featuring CEO Giovane Rosa and BREM President Yuri Schmitke, demonstrated the positive sector trends resulting from recent regulatory changes.

A crucial turning point for the industry was the federal government's approval of the “Fuel of the Future” law, which BREM actively supported. Following this legislative success, BREM is now working to establish the National Biomethane Zero Program and a biogas electricity certification system to ensure these resources are properly valued.

BREM's efforts extend to integrating biogas into the broader energy matrix. Schmitke highlighted how biogas systems can complement distributed solar power by using gasometers to store biogas when solar generation is high and release it when solar power decreases, thereby stabilizing the grid.

Furthermore, BREM has made an extensive contribution to the development of Brazil’s sustainable finance taxonomy. The association submitted a 45-page report, created with the support of the European Union Climate UCD project, which studied successful European regulatory models. The example of Denmark, which already supplies 30% renewable gas to its grid and aims for 100% by 2030 through certificates of origin, serves as a model for Brazil. To support further technical and regulatory progress, BREM has signed cooperation agreements with both the Brazilian Electricity Commercialization Chamber (CCE) and the European Biogas Association.

Untapped Potential and Remaining Regulatory Gaps

Despite the strong momentum in biogas, the broader waste-derived fuels sector still faces regulatory challenges.

Refuse-Derived Fuel (CDR)

Brazil is already utilizing Refuse-Derived Fuel (CDR), wich is a blend of industrial and urban waste, to replace fossil fuels in cement production. Currently, the country replaces 30% of the fuel used in cement production with CDR, substituting petroleum coke in clinker manufacturing. Experts believe this substitution rate could climb to 50-80%, matching European levels, provided there is investment in cement-plant upgrades and new blending facilities.

However, the CDR sector currently operates without official targets or a dedicated regulatory agency, relying only on voluntary standards issued by ABNT.

Biogas and Biomethane Potential

The biogas landscape reveals an even larger untapped opportunity. Brazil currently exploits just 3.4% of its biogas potential and 1.4% of its biomethane potential, representing what analysts describe as a R$ 300 billion market still in its infancy.

A major regulatory shift is anticipated in 2026, when a mandatory 1% biomethane blending requirement comes into force, increasing by one percentage point annually until 2036. This rule is expected to enable renewable gas to supply up to 10% of Brazil’s total natural gas demand.

Biogas also holds vast potential for electricity generation, theoretically capable of supplying 40% of national electricity consumption and offsetting up to 70% of diesel use. While full utilization is constrained by technical and economic factors, biogas is seen as a key complementary source for stabilizing an increasingly intermittent grid dominated by solar and wind power.

Industry representatives emphasize that the ongoing electricity-sector reform must properly account for the value of dispatchable renewable sources. Without clear rules for compensating biogas plants for ancillary services, such as grid stability and load balancing, the market's growth may be hindered.

Brazil's waste-to-energy sector is at a critical juncture. The combination of ambitious industry projections, supportive legislation like the "Fuel of the Future" law, and the efforts of organizations like BREM are creating a robust foundation for growth. However, unlocking the full potential of this R$ 300 billion market, particularly in CDR and electricity generation, will require strengthening the regulatory framework to provide clear targets, compensation mechanisms for grid services, and dedicated oversight. Stakeholders agree that a fresh policy framework is essential to drive new investments, create higher earnings, and ensure better environmental protection.

Petrobras (PETR3; PETR4) Gains IBAMA Approval for Equatorial Margin Oil Exploration: Strategic, Environmental, and Political Implications

Brazil’s environmental regulator IBAMA (Brazilian Institute of the Environment and Renewable Natural Resources) on September 24 granted Petrobras preliminary approval for oil exploration in FZA-M59 block, which is in the Equatorial Margin offshore Amapá, in the north part of Brazil. This decision is seen to be the last part of the licensing procedure for one of Brazil’s most disputed oil frontiers which have been frequently compared with the country's pre-salt discoveries in terms of potential.

Emergency Simulation Validates Petrobras’ Preparedness

As part of the approval process, Petrobras conducted a large-scale oil spill response simulation in the Amazon River Basin region. Specialized vessels, emergency equipment, and rapid-response teams were mobilized during the exercise to assess the company's capability in environmental risk reduction.

IBAMA reported that Petrobras proved to be technically strong, operationally efficient, and with good response capabilities in the event of accidents. A few minor adjustments were asked for, but Petrobras promised to make the changes within two days, implying that the remaining challenges are procedural and not structural.

