The Brazilian Agency for Petroleum, Natural Gas and Biofuels (the “ANP”) published yesterday (January 5, 2015) the initial draft of the Tender Protocol and Concession Contract for the First Bidding Round for Natural Gas Transportation Pipelines, regarding the Itaboraí-Guapimirim pipeline. In this sense, we present some of their highlights:

Participation Fee: The participation fee is BRL 2,600.00 (two thousand and six hundred reais), and grants access to the technical data package. It is mandatory and individual for each company, even those who wish to bid through a consortium.

Presentation of Proposals: The interested parties shall present, in the public session: (i) the financial proposal; (ii) the technical proposal; and (iii) the documents for qualification purposes of the bidding company or consortium.

Winning Bid: The winning bid shall include the lowest offer for the annual revenue for the natural gas transportation activity, which, cannot exceed BRL 20,579,100.00 (twenty million, five hundred and seventy- nine thousand, and one hundred reais), and a technical proposal  in accordance with the terms of the Tender Protocol.

Concession Term: The concession for the operation of the natural gas transportation pipeline will have a term of 30 (thirty) years from its execution date, and may be extended for an equal period, under the conditions set out in the Concession Contract.

Local Content: During the construction phase, the global local content commitment to be observed is of 80% (eighty percent). Also, companies must observe the minimum commitment for each of the items as listed in the Concession Contract.

Guarantees: Companies must present a bid bond of BRL 12,500,000.00 (twelve million and five hundred thousand reais), and the winning company or consortium must present a performance guarantee of at least 30% (thirty percent) of the value of the investment necessary for constructing the gas pipeline. Both guarantees shall be presented either as a bank guarantee or as a surety bond, according to the templates provided in the Tender Protocol.

Petrobras’ data and licenses: In case the winning company wants to use Petrobras’ studies and projects as well as the licenses already obtained, it shall reimburse Petrobras in the amount of BRL 868,806.62 (eight hundred and sixty-eight thousand, eight hundred and six reais and sixty-two cents).

Execution of the Concession Contract: The winning company shall incorporate a specific purpose company to execute the Concession Contract, which will also be subject to qualification by ANP. The expectation is that the Concession Contract is signed in the second half of 2015.

Initial Schedule proposed by ANP: We would like to draw your attention to the following deadlines in the initial schedule proposed:

Click here to view table.

Please note that the provisions mentioned herein are still subject to modifications, as the ANP is currently accepting comments and suggestions during the public consultation period.

For your reference, please find here the draft of the Tender Protocol and here the draft of the Concession Contract, as published by the ANP.