On 8 June 2017 the Ministry of Mines and Energy (“MME”) held the 34th ordinary meeting of the Brazilian Energy Council (“CNPE”) under which, among other matters, the CNPE:
- confirmed Petrobras’s request to hold at least a 30% participating interest in the unitizable area adjacent to Sapinhoá Field, as well as in Peroba and Alto de Cabo Frio Central;
- made changes to the areas that will be offered in the 15th and 16th concession bid rounds and in the 4th pre-salt bidding round; and
- created a new policy to offer areas to the market on a permanent basis and not only during bid rounds.
Petrobras will hold at least 30% participating interest in the unitizable area adjacent to Sapinhoá Field, as well as in Peroba and Alto de Cabo Frio Central
On the 8 June 2017 meeting and by means of the CNPE Resolution 13/2017, the CNPE has confirmed that Petrobras will be the operator and hold at least a 30% participating interest in the area adjacent to Sapinhoá Field (2nd pre-salt bid round) and in the areas of Peroba and Alto de Cabo Frio Central (3rd pre-salt bid round). Also, Petrobras will be allowed to increase further such percentage by forming consortia to participate in the bids.
CNPE Resolution 13/2017 validates the exercise by Petrobras of its pre-emption rights over those pre-salt areas, pursuant to Law 12,351/2010 and Federal Decree 9,041/2017.
The amount to be paid by Petrobras as signature bonus, considering that the bid results confirm the minimum stake indicated above in each block, is R$810 million (approx. £200 million).
It is important to highlight that, even having exercised its pre-emption rights, Petrobras may still withdraw from the winning consortium if the percentage of profit oil offered to the Brazilian Government is higher than the minimum provided in the invitation for bid.
In relation to blocks in which Petrobras has not exercised its pre-emption right, the company may participate in equal terms with other bidders, whether to act as operator or not.
Multiyear schedule for upcoming bid rounds
Following the decision by the CNPE to establish a multiyear bid round schedule, which contemplated 10 bid rounds for onshore and offshore areas under the concession and production sharing regimes (PSC) until 2019, the CNPE, on its 8 June 2017 meeting, made a few changes to the areas that will be offered in the 15th and 16th concession bid rounds and in the 4th pre-salt bidding round, which are expected to occur in 2018 and 2019:
Sectors SSEAL-AUP1 and SSEAL-AUP2, in the Sergipe-Alagoas Basin, and Sector SPEPB-AP3, in the Pernambuco-Paraíba Basin, where included in the 15th concession bid round, scheduled for the first half of 2018;
Sector SC-AP5, in the Campos Basin, which was originally scheduled to be offered in the 16th concession bid round was anticipated to the 15th concession bid round;
Sector SC-AP4, in the Campos Basin, originally forecasted for the 15th concession bid round will now be offered in the 16th concession bid round, scheduled for second half of 2019; and
A new area (to the south of Uirapuru prospect) was included in the pre-salt prospect of Uirapuru, in the Santos Basin, which will be offered in the 4th pre-salt bid round, scheduled for the first half of 2018.
Below is the multiyear bid round schedule established by the CNPE:
Please click here to view.
Permanent offer of certain areas returned or not bided
As part of Brazilian Government’s new policy for the E&P industry in Brazil, the CNPE has decided that it will offer certain onshore and offshore areas on a permanent basis to the market. The CNPE’s idea is that this permanent offer works as an alternative mechanism to the bidding rounds, allowing companies to show their interest on certain areas at any time without having to wait for the bid rounds.
The government has not announced the areas that will be offered on a permanent basis, but the CNPE has indicated that it will select areas that either: (i) did not receive any bids during previous bidding rounds, or (ii) were returned by the concessionaires to the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”).
Areas located in the pre-salt layer, and areas considered strategic to the Brazilian Government pursuant to Law 12,351/2010, will not be included in the permanent offers.
The permanent offers regime will be valid upon its publication in the Official Gazette, but it will require further regulation by the ANP before it is fully in force.
This is an unprecedented decision in the Brazilian market and is part of the Federal Government’s attempt to foster the oil and gas activities in the country, which have suffered with the drop of oil price, the reduction of investments in the sector and the five year interruption of bidding rounds.