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 legal team.
In order to keep our clients informed about the current landscape of the main energy and natural resources sectors in Brazil, we have prepared the Energy Newsletter, a monthly bulletin with the main news of the energy market.
This information channel is the result of the collaboration between our “Oil & Gas” and “Energy” teams.
The newsletter was designed within the context of the energy transition that is being targeted in Brazil, and drafted as a complete source of information about the dynamic Brazilian energy market within the oil, natural gas, electricity and renewable energy sectors.
Enjoy reading!
Oil & Gas
HIGHLIGHTS
ANP plans to consult market on regulations for access to gas infrastructures
On January 30, 2024, an article by Brasil Energia reported that the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (“ANP”) intends to hold a public consultation and hearing, in the first half of 2024, regarding the draft resolution on access to natural gas pipelines and processing units, as well as liquefied natural gas (“LNG”) terminals.
According to the data obtained by the news outlet, the ANP’s Board will analyze a report prepared by a working group, formed by different internal superintendencies, on the regulatory impact of granting access to essential infrastructures, such as flow pipelines, Natural Gas Processing Units (“UPGNs”) and LNG terminals. The next step will be to draft the resolution and submit it to the sector’s agents within at least 45 days.
According to Heloíse Helena Costa, ANP’s Board Advisor, although it is not possible to predict when the resolution will be published, it is likely to take place in 2024. In addition, according to the advisor, the ANP is also drafting a resolution to address the revision of the production development plan, in which natural gas reinjection will be considered.
Seismic reprocessing reinforces the potential of the Northern Brazilian Equatorial Margin
On January 31, 2024, the Editora Brasil Energia published an article addressing the potential of the Northern Brazilian Equatorial Margin (Margem Equatorial do Maranhão). Allan Kardec Duailibe, president of the state’s distribution company (Gasmar) and spokesman for the Maranhão government in defense of the exploratory activities of the Brazilian Equatorial Margin, has drafted a new study indicating the existence of more than 100 structures favorable to the production of hydrocarbons in the Barreirinhas Basin, located on the state’s coast. This study, called MegaBar, was based on the reprocessing and interpretation of 3D seismic data carried out by the company CGG, and published by the regulatory agency.
Duailibe highlighted the existence of promising geological findings, encouraging local governments to move forward with their exploratory efforts. However, the Brazilian Institute of Environment and Renewable Natural Resources (“IBAMA”) is demanding additional guarantees from investors in order to prevent environmental accidents. Currently, five companies (Petrobras, BP, Chariot, Shell and 3R) hold exploration contracts in this region.
The study also emphasizes the importance of streamlining the licensing process for exploratory drilling in the basin in order to prevent companies from withdrawing and returning the blocks to the ANP. The document, signed by Duailibe, Pedro Victor Zalán and Roberto Juncken, highlights the Brazilian Equatorial Margin’s potential, which is comparable to that of the Pre-Salt area.
In addition, Duailibe argues that investments in the region can yield significant socio-economic benefits, especially in relation to the new jobs and income that can be created. Another study, commissioned by the local government and carried out by Luís Eduardo Duque Dutra, professor at the Federal University of Rio de Janeiro (“UFRJ”), suggests that oil and gas exploration can leverage the state’s development and help finance its energy transition.
Investments in the region are estimated to generate 45,000 jobs during the construction phase and further 18,000 direct and indirect jobs during operations. The study also highlights the possibility of paying above-average salaries for the workers employed.
Overall, the investments planned for the oil and gas sector in the region until 2034 amount to BRL 23.8 billion, of which BRL 1 billion are allocated to the Barreirinhas Basin and BRL 1 billion to the Pará-Maranhão region for the drilling of 4 exploratory wells. The amount represents a significant boost compared to the total investment in the state in 2022, which was approximately BRL 21 billion.
