New bidding round

On March 29 2018 the National Petroleum Agency (ANP) led the 15th bidding round in Rio de Janeiro, which reinforced international oil companies' (IOCs') interest in investing in Brazil.

Eleven foreign and two national oil companies committed to paying approximately R8 billion ($3 billion) in signature bonuses. The highest commitment (totalling $865 million) was presented by the consortium between ExxonMobil, Petrobras and QPI, followed by other significant players such as Statoil, Shell, Chevron, Wintershall, Petrogal, BP, Repsol, Murphy and QG. The IOCs have demonstrated their belief that the geological reserves in the Campos Basin are some of the most prolific on the planet.

Waiver requests

As expected by the market since the drop in the oil prices in 2014, the ANP has finally issued Resolution 726/2018, which sets out the procedure for waiver requests of local content obligations. It also includes adjustments and substantial reductions to the percentage of local content previously committed, and the transfer of their excess under concession contracts awarded, between 2005 (7th bid round) and 2015 (13th bid round). The operating companies must demonstrate the following to the ANP:

  • a lack of national suppliers;
  • higher prices compared to the international market;
  • excessive periods of delivery; and/or
  • the non-availability of technology in the country.

The exemptions are based on national public interest in attracting new investment and leveraging the execution of potentially dormant projects (approximately 40 by 2030). The ANP continues to develop new regulatory measures to incentivise the local industry in order to meet future demand.

By June 2018, a new bidding round (the 4th pre-salt bidding round) will be promoted by the ANP. Substantial offers are expected. These initiatives are expected to introduce:

  • new opportunities;
  • contracting rights for materials and services;
  • specialised jobs and revenue generation; and
  • new business to the local and international market.

For further information on this topic please contact Godofredo Mendes Vianna or Jose Vicente Duncan de Miranda at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email (godofredo@kincaid.com.br or jose.vicente@kincaid.com.br). The Kincaid | Mendes Vianna Advogados website can be accessed at www.kincaid.com.br.

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