On May 9, 2017, the National Energy Policy Council ("CNPE") published Resolution No. 7 ("Resolution"), which approves the local content commitments for the bidding rounds under concession and production sharing regimes for this year, as well as establishes the guidelines for local content in unitization areas.
As previously decided in CNPE's 1st Extraordinary Meeting in 2017, the Resolution establishes that in the event that the deposits extend to non-contracted areas, 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.
For the unitization areas to be offered in the 2nd Bid Round under the production sharing regime, the CNPE determined the minimum local content as follows: (i) Carcará and Sapinhoá - 35% during the exploration phase and 30% during the development phase; (ii) Gato do Mato - 38% during the exploration phase and 60% during the development phase; and (iii) Tartaruga Verde - 55% during the exploration phase and 65% during the development phase.
In relation to the 3rd Bid Round under the production sharing regime, the minimum mandatory local content shall obey the percentages of: (i) 18% during the exploration phase; and (ii) in the development phase, 25% for well construction, 40% for the collection and offloading system and 25% for the stationary production unit.
As for the 14th Bid Round under the concession regime, CNPE established that the local content commitments will not be used as a criteria when judging the proposals in the bidding round. For the onshore blocks, the minimum global commitment percentage required will be of 50%, both for the exploration phase and for the production development period. Regarding the offshore areas, the minimum local content percentage required shall be: (i) exploration phase – minimum global commitment of 18%; and (ii) production development period – 25% for well construction, 40% for the collection and offloading system, and 25% for the stationary production unit.
Lastly, Resolution No. 7/2017 decided on the exclusion of the contractual commitment of local content in the bids under the concession regime of onshore areas containing marginal accumulations. This provision applies as of the 4th Bid Round of onshore areas containing marginal accumulations of oil and natural gas.
For more information in relation to this legal update, please contact EnergypartnersTC@mayerbrown.com.