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What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?
The 1988 Federal Constitution sets the basic provisions regarding the oil and gas sector. Accordingly, it grants the Federal Union ownership of mineral resources in the Brazilian territory which are deemed to be assets independent from the soil itself.
On the enactment of Constitutional Amendment (EC) 09/1995, which modified Article 177 of the Federal Constitution, the Federal Union was authorised to hire state-owned or private companies to perform activities relating to oil and gas exploration and production. Until then, only Petrobras – the Brazilian national oil company – had been entitled to conduct these activities.
EC 09/1995 was followed by the enactment of Law 9.478/1997 (the Petroleum Law), which transformed the Brazilian oil and gas sector’s legal regime.
The Petroleum Law introduced the concession regime for the exploration and production of oil and gas in Brazil. Under this new approach, the government authorised different economic agents to explore and produce oil and gas under particular concession agreements, following bid proceedings conducted by the National Agency of Petroleum, Natural Gas and Biofuels (ANP).
In 2007 the discovery of large oil and gas reserves concentrated in the pre-salt layer encouraged the government to enact the so-called ‘Pre-salt Law’, which created a new regime for pre-salt and strategic areas by imposing the production sharing agreement in lieu of the concession agreement that is still legally applicable to other areas.
As regards natural gas, Law 11.909/2009 (the Gas Law) regulates its:
- import; and
As regards the supply of piped gas, the Federal Constitution authorises the states to exploit the services related thereto directly or through concessions. Therefore, such activity is regulated by the states and their respective agencies.
A proposed change to the regulatory framework for natural gas commercialisation and transportation is under analysis by Congress through the Bill of Law 6,102/2016, attached to the Bill of Law 6,407/2013, aiming to promote the Brazilian natural gas industry.
What government bodies are charged with regulating the oil and gas industry and what are the extent of their powers?
The government bodies charged with regulating oil and gas activities in Brazil are as follows.
Ministry of Mines and Energy
The Ministry of Mines and Energy (MME) is the federal government body in charge of formulating public policies for the oil and gas sector, as well as other sectors, such as electric power, nuclear power and metallurgy.
National Council for Energy Policy
The National Council for Energy Policy (CNPE) was created by Law 9.478/1997 (the Petroleum Law) and is headed by the minister of mines and energy. The CNPE’s main duties are to:
- propose national policies and measures to promote the rational use of energy resources;
- guarantee energy supply in remote areas or areas of difficult access;
- review periodically the energy matrix that is applied to different regions;
- establish guidelines for the import and export of oil and its by-products;
- define the areas to be offered in ANP bid proceedings for the exploration and production of oil and natural gas; and
- define strategies and policies for the economic and technological development of the oil, natural gas and other hydrocarbons and biofuels sectors.
The ANP was created in 1997 by the Petroleum Law, which sought to establish a government agency to oversee the regulation, contracting and supervision of economic activities relating to the oil, natural gas and biofuels sectors. ANP’s main duties are to:
- implement national policies relating to oil, natural gas and biofuels;
- promote studies for the delimitation of areas to be offered in bid proceedings;
- promote bid proceedings for the exploration, development and production of oil and natural gas, executing the relevant concession or production sharing agreement;
- authorise the refining, liquefaction, regasification, shipping, processing, treatment, transportation, storage and packaging of natural gas;
- regulate and authorise activities relating to fuel supply; and
- inspect activities relating to the oil, natural gas and biofuels industries, imposing administrative penalties (including fines) where necessary.
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