Strategic Potential of the FZA-M59 Block

The Equatorial Margin, which extends from Amapá to Rio Grande do Norte, is seen as one of the last high-potential frontiers for oil exploration in Brazil. Early studies suggest the presence of significant reserves of oil and natural gas, potentially attracting billions in investment.

The Brazilian government views the region as critical to balancing economic growth with its energy transition strategy. Oil revenues are expected to fund social programs, infrastructure, and renewable energy development, reinforcing Brazil’s global role in the climate debate while maintaining energy security.

Political and Environmental Tensions

The approval comes amid intense political debate. President Luiz Inácio Lula da Silva has defended the project as a matter of national sovereignty and economic necessity. Conversely, Environment Minister Marina Silva has voiced strong opposition, arguing that oil expansion undermines Brazil’s environmental commitments. She ultimately yielded after internal government negotiations.

The Federal Prosecutor’s Office recommended rejecting the license, citing risks to biodiversity. Environmental organizations warn that drilling in ultradeep waters near sensitive ecosystems, such as coral reefs, mangroves, and traditional fishing communities, poses high risks of ecological disaster. Nicole Oliveira, director of the Arayara Institute, argued that an oil spill would have consequences not only for Brazil but for neighboring countries as well.

Timing and the COP 30 Context

IBAMA’s decision comes less than a month before COP 30, the UN climate conference scheduled for Belém, Pará, in November 2025. The timing has fueled criticism regarding Brazil’s credibility in global climate negotiations.

While the government insists that oil revenues will finance the energy transition, critics argue that expanding fossil fuel production contradicts international commitments to reduce carbon emissions. This message of supporting clean energy while greenlighting new oil projects has placed Brazil at the center of a global energy paradox.

Market Outlook and Investor Perspectives

Despite recent declines in global oil prices, Petrobras maintains one of the lowest production costs in the world, ensuring profitability even in less favorable markets. Investors see the Equatorial Margin as a potential “new pre-salt”, capable of reshaping Brazil’s energy landscape as the original pre-salt discoveries did in the 2000s.

The immediate outlook hinges on Petrobras delivering the final documentation requested by IBAMA. If the project proceeds, it could redefine the company’s trajectory and solidify Brazil’s position in the geopolitics of energy transition.

The approval of Petrobras’ Equatorial Margin exploration license represents more than a regulatory milestone. In fact, it is a crossroads between economic strategy, environmental stewardship, and political negotiation. As Brazil prepares to host COP 30, the outcome of this project will serve as a test of the country’s ability to balance its fossil fuel dependence with its ambition to lead in climate action.

Today, a survey conducted by the DataFolha Institute indicated that 61% of Brazilians are against oil exploration in the Equatorial Margin.

Bolsonaro, Lula, and Trump: Political Shifts and Trade Tensions Impacting Brazil and the United States

A recent survey conducted by Pulso Brasil-Ipespe showed that the approval rating of Brazil’s Supreme Federal Court (STF) rose from 43% to 46% after the conviction of former president Jair Bolsonaro for attempting a coup d’état. Bolsonaro was sentenced to 27 years and 3 months in prison, along with other high-ranking military officials involved in the plot.

Meanwhile, Brazil’s Chamber of Deputies saw its disapproval rating climb from 63% to 70%, as attempts to pass legislation protecting politicians and coup supporters backfired. Approval fell sharply from 24% to 18%, with most Brazilians feeling Congress is disconnected from citizens’ needs.

Tax Reform and Political Bargaining in Brazil

This week, Brazil’s Senate Economic Affairs Committee approved Senator Renan Calheiros’ proposal to exempt workers earning up to R$5,000 per month (about US$1,000) from paying income tax. However, in the Chamber of Deputies, Bolsonaro-aligned lawmakers have tied the approval of this tax exemption to legislation aimed at reducing penalties for coup participants involved in the January 8th, 2023 attacks on Brazil’s democratic institutions.

Eduardo Bolsonaro’s 2026 Presidential Bid

Journalist Mônica Bergamo reported growing discussions around Eduardo Bolsonaro’s potential presidential run in 2026. Despite facing charges that could make him ineligible, Eduardo insists he will run—with or without the support of his father Jair Bolsonaro or the Liberal Party. He is even considering founding a new political party.
Right-wing leaders argue his candidacy would divide conservatives and potentially help Lula’s reelection, though some believe Eduardo is positioning himself for a stronger run in 2030.

