CNPE AUTHORIZES ROUNDS OF BIDDING FOR OIL AND GAS EXPLORATION

1/31/19

The National Council for Energy Policy (CNPE) published Resolutions 17 and 18 of 12/17/2018, which authorize the National Petroleum, Natural Gas and Biofuels Agency (ANP) to carry out Bid Rounds for exploration and production of oil and natural gas on the Brazilian coast.

Resolution No. 17 authorizes the holding of the 16th Bidding Round, under the concession regime, which will offer 42 blocks in the Pernambuco-Paraíba, Jacuípe, Camamu-Almada, Campos and Santos sedimentary basins, totaling 29.91 thousand km² of area.

The Local Content rules will not be adopted as criteria for judging the bids in the Bidding, however they will be defined in specific clauses of the contract.

Such clauses should establish the minimum percentage of mandatory Local Content of: 18% for the Exploration Phase; 25% for Well Construction; 40% for the collection and drainage system; and 25% for the Stationary Production Unit. These percentages will not be able to flexibilize the contractual commitment (waiver).

Resolution 18, in turn, authorizes the 6th Round of Bidding, under the production sharing regime, which will offer the blocks denominated Aram, Bumerangue, Cruzeiro do Sul, Sudoeste Sagitario, all located in the Santos Basin, and Norte de Brava, located in the Campos Basin, all in the Pre-Salt area.

Pursuant to Law No. 12,351 of 2010, Petrobras must express its right of first refusal in each of the blocks offered, within a maximum period of thirty days, as of the publication of this Resolution.

The minimum percentage of Union surplus oil shall be:

  1. a) in the Aram Block, 24.53%;
  2. b) in the Bumerangue Block, 26.68%;
  3. c) in the Cruzeiro do Sul Block, 22.87%;
  4. d) in the Sudoeste de Sagitario Block, 26.09%; and
  5. e) in the Norte de Brava Block, 36.98%.

The minimum mandatory Local Content to be required in the areas of Aram and Bumerangue are: 18% for the Exploration Phase; 25% for Well Construction; 40% for the Collection and Drainage system; and 25% for the Stationary Production Unit. These percentages will not be able to flexibilize the contractual commitment (waiver).

The minimum mandatory Local Content to be required in the univariate areas of Cruzeiro do Sul, Sudoeste de Sagitario and Norte de Brava shall be equal to the conditions required for this purpose in the contracts of the respective adjacent areas.

The amount of the signing bonus for the areas will be:

  1. a) in the Aram Block, R $ 5,050,000,000.00;
  2. b) in the Bumerangue Block, R $ 550,000,000.00;
  3. c) in Cruzeiro do Sul Block, R $ 1,150,000,000.00;
  4. d) in the Sudoeste de Sagitario Block, R $ 500,000,000.00; and
  5. e) in the Norte de Brava Block, R $ 600,000,000.00.

In addition to the bidding rounds mentioned above, the CNPE authorized, pursuant to Resolution No. 19 of 12/17/2018, that the ANP detail the prospectus studies indicated to compose the 7th and 8th Bidding Rounds under the Production Sharing Regime , for the years of 2020 and 2021, respectively.

The 7th Round should offer blocks in the areas called Esmeralda and Ágata, located in the Santos Basin, and Água Marinha, located in the Campos Basin.

The 8th Round, in turn, should offer blocks in the areas named Tupinambá, Jade and Ametista, located in the Santos Basin, and Turmalina, located in the Campos Basin.

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