Investments in oil and gas production can exceed BRL 500 billion over the next 5 years
On January 31, 2024, the ANP published updated information on the Dynamic Dashboard for Activity, Investments and Production Projections in the Production Phase. The update indicated that. between 2024 and 2028. approximately BRL 514 billion are expected to be invested in the production phase of current contracts for exploration and production of oil and natural gas in Brazil.
This dashboard displays the data reported by current contractors in the Annual Work and Budget Programs (“PAT”) and Annual Production Programs (“PAP”), and can be updated at any time. In addition, it is important to note that these forecasts only refer to the production phase, which is the second phase under the contracts.
Investments in the first phase (exploration phase) for 2024 are estimated at USD 1.96 billion. Of these investments, around 95% are allocated to the offshore basins, while the Brazilian Equatorial Margin basins are expected to receive approximately USD 1.09 billion, and the East Margin basins, USD 772 million. The onshore basins, in turn, are expected to attract an investment of USD 100 million by 2024, allocated to new frontier and mature basins.
The greatest impact on this year’s investments will be created by drilling wells, with USD 1.71 billion projected for the drilling of 39 exploratory wells, representing 87% of the investments estimated for 2024.
NEWS
Operational safety: ANP publishes technical note on human factors
On January 25, 2024, the ANP’s Board approved the publication of Technical Note No. 10, regarding operational safety in the oil and natural gas sector, especially within the scope of Human Factors Engineering.
The ANP’s target is to reinforce the importance of companies in the oil and natural gas exploration and production in using the industry’s best international practices. The ergonomic standards that regulate facilities, for instance, must be in line with the physical and cognitive abilities of the workers in charge of operating them. By adopting standards of this sector, potential procedural accidents are minimized by simply adjusting ergonomics.
The technical note is based on audits carried out by the ANP, which indicated the need to reinforce the use of these standards by the Brazilian national industry.
ANP approves results of the 2nd Cycle of the Production Sharing Open Acreage
On January 02, 2024, the ANP published the results of the 2nd Cycle of the Production Sharing Open Acreage, which took place on December 13th, 2023. In this bidding round, the Tupinambá block, in the Santos Basin, was acquired by BP Energy.
The signing bonus, which is fixed in the sharing bids, was BRL 7,047,000.00, and the winning company is expected to invest BRL 360 million in the first phase of the contract (exploration phase). According to the ANP, the percentage of surplus oil offered to the Federal Government was 6.5%, with a premium of 33.2% compared to the minimum established in the tender protocol.
The contract is scheduled to be signed on May 31, 2024.
Workshop introduces SisRoc – a system for managing rock and fluid sample collections
On January 10, 2024, the ANP held the Technical Workshop on the SisRoc Solution for Managing the Federal Government’s Rock and Fluid Sample Collections, aimed at introducing a computerized, web-based online system, which is expected to be available by the end of the first quarter of 2024. A total of 150 people attended the workshop, including representatives of exploration and production companies, as well as service providers and research institutions working in the E&P sector, either in person or remotely.
This system will provide representatives of companies and research institutions, through an integrated and intuitive interface, with the tools to identify the availability of samples from oil and gas wells, as well as register the samples obtained from new drilling operations. In addition, it will be possible to request access to samples for analysis, submit results and use other services involving the use and access of rock and fluid samples.
ANP publishes dynamic dashboard on registration of greases and lubricants
On January 16, 2024, the ANP published the Dynamic Dashboard for Registration of Greases and Lubricants. Through the new tool, before purchasing, it will be possible to check whether greases and lubricating oils hold an ANP registration, as established by ANP Resolution No. 804/2019.
The new dashboard allows purchasers to search for data using a registration number or trademark, and also displays the list of all registered lubricants. It also contains general information on greases and lubricating oils, as well as a section with frequently asked questions and answers on the matter. The data will be updated weekly as new registrations are published.
