EXTENSION FOR PRE-SALT CONTRACTS

Nov 11, 2019

The ANP recommended to the MME the amendment of the CNPE resolution authorizing the extension of the production phase of Round Zero contracts (02/2016). The proposal is to extend the benefit to concessions within the pre-salt polygon, ensuring greater predictability of investments and avoiding early interruption of production.

The measure complies with a request made by Petrobras to the government in October. In the letter sent to MME, the state company argues that the extension of the contracts will contribute to the decision-making of long-term investments by anticipating discussions between concessionaires and regulator.

“The typical behavior of an oil and gas production curve in offshore fields starts with an accelerated growth (ramp-up), in which the first wells are interconnected, followed by a plateau, of varying duration on a case by case basis. After this step, production declines. It is precisely at this moment that, in order to incorporate new reserve volumes and increase the value of their portfolio, operators need to design complementary projects or at least reduce the rate of decline, ”explained the oil company.

The MME then requested ANP’s position on the possibility. In a technical note, the agency’s E&P superintendent, Marcelo Castilho, noted that industry best practices recommend the rational exploitation of reservoirs in order to increase their recovery factor and field life, naturally indicating the extension of the production phase. .

“Contractually, it is possible to interpret that the production phase is extendable by nature, with its extension being the rule, and non-extension being the exception,” he argued.

Castilho concluded the opinion by stating that there is no impediment to extending the production phase of concession contracts of any round, regardless of their location – provided that in light of the review of a new development plan to be approved by the ANP.

To be effective, the change depends on MME approval and referral for resolution by CNPE.

Source: Brasil Energia Magazine

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