On December 22, 2017, Provisional Measure No. 811/2017 (“Provisional Measure”) was published in the Official Gazette, authorizing the Brazilian government-owned company Pré-Sal Petróleo S.A. (“PPSA”) to directly market the Federal Government’s share of oil and natural gas in relation to production sharing agreements.

The Provisional Measure amended Law No. 12,304/2010 ("Pre-Salt Law"), which prohibited PPSA from being responsible for carrying out (directly or indirectly) oil and gas trading activities – an action which required the hiring of a trading company for such a role. However, as a result of the enactment of the Provisional Measure, PPSA may now choose to hire a trading company or directly conduct the trade of oil in the market.

The revenue from trading will be considered after the deduction of taxes and expenses directly related to the sale transactions. In the event that the trade is carried out by a trading company, its payment must also be deducted from the revenue. However the expenses incurred by PPSA in the performance of its activities as well as the payment it receives will not be considered as trading expenses.

The expenses related to trading must be included in the agreement executed between PPSA and the trading company or, in the case of direct trade, between PPSA and the buyer. In the event of a bid, the expenses must also be specified in the tender protocol. It is worth mentioning that PPSA will be responsible for supervising and auditing the transactions, costs and sale prices used by the trading company.

Furthermore, the Provisional Measure establishes that any and all trading carried out by the PPSA must be made in accordance with the policy defined by the National Energy Policy Council ("CNPE") and with the reference price set forth by the National Agency of Petroleum, Natural Gas and Biofuels ("ANP"), except in cases where there is no interested buyer. In the latter scenario, a market price will be used.

Lastly, according to the Provisional Measure, it will be incumbent upon the CNPE topublish by December 31, 2018, a new policy on trade. In the interim, the direct trade by PPSA will be governed by the Ministry of Mines and Energy ("MME").