President Michel Temer recently enacted Law 13.365/2016. The law makes the participation of Petrobras as the exclusive pre-salt operator optional, while setting out Petrobras's pre-emptive right.

This measure has been welcomed by the oil and gas industry in Brazil and Petrobras.

The exercise of Petrobras's pre-emptive right will be administered by the National Council of Energy Policy (CNPE) which, considering the national interest, will offer Petrobras a pre-emptive right as the operator of blocks under the production sharing regime.

Petrobras, in turn, must make a justified statement to the CNPE regarding its decision on its pre-emptive right. After Petrobras makes its statement, the CNPE will submit a proposal to the president regarding the blocks to be operated by Petrobras, in line with its minimum participation requirement.

In accordance with Law 12.351/2010 – now modified by Law 13.365/2016 – Petrobras was mandatorily the sole operator of blocks under the production sharing regime. Petrobras was also required by law to maintain a minimum participation interest of 30% in every consortium.

With the enactment of the new law, the Brazilian government is preparing to conduct the second production sharing round, which will offer four pre-salt areas, in the second half of 2017. The new rules are expected to attract the interest of many companies, as compared to the first round, in which only one consortium participated in the bidding process.

For further information on this topic please contact Godofredo Mendes Vianna or Fernanda Gueiros at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email (godofredo@kincaid.com.br or fernanda.gueiros@kincaid.com.br). The Kincaid | Mendes Vianna Advogados website can be accessed at www.kincaid.com.br.

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