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 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.
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Demarest’s Oil and Gas Team
On April 19, 2022, the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) published Resolutions Nos. 874/2022 and 875/2022, which consolidate the rules that establish the criteria for setting the reference price of oil and natural gas, respectively. Such consolidation involves the regulations contained in eight other regulatory acts of the ANP. Since the regulatory content concerning the establishment of reference prices was not amended, the regulatory impact analysis (“AIR”) as well as the public consultation and hearing were not required. The publication of these resolutions caused the express repeal of ANP Ordinance No. 206/2000 and ANP Resolutions Nos. 4/2009, 40/2009, 3/2010, 14/2011, 703/2017, 788/2019, and 796/2019.
On April 28, 2022, ANP’s Board of Directors approved ANP Resolution No. 876/2022, subsequently published in the Official Gazette on May 02, 2022, which establishes the requirements and procedures for submission and approval of the Exploratory Work Plan (“PTE”). The rule is applicable to companies that hold the rights for the exploration and production of oil, natural gas, and other fluid hydrocarbon, granted through contracts in the exploration phase as well as to agents subject to the remaining obligations arising from these contracts.
The Resolution sought 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. Such document must specify the activities to be performed, along with their respective schedules and budgets, for each block under the exploration and production (“E&P”) contract, as well as for the period during which the remaining obligations will be performed.
Below is the list of public consultations published by the ANP whose contribution periods are still open:
|PUBLIC CONSULTATION AND HEARING (ANP)||SUBJECT||CONTRIBUTION PERIOD||PUBLIC HEARING DATE|
|N° 10/2022||Upstream – The purpose of the public consultation and hearing is to obtain, from beneficiary entities and other interested parties, contributions for the revision of ANP Ordinance No. 143/1998, which regulates procedures regarding the calculation and payment to landowners. The proposal is to introduce some flexibility on the current standard rate of 1% on gross production revenue, varying between 0.5% and 1%. The measure is expected to have positive impacts on the appeal and economic feasibility of new areas to be offered in future bids. Fields currently in production and current landowners would not be impacted by this amendment.
|Until June 15, 2022||June 29, 2022 | 2:00 PM to 5:00 PM|
|N° 11/2022||Downstream – Obtain contributions and additional information on the resolution draft that revises specifications for S10 and S500 diesel oils for roadway use, and the respective obligations regarding quality control to be met by economic agents. The proposed amendments include: (i) Amendment of parameter limits of the S10 and S500 diesel specifications; (ii) inclusion of requirements for good practice procedures for handling, transportation and storage of A and B diesel oils; (iii) introduction of co-processing as an alternative to diesel oil production, adding to the country’s transport fuel matrix a product that contains a renewable portion – in theory, about 5% of vegetable oil; (iv) Amendment to the definition of diesel fuel A, allowing any non-renewable feedstock to be used in its production; and (v) discontinuation of S500 diesel for roadway use and S1800 for non-roadway use, replacing them with S10 diesel, with low sulfur content.||Until June 17, 2022||July 6, 2022 | 2:00 PM to 6:00 PM|
On April 14, 2022, the ANP’s Board of Directors analyzed the objection formulated by Companhia de Gás do Estado do Rio Grande do Sul (“Sulgás”), regarding the CP 03 Public Consultation of Transportadora Brasileira Gasoduto Bolivia-Brasil (“TBG”). The Agency has decided to approve the Public Consultation result, for all entry and exit zones once all applicable regulatory procedures have been fulfilled.
At the time, the ANP’s Board of Directors also approved the resumption of the process in the stage of expression of interest regarding the additional capacity proposed by TBG for the RS1 exit (from 2024 to 2026), as well as for the SC2 exit (in 2026), so that the gas demand of the states of Santa Catarina and Rio Grande do Sul can be met until 2026.
As decided by the Collegiate Board of Directors on April 14, 2022, the ANP approved the implementation of action plans that will allow improvement of fuel supply monitoring in Brazil. According to the Agency, the action plans are aimed at adjusting its regulatory framework and the use of additional data, complementing the terms of ANP Resolution No. 868/2022, which provides for the daily receipt of fuel stock data from the sector’s agents.
Read in full the presentation on the subject prepared by the ANP.
On April 28, 2022, ANP published Order Nº 16/2022, which revoked Technical Reports 001/2020 and 002/2020. The Reports discussed the flexibilization of the rule that allowed Local Content Certification Bodies to conduct remote audits in establishments for manufacturing the goods or the provision of services as well as the possibility of postponing the deadline for such bodies to publish data of the local content certificates on their websites.
As a consequence of such revocation the conduction of audits onsite for the issuance of local content certificates become necessary again and the deadlines defined in the legislation in force for the publication of certificates in the corresponding websites are once again valid.
On April 11, 2022, Petrobras informed the market that it is restarting the divestment process for Tartaruga Field, located in the shallow waters of Sergipe-Alagoas Basin, in the State of Sergipe, through the release of a Teaser about the asset.
According to Petrobras, the wells in the field were drilled directionally, from the base located in the onshore portion of the ring-fence. Average production in 2021 was approximately 222 bpd of light oil (37º API) and 4,660 m³/day of associated gas. Petrobras holds 25% of the rights in the field and Maha Energy Brasil Ltda. is the operator, with 75% of the interest rights.
