Oil & Gas Newsletter no. 2

[vc_row][vc_column][vc_column_text]In order to keep our clients informed about the current landscape of the Oil & Gas sector, we have prepared this monthly newsletter with the main news of the market. 

Our goal is to establish this newsletter as a complete and reliable source of information about the dynamic Brazilian Oil & Gas market. This issue was organized with a great deal of effort, and we encourage your suggestions for subsequent issues.

This newsletter is for informative purposes only and does not constitute legal advice for any specific operation or business. For more information, please contact our team of lawyers.

Enjoy your reading!
Demarest’s Oil and Gas Team[/vc_column_text][vc_empty_space height=”40px”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

NEW RESOLUTIONS

ANP amends resolution that consolidates rules on accreditation of certification bodies

On March 17, 2022, the Collegiate Board of the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) approved the publication of the new Resolution 869/2022, which consolidates ANP Resolutions No. 25/2016 and No. 801/2019, which, in turn, established the requirements and procedures of the accreditation, by ANP, of certification bodies for local content of goods and services. 

As clarified by the Agency, the combining of the regulatory acts into a sole Resolution meets the requirements of Decree No. 10.139, of November 28, 2019, which provides for the need to review and consolidate regulatory acts on the same subject in a sole act, with the express revocation of previous ones.  

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ANP consolidates rules on special participation (SP)

On March 24, 2022, the Collegiate Board of Directors of the ANP approved the publication of ANP Resolution No. 870/2022, which consolidates Ordinance No. 58/2001  and ANP Resolutions No. 35/2010 and No. 12/2014. The original regulatory acts establish the procedures for calculating special participation (SP) – i.e., extraordinary financial remuneration, owed by concessionaires for exploration and production of oil or natural gas, for fields with large production volumes. 

 The combining of the three acts into a sole resolution meets the requirements of Decree No. 10,139 of November 28, 2019, since it brings together regulatory acts on the same subject into a sole act, with the express revocation of the previous ones. 

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Resolution that regulates local content reports published

On March 31, 2022, Resolution No. 871/2022 was published in the Brazilian Official Gazette, regulating local content reports, which correspond to the Quarterly Expense Report (“RGT”) and the Local Content Report (“RCL”), to be sent to the ANP within the scope of oil and natural gas exploration and production contracts.  

Among other aspects, the frequency, formatting and content of the RGTs and RCLs were established, to which the clauses entitled “Accounting and Auditing” and “Local Content”, respectively, of the exploration and production (“E&P”) contracts refer.  [/vc_column_text][vc_empty_space height=”40px”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]UPCOMING PUBLIC CONSULTATIONS AND HEARINGS

We list below the public consultations published by the ANP and whose contribution deadlines are still open:

[/vc_column_text][vc_empty_space height=”40px”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]RELEVANT DECISIONS

Public Consultation on the Incremental Call for GASIG approved

On March 17, 2022, the ANP Board of Directors approved a public consultation to obtain contributions from economic agents and other interested parties for the Public Call Notice for contracting incremental natural gas transportation capacity on the Itaboraí-Guapimirim (GASIG) pipeline, to be built by Nova Transportadora do Sudeste (NTS). 

According to the Agency, the purpose of the public notice is (i) to identify the demand for the natural gas pipeline transportation service offered, and (ii) to contract the transportation capacity in the firm mode at the Itaboraí entry point for 15 years, starting March 1, 2023. 

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ANP publishes, within the scope of RenovaBio, the distributors’ individual targets for 2022

On March 24, 2022,  ANP Order No. 374/2022 was published, containing the individual compulsory targets for the year 2022 for distributors in the scope of RenovaBio, the National Biofuels Policy. The text, available here, establishes the 2022 reduction target for greenhouse gas emissions for each distributor that sold fossil fuels in 2021. 

The individual targets are calculated annually by the ANP, based on the national annual target published by the National Energy Policy Council, for 2022, through Resolution CNPE no. 17, of October 5, 2021. 

The targets are reached by the distributors by retiring (taking out of circulation) decarbonization credits (CBIOs) in an amount corresponding to their target. 

 [/vc_column_text][vc_empty_space height=”40px”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]OPPORTUNITIES

Upstream Opportunities

Open Acreage – Production Sharing: ANP holds a public hearing on the pre-tender protocol and contract drafts

On March 25, 2022, ANP held a hybrid public hearing on the pre-tender protocol  and the draft contracts that provide for the bidding rules for 11 (eleven) blocks located in the pre-salt layer, under the Open Acreage –  Production Sharing (“PPO”) regime. 

