On May 02, 2017 Decree No. 9,041/2017 (“Decree”) was published and came into force. Such Decree, aims to regulate Law No. 13,365/2016, which changed the current criteria for investments and operations in the Brazilian pre-salt areas.
Such alterations came in a critical moment and it is expected that they will assist with the attraction of foreign investments, as the Brazilian Government has recently authorized and defined the areas which will be object of the next bidding rounds to be held by the National Agency of Oil, Natural Gas and Biofules (“ANP”), which include the pre-salt areas, to be offered during the Second and Third Bidding Rounds for the Production Sharing Regime, scheduled to occur in October 2017.
As a matter of introduction, in summary, before the alterations introduced by Law 13,365/2016, Petróleo Brasileiro S.A. – Petrobras (“Petrobras”), the Brazilian national oil company, would necessarily be the operator, holding a minimum stake of 30% in any consortium formed with oil companies that win the public bid proceedings for the pre-salt and strategic areas, upon the execution of Production Sharing Agreements, with the ANP.
Accordingly, in view of the aforementioned alterations, Petrobras no longer has the obligation to act as the operator. Accordingly, although Petrobras will always be granted a “right of first refusal” to hold a 30% stake and/or to be the operator in the pre-salt and strategic areas’ developments, it will not be obligated to do so anymore.
In this regard, the Decree provides the rules and definitions that shall be applied for the execution of such preference by Petrobras, being those:
(i) Petrobras shall manifest its interest in participate as the operator of the offered areas, within 30 (thirty) days counted from the publication of the National Energy Policy Council’s (“CNPE”) resolution establishing the technical and economic parameters of the blocks offered under the production sharing regime. For the Second and Third Bidding Rounds for the Production Sharing Regime, said resolutions were published on May 04, 2017 and April 27, 2017, respectively;
(ii) The aforementioned manifestation shall include the blocks and the participation percentage intended by Petrobras, which cannot be inferior to 30% (thirty per cent);
(iii) The CNPE will then propose to the Brazilian President the blocks which shall be operated by Petrobras, indicating its participation in the consortium to be formed, which may range between 30% and the percentage indicated by the latter.
The Decree also provides that in case Petrobras exercises its preferential rights, after the conclusion of the bidding round’s judgment phase, it must join the winning consortium, as the operator, in case said winning consortium offered to the Brazilian Union the minimum percentage of profit oil previously specified in the tender rules. On the other hand, Petrobras will just have the option to join the winning consortium, in case such winning consortium offers to the Brazilian Union a percentage of profit oil superior to the one previously specified in the tender rules. In the last case, the winning consortium must indicate to ANP’s approval the operator and the percentages of participation of each of its parties.
Finally, it shall be highlighted that, if Petrobras opts not to exercise its preferential rights, it may than participate in the bid round, but in equal conditions with the other participants, having the option to do it as a party of a consortium or alone.
In any event, considering the high potential of the areas to be offered during the next pre-salt bidding rounds, it is expected a massive participation of international oil companies, either in a consortium operated by Petrobras or independently.