POWER
HIGHLIGHTS
MME opens public consultation to regulate the inclusion of distributed minigeneration projects in REIDI
On January 17, 2024, the Ministry of Mines and Energy (“MME”) opened Public Consultation (“CP”) No. 159/2024, aimed at receiving contributions to regulate the procedures for requesting that distributed minigeneration projects be included in the Special Incentive Regime for Infrastructure Development (“REIDI”).
Access Public Consultation No. 159/2024.
TCU will monitor the extension of distribution concessions
The plenary of the Brazilian Federal Audit Court (“TCU”) authorized the MME to move forward with the extension of the concessions involving distribution companies and reserves the right to monitor the extension process of each distribution concessionaire on a case-by-case basis.
The proceeding mentioned above was scheduled to be judged last year, but it was removed from the trial agenda at the request of the Brazilian Chief of Staff and the president of the House of Representatives, Arthur Lira.
In light of this decision, Minister Antonio Anastasia proposed to his peers that, “in the event that the Granting Authority chooses to extend the concession of electricity distribution not provided for by art. 7 of Law 12,783/2013, this court will carry out the individualized monitoring, through specific inspections of the proceedings that will result in the execution of amendments to the contracts”.
According to news, the MME will hold discussions with the Brazilian Chief of Staff to establish the conditions for the potential renewal of concessions. There are 20 distributors whose concessions will expire from 2025 to 2031, and another 33 distributors whose concessions expire after this period.
Access the announcement in full.
Access the article about the MME in full.
ONS completes analysis of generators’ flow margins
Through Technical Note NT-ONS DPL 0132/2023, the Brazilian National Electric System Operator (“ONS”) completed the review of access opinions for hiring the exceeding flow margin.
Normative Resolution (“REN”) of the Brazilian National Electricity Regulatory Agency (“ANEEL”) 1.065/2023 established the requirements and procedures on the special mechanism for generation grants and Transmission System Use Contracts (“CUST”), thus revoking the concessions of the power plants eligible for the special amnesty mechanism.
Because of this resolution, 244 power plants were allowed to amicably withdraw from their authorizations and obligations, having their grants revoked. As a result, approximately 10.08 GW of the transmission grid were “released”.
A portion of the amnestied amount was earmarked for generators with access opinions indicating the absence of systemic feasibility or whose flow depended on transmission works.
According to the ONS, after amnesty, 507 requests were submitted by power plants, amounting to 22.55 GW of installed power. A total of 175 companies were included in the exceeding flow margin, totaling 7.90 GW, of which 3.53 GW were allocated in the Southeast region and 4.37 GW in the Northeast region.
In view of this, these plants must sign a CUST within 90 days.
Access the article in full.
Access the list of all projects that have successfully obtained an exceeding flow margin.
TCU resolves on undue granting of TUST/TUSD discounts
On January 31, 2024, the TCU judged ANEEL’s appeal in the proceeding that addressed the improper granting of discounts on the Tariffs on the Use of Transmission and Distribution Systems (“TUST/TUSD”) for projects that exceed the power injection limits of 300 MW, in violation of paragraph 1-A, of Art. 26, of Law No. 9,427/1996.
In 2023, the Secretariat for Infrastructure Supervision of Electrical Energy (“SEINFRAELÉTRICA”) submitted a representation to the TCU regarding the fractioning of generation projects so that they can be included in the legal limits for the discount.
In its decision on this matter, the TCU had established that ANEEL must not grant new discounts to projects pending authorization until the matter is regulated by the agency, in order to prevent the granting of discounts in the event that single projects were split into smaller ones. Also, the TCU established that ANNEL must submit an action plan within 180 days to regulate this matter and address the projects whose grant has already been awarded.
ANEEL appealed against this decision in order to seek clarification regarding the projects undergoing the granting process. As a result, the TCU amended its decision in order to authorize: (i) ANEEL to issue grants to projects that are expressly under 300 MW of capacity; and (ii ) entrepreneurs to proceed with the implementation of the projects undergoing the authorization process “at their own discretion and risk”, explicitly stating in the grants that the plant’s eligibility for the TUST/TUSD discount will depend on future regulations.
