On May 11, 2018, the National Energy Policy Council ("CNPE") published Resolution No. 4/2018 ("Resolution"), which establishes the technical and economic parameters for the 5th Pre-Salt Bid Round under the Production Sharing Regime (“5th Pre-Salt Round”), as well as formally authorizes the National Agency of Petroleum, Natural Gas and Biofuels ("ANP") to carry out the bidding process.

The 5th Pre-Salt Round will offer four areas located in Santos and Campos Basins: Saturno; Titã; Pau-Brasil; and Sudoeste de Tartaruga Verde. It should be noted that the Resolution declared the areas of Saturno and Titã as strategic areas and reformulated them to include the blocks S-M-534 and S-M-645, which had been removed from the 15th Bid Round under the concession regime.

The CNPE defined the minimum percentages of the Federal Government’s profit oil for each area as (i) 9.56% in the Saturno area, (ii) 5.80% in the Titã area, (iii) 24.82% in the Pau-Brasil area and (iv) 10.01% in the Sudoeste de Tartaruga Verde area.

Under the Resolution, the signature bonus due to the Federal Government will consist of:

  1. BRL3.125 billion for the Saturno area;
  2. BRL3.125 billion for the Titã area;
  3. BRL500 million for the Pau-Brasil area; and
  4. BRL70 million for the Sudoeste de Tartaruga Verde area.

The minimum mandatory local content for the areas of Saturno, Titã and Pau-Brasil will meet the following criteria: (i) exploration phase – minimum global requirement of 18%; and (ii) development phase – 25% for the well construction, 40% for the collection and offloading system, and 25% for the stationary production unit. It is important to point out that these percentages may not be waived.

For the unitization area of Sudoeste de Tartaruga Verde, the minimum mandatory local content will be that established in the concession contract of the adjacent area (Tartaruga Verde), including the contracted percentages for the items and sub-items of the commitment tables and the other conditions agreed upon.

Furthermore, the CNPE established the guidelines on expenditures that could be recognized as cost oil, based on the best practices of the oil industry and the typical costs of the activity.

As of the time of publication of this Resolution, Petrobras will have 30 days to exercise its preferential rights to be the operator in each of the offered areas, as discussed in this previous legal update.

Lastly, the Resolution authorized the ANP to detail the studies regarding the prospects of Aram, Sudeste de Lula, Sul e Sudoeste de Júpiter and Bumerangue, in Santos Basin, in preparation for the 6th Pre-Salt Bid Round under the production sharing regime in 2019.