ANP releases new resolutions to update brazilian regulatory framework

The National Agency for Oil, Natural Gas and Biofuels (“ANP”) published in the past week three new resolutions.

Resolution 852/2021 – Oil and Natural Gas By-Products

On September 24, 2021, the ANP published Resolution No. 852/2021, which regulates, among other aspects, the production of oil and natural gas by-products, their storage, trade and the provision of related services.

The regulation consolidates the activities of oil refining, natural gas processing, formulation of gasoline and diesel oil and production of fuels in petrochemical plants into a single resolution; repealing a total of 11 normative acts.

Several important changes were implemented, among which we can highlight:

• ANP’s authorization for the construction or modification of a new production facility for oil products and natural gas is waived, whereby only the communication of such activity to the regulatory agency is necessary;
• the ANP may authorize the carrying out of tests prior to the granting of the operation authorization, for a maximum period of 3 months;
• transfer of ownership of the operating authorization is possible;
• the new Resolution establishes with whom agents can trade, including authorization of direct trade with the consumer, subject to compliance with certain requirements; and
• change of operational safety conditions, the raw materials used, the production profile or the final quality of the products require approval by the ANP.

Legal entities with an authorization request in progress at the ANP will have a period of 90 (ninety) days to comply with the provisions of the new Resolution, under penalty of shelving of the application.

Click here to access the full content of Resolution No. 852/2021.

Resolution 853/2021 – Reduction of Royalties Rate for Small and Medium-sized Companies

On September 28, 2021, Resolution No. 853/2021 was published, which allows for the reduction of the royalties rate on fields granted to small or medium-sized companies.

The request for reduction must be made through an individualized application by production field, being applicable only to fields granted individually to small and medium-sized companies or to consortia whose members are small or medium-sized companies with participation equal to or greater than 75%.

Fields operated by small-sized companies (average annual production less than 1,000 boe/d in Brazil and abroad) will have their royalty rate reduced to 5%, while fields operated by medium-sized companies (average annual production less than 10,000 boe/d in Brazil and abroad) will have the royalty rate reduced to 7.5%. Such reductions will only affect the production of the month following the date of signature of the amendment to the concession agreement.

Click here to access the full content of Resolution No. 853/2021.

Resolution 854/2021 – Financial Guarantees for Decommissioning

After several discussions with market agents of the oil and gas sector, the ANP published on September 29, 2021, Resolution No. 854/2021, which regulates the procedures regarding the presentation of financial guarantees for the decommissioning of production facilities, among other aspects.

The field operator must present the financial guarantee or the instrument that ensures the decommissioning of the facilities, within 180 days from the date of commencement of production of the field.

In the case of a consortium, the financial guarantees or the instrument may be submitted individually or jointly by the parties. Regardless, all parties are jointly and severally responsible for the presentation and solvency of the guarantees submitted.

In the case of assignment of the exploration and production agreement, the presentation of a financial guarantee or instrument shall be a condition for approval of the assignment.

The financial guarantee modalities accepted by the ANP are: (i) letter of credit; (ii) insurance guarantee; (iii) pledge of oil and natural gas; (iv) corporate guarantee; and (v) provisioning fund. It will also be possible for the party to ensure financial resources for the fulfillment of the decommissioning obligation by means of an instrument with an extrajudicial enforcement. It will be up to the ANP to accept or deny the financial guarantee or the instrument presented.

For exploration and production agreements in force on the date of publication of Resolution 854/2021, the parties will have the deadline of June 30, 2023 to comply with the terms of such resolution and to implement the necessary adjustments to the guarantees already presented.

Click here to access the full content of Resolution No. 854/2021.

Our Oil & Gas team is available to provide any clarification on this matter.