ANEEL’s action plan, as established by the TCU, must be submitted by May 25, 2024.
Access the decision regarding this representation.
NEWS
Free Energy Market opened in 2024 for Group A consumers
In the Free Contracting Environment (“ACL”) of electricity, also known as “Free Energy Market”, consumers can contract electricity at prices they have freely agreed upon, without being subject to the energy tariffs approved by ANEEL.
Of over 90 million consumers in Brazil, only approximately 12,000 consumer units fall under this segment.
However, MME Ordinance No. 50/2022, of September 28, 2022, authorized Group A consumers – agents of voltage greater than or equal to 2.3 kV – to migrate to the ACL as of January 01, 2024.
Consumers with an individual load under 500 kW must be represented by a retail trader before the Energy Trading Chamber (“CCEE”).
As of January 2024, tens of thousands of consumer units are expected to migrate to the ACL.
EPE publishes plans for transmission expansion works
The Brazilian Energy Research Company (“EPE”) launched the Transmission Expansion Program (“PET”) and the Long-Term Expansion Plan (“PELP”) regarding the 2nd semester of 2023.
PET only encompasses works whose systemic requirement date runs until 2029. These represent the determining works of the sector’s planning.
PELP comprises works whose systemic requirement date runs from 2030 onward. These works, in turn, are indicative and can be reevaluated in the coming planning cycles.
According to EPE, the document includes all the expansion works recommended for the National Interconnected System (“SIN”) according to planning studies completed by November 2023, and which have not yet been authorized or tendered, including the results of Transmission Auction No. 002/2023 (December 2023).
The total investment involved in the expansions mentioned in the PET/PELP edition amounts to BRL 56.2 billion. Of this total, BRL 37.8 billion will be allocated to investments in transmission lines and BRL 18.4 billion in substations. Also, of this amount, BRL 30.6 billion will be allocated to investments in planned works with a view to generation flow.
Infrastructure Debentures Law published
On January 10, 2024, Law No. 14,801/2024 was published, addressing Infrastructure Debentures. In short, the law establishes that special-purpose companies, concessionaires, permit holders, authorization holders or lease holders incorporated as a joint-stock company can issue debentures. The funds raised from which will be allocated to the implementation of priority infrastructure or research, development and innovation projects.
Access Decree No. 14,801/2024.
Women-only team monitors SIN
On January 16, 2024, for the first time in the ONS’s history, SIN monitoring was carried out by a team formed only by women. Operators have taken control of electricity generation and transmission facilities in more than 10 states and Brazil’s Federal District.
Guide launched for verifying technological development of companies in the power sector
On January 16, 2024, ANEEL launched “ANEEL’s Technological Development Assessment Guide” to assess the level of development of technologies employed by companies in the power sector. The guide is part of the Five-Year Strategic Innovation Plan (“PEQuI”) for the 2024-2028 period and seeks to foster innovations between industrial partners, while nurturing a solid and collaborative environment.
Renewables and other Energy Sources
IEA report and Brazil’s leading role in the international landscape
On January 11, 2024, the International Energy Agency (“IEA”) published the Renewables 2023 report, which demonstrated Brazil’s leading role in the expansion of renewable energy in Latin America. According to the report, Brazil is likely to account for 65% of the increase in renewable energy generation between 2023 and 2028. Solar energy is at the forefront of such expansion, and Brazil’s solar energy production in Latin America is estimated at approximately 90%.
Brazil’s prominence in the sector is not only attributable to its favorable environment, but also to the application of public policies that leverage the market and drive the growth of clean energy sources. In 2023 alone, there were almost BRL 40 billion in investments in the energy industry, with a special focus on the Northeast region, as well as the expansion of renewable energy distribution.
According to the report, Brazil is a leading force in biofuels, with a 40% global expansion by 2028, of which road transportation accounts for 90% of the total expansion.