Trump’s Tariffs on Brazilian Products and Their Economic Impact

Former U.S. President Donald Trump has proposed a 50% tariff on Brazilian products, including beef and coffee, echoing past tariffs imposed on Chinese imports. While the policy aims to reindustrialize the U.S., experts say it contradicts economic liberalism and mainly raises costs for American consumers.

Historically, the U.S. used tariffs to protect its nascent industries, but globalization has made such protectionism less viable. Analysts estimate the Brazilian economy could shrink by 0.2% to 0.5% of GDP due to these measures, particularly affecting small industries and retailers. However, key products such as Embraer aircraft and orange juice were exempted, given U.S. dependency on these imports.

Brazilian Beef Exports Grow Despite U.S. Tariffs

The 50% tariff on Brazilian beef initially lowered domestic prices in Brazil but made the product nearly inaccessible to U.S. consumers, fueling inflation in the United States.

Despite these challenges, Brazilian beef exports reached 2.41 million tons from January to August 2024, a 19% increase year-over-year, according to industry group Abrafrigo. August alone, when the tariffs took effect, was the second-best month for exports in 2024.

• China remains the top buyer, importing nearly 1 million tons (+19%), with revenue up 41% to almost US$5 billion.
  
  

• The United States holds the second spot, importing 557,000 tons (+66.5%), generating US$1.6 billion in revenue (+73.2%), despite a 46% drop in August shipments due to tariffs.
  
  

• Other markets such as Mexico, Argentina, Indonesia, and Japan are expanding, supported by government and private sector efforts to diversify Brazil’s export destinations.
  
  

Political and Economic Risks for Bolsonaro and Trump

Both Eduardo Bolsonaro and Donald Trump are facing setbacks that could weaken their political platforms. Eduardo risks fragmenting Brazil’s conservative base, while Trump’s tariffs are driving U.S. inflation and could backfire ahead of the 2026 midterm elections, when voters will choose all 435 House Representatives and one-third of the Senate.

Will Petrobras (PETR3; PETR4) Dividends Stay High in 2025? Forecasts and Investor Insights

Petrobras (PETR3, PETR4) has always been one of the most widely followed companies in Brazil, not only because of its size and influence in the energy sector but also for its dividend payments in recent years. Now moving through 2025 with the same question: How much will Petrobras pay out in dividends this year and what can be expected in 2026?

Dividend Outlook For 2025

Through the first half of 2025, Petrobras declared six dividend distributions in respect of first and second-quarter results, of approximately R$1.58 per share. Market expectations place the company at R$3.40-odd per share for the full year, manifesting a dividend yield of nearly 9.8%. That leaves around R$1.46 per share to be paid in the second half, with roughly R$0.73 each payable in the third and fourth quarter. 

These expectations are based on the current business plan of Petrobras, wherein Brent oil is assumed to be at US$83 per barrel, whereas the average for 2025 has been closer to US$70. A movement of US$5 in Brent prices can lower or increase dividend yields by approximately 1.3 percentage points, putting oil price volatility at the very center of shareholder returns.

BTG Pactual’s Positive View

According to analysts at BTG Pactual, Petrobras benefits from a “positive asymmetry”: higher-than-expected production combined with lower capital expenditures (CAPEX) and operational expenditures (OPEX). This combination could result in higher cash generation and potentially larger dividends than currently priced in by the market.

BTG also set a buy recommendation for Petrobras, with a price target of R$44, suggesting a significant upside from current levels.

Dividend Projections for 2026

Looking ahead, Petrobras’ 2026 dividend will largely depend on oil prices and government strategy.

• In a conservative scenario with Brent below US$70, dividends may drop to around R$1.50 per share (4–7% yield).

• In an optimistic scenario with Brent above US$70, dividends could reach R$3.00–R$4.00 per share (10–15% yield).
  

Given the electoral cycle, some analysts believe the government may push Petrobras to distribute higher dividends in 2026, using the company as a cash source to fund fiscal needs.

However, markets were shaken last week by rumours that Petrobras had to cut back US$8 billion on investments in the 2026-2030 Strategic Plan.

Nevertheless, for long-term investors, Petrobras offers a unique combination of high dividend yield and discounted valuation, but with higher-than-average risks. Oil price volatility, CAPEX and OPEX control, and political uncertainty will continue to shape Petrobras’ performance in 2025 and 2026.