From the blocks on offer in the pre-bid, the following were scheduled to be offered in the 7th and 8th Production Sharing Rounds: Ágata, Água Marinha, Esmeralda, Jade, Turmalina and Tupinambá, in the Bacia de Santos. The others did not receive offers in the production sharing bidding rounds held previously by the ANP, These are: Itaimbezinho (4th Production Sharing Round, Bacia de Campos), Norte de Brava (6th Production Sharing Round, Bacia de Campos), Bumerangue, Cruzeiro do Sul and Sudoeste de Sagitário (6th Production Sharing Round, Bacia de Santos). 

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Public Bidding Open for Proposals with Petrobrás 

We list below the main contracting opportunities made available by Petrobras so far, through the Petronect platform:

Read in full* As datas são expressas aqui como mm/dd/aaaa[/vc_column_text][vc_empty_space height=”40px”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]OTHER TOPICS

List of small and medium-sized companies active in the year 2022 announced

On March 3, 2022, the ANP announced the updated list of small and medium-sized companies that operate in E&P activities. According to the Agency, the total number of companies with these profiles increased from 25 in 2021 (20 small and five medium-sized) to 36 in 2022 (22 small and 14 medium-sized).   

The increase can be attributed to different fronts of the Agency’s actions to stimulate this segment, such as: (i) reduction of royalties for small and medium-sized companies; (ii) incentive for Petrobras’ divestment program; (iii) extension of concession contracts through commitments of new investments in the fields; and (iv) reduction of the royalty rate on the incremental production of each field. 

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ANP publishes clarifications on local content TACs

On March 04, 2022, the ANP published clarifications to the market about ANP Resolution No. 848/2021, which regulates the terms of conduct adjustment (“TAC”) for local content.  

Among what was clarified, it is worth mentioning the aspects about the use of local content surplus in the composition of the TAC commitments, which correspond to the value, in Brazilian currency, of the local content fulfilled above the commitments established in the contracts. Those are: (i) the sole and exclusive use of local content surplus in source contracts is forbidden and must not represent more than 10% of the total commitments to be made, as per the application of paragraph 2 of Article 10 of ANP Resolution No. 848/2021; and (ii) the use of local content surplus in the TAC is restricted to cases in which the calculated surplus is transferable to the source contract as per contractual provisions and ANP Resolution No. 726/2018. 

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ANP launches Dynamic Dashboard of Biomethane Producers

On March 08, 2022, the ANP published a new interactive way to visualize biomethane production data, the Dynamic Dashboard of Biomethane Producers.  

The new dashboard has the purpose of presenting a dynamic map with the location data of all biomethane producers authorized by the ANP, as well as their respective authorized production capacities, and information related to regional production, raw material and sales, with the possibility of applying filters by period. The database is also available as an Excel spreadsheet, available on the same page. 

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Public Hearing debates the creation of an Exploratory Work Plan 

On March 08, 2022, the ANP held a public hearing to debate the draft resolution that creates the Exploratory Work Plan (“PTE”). The proposed draft seeks to establish the requirements and procedures for the presentation of the PTE by companies holding E&P contracts, as well as its approval by the ANP. 

According to the Agency, the proposed resolution aims to unify the Annual Work and Budget Program (PAT/OAT), of the Exploration Phase, and the Exploration Plan (mandatory for production sharing contracts), in a single instrument: the PTE. The purpose would be to simplify procedures, reduce duplication of information, and enable the Agency to receive more structured data. 

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ANP publishes Competency Matrix for decommissioning offshore installations 

On March 21, 2022, through joint work carried out by the ANP, IBAMA, and the Brazilian Navy, the Competency Matrix for decommissioning maritime installations for E&P of oil and natural gas was published.   

Such publication meets criteria set out in the recommendation by the Federal Audit Court (TCU) and is part of the initiatives undertaken by the ANP to improve the applicability of the decommissioning regulatory regime. The purpose of the publication is to provide greater clarity to the competencies, rules, deadlines, and procedures adopted by each of the agencies involved in the facility decommissioning process. 

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Government launches Public Consultation on the Poço Transparente project 

On March 30, 2022, the Federal Government opened a public consultation on the draft of the public notice for Project Qualification for the performance of Poço Transparente – a pilot project of the government concerning unconventional onshore exploration in the country. The purpose of the measure is to obtain input on the content of the document, for purposes of allowing horizontal well drilling in a low-permeability reservoir, as well as the application of the hydraulic fracturing technique for production, by producing knowledge about the feasibility of oil and gas production in unconventional onshore reservoirs. 

The Ministry of Mines and Energy (MME), the Special Secretary of the Investment Partnership Program of the Ministry of the Economy (SEPPI), the Energy Research Company (EPE) and the ANP worked together, with the involvement of public agents related to the topic, to prepare the draft Notice. 

Read in full

The contribution form can be found here. [/vc_column_text][vc_empty_space height=”40px”][/vc_column][/vc_row]