The document indicated that the world’s capacity to generate renewable energy has been growing at a brisk pace over the last three decades. According to the IEA, this landscape points to a real chance of achieving the target of a threefold increase in global renewables capacity by 2030, as established during COP 28, in December 2023.
Rio de Janeiro opens public consultation regarding energy transition
On January 04, 2024, the state of Rio de Janeiro, via the State Secretariat of Energy and Economy of the Sea of Rio de Janeiro (“SEENEMAR”), launched a public consultation in order to establish the guidelines for the Strategic Energy Transition Agenda for the state of Rio de Janeiro, as well as the measures to be adopted toward the state’s energy transition.
The contributions will result in the drafting of the State Policy for Energy Transition, in compliance with the deadlines and steps described below:
| Phase | Date | Target |
| First phase | Postponed, new date to be announced. | Public consultation regarding strategic guidelines for the state policy. |
| Second phase | April/2024 | Drafting of the bill to be submitted to the Legislative Assembly. |
| Third phase | July/2024 | Public consultation regarding action plans. |
| Fourth phase | December/2024 | Implementation of action plans. |
| Fifth phase | December/2024 | Outline of specific programs and projects. |
| Sixth phase | To be defined | Assessment of programs and projects. |
Interested parties must submit their contributions by March 04, 2024, in line with the form provided by SEENEMAR.
Renewables will meet world demand growth by 2026, says IEA
On January 24, 2024, the International Energy Agency (“IEA”) published a report addressing the perspectives and trends of the global electricity sector. According to the report’s findings, renewable energy is expected to meet the entire growth in terms of global demand by 2026, whose sources will supply more than a third of the total energy generated by 2025, bypassing the supply derived from coal.
In addition, the report mentions that renewable energy growth combined with an increase in nuclear generation will potentially overcome coal-based generation. In addition, global CO2 emissions from energy generation are expected to drop by over 2% in 2024.
NEWS
MME restructures Social Biofuel Seal
On January 10, 2024, the Ministry of Mines and Energy (“MME”), through Minister Alexandre Silveira, and the Ministry of Agrarian Development (“MDA”), through Minister Paulo Teixeira, introduced the text of the decree that restructures the Social Biofuel Seal and generates investments for the Brazilian agribusiness and fuels sector.
As of April 2024, biodiesel will be blended with fossil derivatives at a ratio of 14% (B14), generating the investment of approximately BRL 740 million in 2024, and BRL 1.6 billion as of 2025. The initiative to change the biodiesel seal is an important tool for strengthening family farming, especially in the North, Northeast, semi-arid regions, the north of Minas Gerais and in the Jequitinhonha Valley.
The number of registered families is expected to grow at least 120% by 2024.
MME plans bilateral partnership with the US
On January 17, 2024, the MME received the US Government’s Global Infrastructure Development Program (“GIDP”) delegation to discuss a bilateral cooperation agreement regarding infrastructure and development projects. During the meeting, representatives of the National Departments of Geology, Mining and Mineral Transformation (“SNGM”) as well as Energy Transition and Planning (“SNTEP”) discussed with Helaina Matza (GIDP’s Special Coordinator) the expectations for the mineral and energy transition sectors for the coming years, in addition to sharing experiences about governmental measures in these areas. The meeting was also attended by:
- the director of the Department of Mineral Transformation and Technology, Rodrigo Cota;
- the director of Mineral Planning and Policy, Breno Zaban;
- the deputy director of the Department of Energy Transition, Patricia Naccache;
- SNTEP’s general coordinator, Marco Juliatto;
- GIDP’s senior advisor, Vinay Chawla;
- a member of the GIDP, Jared Farber;
- S. Embassy’s financial advisor, Matthew Lowe; and
- the economic attaché of the American Embassy, Norman Galimba.
BNDES carries out 51 operations targeting renewables
On January 18, 2024, the MME published 2023 figures, regarding Brazil’s energy transition efforts. According to the report, the Brazilian National Bank for Economic and Social Development (“BNDES”) increased investments by 62% in clean energy, as compared to 2022. According to the survey, the total amount invested was BRL 19.6 billion.
