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Media Coverage

Concession and Sharing Beyond Semantics

12 October 2012
TN Petróleo

It Shall not be without reason that questions relating to the implementation of Law n. 12.351, of December 22, 2010, remain absent from the open agenda of the public sectors that should take care of this subject, with the zeal supposedly dedicated to the country’s interests, above all those whose critical effects are debited on the Brazilian project for overcoming the world economic crises, which, if trusted the government experts, we have hardly touched.

After a period of euphoria and grater expectations, fed by myths on the offspring from the generous production of petroleum waved to the proud patriotism of the Brazilian people, the subject was dissipated and shadowed by questions poorly sketched, which are the primary causes of dismay and paralysis in face of problems, the extent of which we are not used to evaluate before recognizing the we have been hasty or the victims of a puerile optimism.

Such hesitation has put in motion the persistent inquietude we fall into when speculating on the causes of so much lateness in launching the projects for the acceleration of the petroleum industry in our country. The reasons for such difficulty, however, if searched with will and perseverance are easily unveiled from the cold and  passion free reading of the text of the pre-salt law.

While performing this exercise, the feeling of loss of contact with the reality comes to our mind imperatively as to the question concerning to, and when, the actions required for making true the so expected start up of a new era for taking advantage from the huge national hydrocarbon resources to the general benefit of the Brazilian society will come up.

The discussion that nowadays grabs the Brazilians is no more focused on determining which kind of contract is compatible with the exploratory model adequate to the pre-salt and its unmeasurable (in the most optimistic vision) reservoirs that would make Brazil the Twenty-first  Century oil superpower, but in how to structure and give muscle to the assumptions nurtured by Law 12.351. It is no secret that the concession as much as the sharing agreements equally deserve the supporting framework for all possible arrangements if guided by an intelligent and objective negotiation.

However, if transmigrated into a semantic dissent, the problem goes loose in barren wrangling. In the pre-salt case the neural point is not the name of the contract that will regulate the contractor’s obligations and rights, whether concession or sharing, but how much, when and how the State will be paid in terms of remuneration of the public asset assigned to private exploration, and, overall, the destination of such values, its division and use to the benefit of the society. Disregarding the open-ending funds on which the government intends apply the pre-salt revenues.

The vexata quaestio, the dispute that bleeds in the heart of the federative establishment has always been the hardened polemic surrounding the royalties’ booty, a subject to which we have dedicated more space than the patience tolerates and the civility allows for, before prophesying that the solutions anguishedly postponed shall not materialize without deep cuttings in the flesh of the unavoidable losers: the national interests.

In the other side, the notorious existence of a hiatus between the contents of the Law and its fulfillment, to be filled in towards the transposition of the unresolved questionings, has been left aside by the editors of the text while giving space to the confuse methodology of the work to be carried out by the State, awkwardly distributed among new and old public service entities delegated to erratic missions.

Such situation is spotted as from the definition of attributions assigned to a minimum of four State bureaucracies (not to speak Petrobrás), which have been granted overlapping competences, or, in the most optimistic interpretation, ill and incoherently positioned, but apt to raise conflicting jurisdictions, or corporative jealousies, prone to enervate their less aggressive servant in defense of his prerogatives. 

This fact irrecusably takes the point on the comparison between attributions granted to the Ministry of Mines and Energy (MME) to undertake the political command of the process and those of its conjectural assistants or coadjutants, as it is nowadays difficult to untangle the hierarchic knots ruling the relationship among entities of the federal administration and autarchic  agencies, or so assumed, created for disconnecting sectarian-ideological meddling from the State service.

Among some of these situations it is perceived that the MME depends on the National Petroleum Agency (ANP) to inform the National Energy Policy Council (CNPE) what it is entrusted to propose to the Presidency of the Republic for the definition of the blocs to be offered to exploration and fixing the technical and economic parameters for the sharing agreements. The ANP is also to subsidize the MME with geological, geophysical and economic data to the structuring of the  contracts, which are on occasion turned up to the CNPE that will again pass them to the Presidency of the Republic. Later  on the MME will receive all such stuff in the form of contracts it will sign on behalf of the Federal Union.

Further on it is known in the Law that the ANP prepares the drafts for the sharing contracts and bidding rules to the subsequent approval of the MME, incorporating the technical and economic parameters that the CNPE suggested to the Presidency of the Republic, the same set up by the ANP and received from the MME. In other provisions of the Pre-Salt Law the ANP advances the bids (should it negotiate the contracts to be signed by the MME? this is not part of the Law, but “por supuesto…”) and carries out the follow up of the performance of the sharing contractor in all its aspects.

However, the company Pré-Sal Petróleo S.A. (PPSA), incorporated under Law n. 12.304, of August 2, 2010, will be the chief manager of the production sharing agreements entered into with the MME, notwithstanding administered and supervised by the ANP. As a gift, PPSA shall be the trading company to commercialize the profit oil allocated  to the government, but Petrobras may be committed to this charge in so far as PPSA will eventually have its own commercial expert staff. Of course, the new state company will sit in Brasilia, but its main offices shall stay in Rio de Janeiro…

It is the very childish turning around play, or “alive wheels”, as you may like it.

To end up, it is largely known that the central point for enhancement of the exploration and production of oil, natural gas and by products in Brazil implies rather the updating of the existing physical resources and acquisition of considerable number of new research and production implements, as the decision to dig and surface the pre-salt treasure is made effective. This is due to happen by the attraction of investments in exploration and production, in the equipment and services industrial sector, in the importation of organizational structures endowed with technologies admitted as not yet available in the country. But, what the government sees through the Brasilia’s fantasy glasses seems to be very different.

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