May 17, 2019
The ANP board approved a new resolution that amends the procedures for sale of oil and natural gas fields and, from the agency’s perspective, will encourage the entry of new operators in mature fields, with the production in decline. The theme had been discussed since last year.
With the new resolution, companies that buy fields can include in the operation to be approved in the ANP a new development plan and include a financial structuring using as collateral rights over the asset, such as reserve, production, participation in the contract – a known mechanism as reserve base lending.
“It is a resolution of the most importance that we approve to stimulate the sale of mature fields, both on land and shallow water,” said ANP Director General Décio Oddone during the meeting.
The director added that this possibility of the ANP approving the development plan of the company or consortium that is buying the field reduces the risks. “It guarantees the renewal of the contract,” he said.
“This resolution is yet another delivery of this board’s commitment to the Brazilian upstream. Not only does it reduce cost, entry barriers, but it also enables investment not only from large operators, but from small and medium-sized, “said ANP director Dirceu Amorelli.
Reserve base lending
The new resolution creates the possibility for companies to use “real guarantees on rights arising from E & P contracts”. In practice, companies and financial institutions can develop projects using as collateral production, contractual position and reserves as collateral for the financing of new investments.
“From this resolution, an asset sale transaction can be accompanied by a reserve base lending operation and a concomitant operation to approve a new development plan, ensuring the extension of the agreement,” explained Dirceu Amorelli.