During its 1st Extraordinary Meeting of 2017, the National Energy Policy Council (“CNPE”) deliberated on matters for the oil and gas sector, including: (i) the approval of the 3rd Bid Round under the Production Sharing Regime, (ii) the plan to promote 10 Bid Rounds from 2017 to 2019, (iii) the new local content policy, (iv) the extension of the exploratory phase regarding the concession contracts of blocks offered during the Bid Round 12 and (v) the guidelines for the importation of biofuels.

For the first time, the CNPE approved a multi-year bid round calendar for the exploratory blocks and mature onshore fields, estimating 10 bid rounds from 2017 to 2019.

For that period, in addition to the three previously announced bid rounds (4th Marginal Accumulation Round, 2nd Production Sharing Round with unitized areas in the Pre-salt, and Bid Round 14 for oil and gas exploration and production blocks), the CNPE also announced the following opportunities:

  • 3rd Production Sharing Round, scheduled for November 2017 (Campos and Santos Basins)
  • 4th Production Sharing Round, scheduled for May 2018 (Campos and Santos Basins)
  • 5th Production Sharing Round, scheduled for the second semester of 2019 (Santos Basin)
  • Bid Round 15 under the concession regime, scheduled for May 2018 (Foz do Amazonas, Ceará, Potiguar, Campos, Santos, Paraná, Parnaíba, Sergipe-Alagoas, Recôncavo and Espírito Santos Basins)
  • Bid Round 16 under the concession regime, scheduled for the second semester of 2019 (Camamu-Almada, Jacuípe, Campos, Santos, Solimões, Parecis, Sergipe-Alagoas, Recôncavo, Potiguar and Espírito Santo Basins)
  • 5th Bid Round for onshore mature fields—yet to be defined—scheduled for May 2018
  • 6th Bid Round for onshore mature fields—yet to be defined—scheduled for the second semester of 2019

As mentioned in our Legal Update on the 3rd Pre-Salt Round, the minimum local requirements to be required for offshore areas will be the following: (i) exploration phase—minimum global requirement of 18 percent; and (ii) development phase—25 percent for well construction, 40 percent for the collection and offloading system, and 25 percent for production facilities.

In addition to the definition of the minimum local content percentages for the bidding rounds, the CNPE established the following rules in regard to the unitization procedures: (i) in the event that the deposits extend to non-contracted areas (“open acreage”), the local content rules relative to such areas will not create additional obligations to the local content rules under the contracts of the adjacent areas; and (ii) the minimum local content percentage to be required in each non-contracted area (“open acreage”) of the 2nd Production Sharing Round will be the same as the percentage established under the contracts of the adjacent areas.

Furthermore, the CNPE recommended that the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) analyze the extension of the terms of the exploratory phase of the 12th Bidding Round concession contracts, which took place in November 2013, in view of the low oil price in the international market and, consequently, the reduction of the oil companies’ investment capacity.

Last, the CNPE approved a resolution establishing guidelines for the importation of biofuels. According to the resolution, the regulated agents that carry out biofuel importation activities must observe the minimum stock supply maintenance obligations and the proof of capacity to supply the market. The same requirement will apply to biofuel producers.

The new rounds approved in the CNPE 1st Extraordinary Meeting, including the 3rd Pre-Salt Round (Production Sharing), will be sent to the president for approval.

Maps of the areas to be offered in the announced 2018 and 2019 Bid Rounds are available clicking here.

For more information in relation to this legal update, please contact EnergypartnersTC@mayerbrown.com.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados and are not intended to provide legal advice. Any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.