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Legal Update

Brazil: ANP regulates the Calculation of the Neutralization of Global Local Content

16 May 2016
Tauil & Chequer Legal Update

On May 4, 2016, the National Agency of Petroleum, Natural Gas and Biofuels – ANP published Resolution No. 20/2016, which establishes the criteria and the equation for calculating the neutralization of weight variation on the percentage of global  commitment and of each item sum, for the purpose of monitoring compliance with local content obligations.

From now on, the calculation of the neutralization will be based on a formula proposed by ANP, which considers the weight effectively allocated by the companies in each local content item, excluding items for which there has been no investment.

Initially, during the process of Consultation and Public Hearing No. 25/2015 conducted by ANP to obtain the input of the industry on this matter, the Resolution was supposed to apply only to concession contracts from the 7th Bidding Round onwards. However, the approved Resolution was adapted to also cover the Onerous Transfer and Production Sharing Agreement, bringing  a wide advantage to the industry.

The Resolution is an answer to an old market demand and will be applied retroactively to all Concession Contracts currently in effect, including inspection procedures already in progress.

The complete resolution is available on ANP’s official website (Portuguese only).


Related People

  • Alexandre R. Chequer
    T +55 21 2127 4212
  • Victor Galante
    T +55 21 2127 4275
  • Bruno Triani Belchior
    T +55 21 2127 4205

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