The investments carried out in renewables by BNDES represents a third of the bank’s total investments, through 51 operations focused on energy transition and climate change.
BNDES will finance projects such as the Babilônia Centro Wind Complex, located in Bahia. Such financing amounted to BRL 3.16 billion, the largest amount ever approved by BNDES within the scope of renewable energy generation. The power plant will have an installed capacity of 553.5 megawatts. The wind energy complex is expected to prevent the emission of 950,000 tons of CO2.
| TYPE | DESCRIPTION | CONTRIBUTION TERM | CODE / NOTES |
|
Public Consultations (MME) |
|||
| CP No. 159/2024 | Proposed procedures for requesting the inclusion of distributed mini-generation projects in REIDI. | February 27, 2024 | |
| Petrobras Contracting | FPSO for SEAP-II – Chartering and Operation services | June 14, 2024
12:00 PM |
7004032955 |
| Petrobras Contracting | FPSO for SEAP- I – Chartering and Operation services | June 14, 2024
12:00 PM |
7004032918
|
| Petrobras Contracting | Chartering and Operation Services of FPSO – Barracuda and Caratinga Revit | July 01, 2024
12:00 PM |
7004050042 |
| Petrobras Contracting | Telecommunication services – INMARSAT C radio station for ships | February 27, 2024
12:00 PM |
7004248096 |
| Petrobras Contracting | Infrastructure Maintenance Services of Telecommunications Stations | February 22, 2024
12:00 PM |
7004253072 |
| Petrobras Contracting | Maintenance Services on Telecommunications Station Infrastructure | February 22, 2024
12:00 PM |
7004253072 |
| Petrobras Contracting | Telecommunication Services – INMARSAT C radio station for vessels | February 27, 2024
12:00 PM |
7004248096 |
| Petrobras Contracting | Offshore Design, Repair and Maintenance Services, including Items and Pieces, for the UN-BC marine units | February 29, 2024
05:00 PM |
7004252317 |
| Petrobras Contracting | Contracting of a marine intervention unit (“UIM”), Self-elevating platform with independent cantilevered legs, to operate in water depths between 12m and 50m. | February 29, 2024
12:00 PM |
7004230948 |
| Petrobras Contracting | Acquisition of floats for submarine interconnection | February 23, 2024
05:00 PM |
7004250393 |
**Please note that the deadlines in the table above are constantly changing and correspond to the deadlines disclosed at the time of publication of this newsletter.
WHATS COMING UP
 |
March/2024 – Transmission Auction 001/2024
To be held by ANEEL. |
 |
July/2024 – Auction for Contracting Capacity Reserve
To be held by ANEEL. |
 |
August/2024 – New Energy Auctions “A-4” and “A-6”
To be held by ANEEL. |
 |
September/2024 – Transmission Auction 002/2024
To be held by ANEEL. |
 |
October/2024 – Auction for the Supply of Isolated Systems
To be held by ANEEL. |
 |
November/2024 – Auction for Contracting Capacity Reserve
To be held by ANEEL. |
 |
December/2024 – Existing Energy Auctions “A-1” and “A-2″
To be held by ANEEL. |
 |
July/2025 – Auction for Contracting Capacity Reserve
To be held by ANEEL. |
| |
March/2025 – Transmission Auction 001/2025
To be held by ANEEL. |
| |
August/2025 – New Energy Auctions “A-4” and “A-6”
To be held by ANEEL. |
| |
September/2025 – Transmission Auction 002/2025
To be held by ANEEL. |
| |
October/2025 – Auction for the Supply of Isolated Systems
To be held by ANEEL. |
| |
November/2025 – Auction for Contracting Capacity Reserve
To be held by ANEEL. |
| |
December/2025 – Existing Energy Auctions “A-1” and “A-2″
To be held by ANEEL. |
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