On April 18, 2022, Petrobras disclosed, in an announcement to the market, the binding phase for the sale of the totality of the 20% interest held by its subsidiary Petrobras America Inc. (“PAI”) in MP Gulf of Mexico, LLC. (“MPGoM”), located in Texas, USA. MPGoM, owner of offshore fields in the Gulf of Mexico, is a Joint Venture Company with 80% interest from Murphy Exploration & Production Company, and 20% from PAI. Additionally, it has an interest as operator or non-operator in 14 offshore fields in the Gulf of Mexico. Petrobras’ share in relation to the fields’ production in 2021 was 10.4 thousand bpd of equivalent oil.
According to Petrobras, potential buyers classified for this phase will receive aprocess letter with instructions about the divestment process, including guidelines for conducting due diligence and sending binding proposals.
In accordance with the decision of ANP’s Board of Directors, dated April 29, 2022, the public notice and models of the sharing contracts of the Open Acreage – Production Sharing (“OPP”) were approved. The documents have already been subject to public consultation and hearing and forwarded for approval by the Ministry of Mines and Energy (“MME”). Subsequently, the documents will be submitted to the Federal Audit Court (“TCU”).
The Agency pointed out that, from eleven (11) offered blocks, seven (7) were scheduled to be offered in the 7th and 8th production sharing rounds (Ágata, Água Marinha, Esmeralda, Jade, Turmalina and Tupinambá, in the Santos Basin). The other blocks did not receive offers in production sharing bidding rounds held previously by ANP, listed below: Itaimbezinho (4th Sharing Round, Campos Basin), Norte de Brava (6th Sharing Round, Campos Basin), Bumerangue, Cruzeiro do Sul and Sudoeste de Sagitário (6th Sharing Round, Santos Basin).
The draft tender protocol, draft contracts and other information about the PPO can be found at here.
Below are the main contracting opportunities made available by Petrobras so far, through the Petronect platform
|SDSV 2022 – Chartering of Shallow Diving Support Vessels (“SDSV”) + Provision of Shallow Diving Services + Provision of specialized technical services with Remotely Operated Vehicle (ROV) (Lots A to H)||June 01, 2022 | 3 p.m.||7003744874|
|SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with Remotely Operated Vehicle (ROV) (Lots A and E)||June 01, 2022 | 3:00 PM||7003813137|
|SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with Remotely Operated Vehicle (ROV) (Lots B and F)||June 01, 2022 | 3:00 PM||7003813138|
|SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with Remotely Operated Vehicle (ROV) (Lots C and G)||June 01, 2022 | 3:00 PM||7003813139|
|SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with Remotely Operated Vehicle (ROV) (Lots D and H)||June 01, 2022 | 3:00 PM||7003813140|
|Chartering of Anchor Handling and Tug Supply (“AHTS”), AHTS-R and AHTS-Multipurpose Vessels + provision of shallow diving and specialized technical services with remotely operated vehicle (ROV)||June 13, 2022 | 4:00 PM||7003656258|
|Chartering of passenger ship FSC type (Fast Supply Crewboat) (Lots 1 and 2)||May 24, 2022| 2:00 PM||7003829650|
|Chartering of passenger ship FSC type (Fast Supply Crewboat) (Lot 1)||May 24, 2022| 2:00 PM||7003829651|
|Chartering of passenger ship FSC type (Fast Supply Crewboat) (Lot 2)||May 24, 2022| 2:00 PM||7003829652|
|Chartering of a P5 type vessel||May 27, 2022| 2:00 PM||7003834254|
|Supply (Purchase and Sale) of Floating, Production, Storage and Offloading (“FPSO”) Vessel||May 30, 2022| 4:00 PM||7003470660|
|Supply of Marine Well Completion Goods and Services in the TOT-3P Well Design Concept||June 07, 2022| 3:00 PM||7003791841|
|Offshore service of trepanning and temporary blockage in process pipelines, with supply of parts and pieces||May 24, 2022| 3:00 PM||7003804942|
|Technical inspection and maintenance services of RJMG tanks – Phase 2||May 26, 2022| 3:00 PM||7003820278|
|Security inspection services and operational monitoring of bunker vessels in the Ports of Rio de Janeiro and Niterói, in the region of Guanabara Bay and its surroundings||May 25, 2022| 1:00 PM||7003832349|
|Installation Services for centrifugal pumps (“BCS”) and well equipment, operation, maintenance and logistic control services in fluid station||May 26, 2022| 3:00 PM||7003804940|
|Executive project services, construction, assembly and commissioning of the new Motor Control Center CCM-520, with supply of goods||May 25, 2022| 4:00 PM||7003801951|
|Preventive and corrective maintenance services for the decanter centrifuge and the Epicyclic Gearing||May 26, 2022| 5:00 PM||7003827301|
|Contracting of Pull in Pull in – Pull out Services including electric ROV fronts||June 01, 2022 | 3:00 PM||7003820086|
|Telecommunications services – Multimedia Communication Service (“SCM”), to serve various units of Petrobras||May 24, 2022| 11:00 AM||7003824682|
|Chartering and operation services of Dynamic Positioning Maritime Drilling Units, divided into 3 non-exclusive lots||June 06, 2022| 11:00 AM||7003820695|
|Acquisition of Anchoring Accessories, to serve a pool of projects||June 03, 2022| 06:00 PM||7003824781|
|Chartering of UT 750 type vessel||June 08, 2022| 02:00 PM||7003846990|
On April 05, 2022, the ANP held a public hearing to discuss the revision of the Technical Regulation for Measurement of Petroleum and Natural Gas (“RTM”).
The RTM, a document drafted by ANP together with Inmetro (attached to ANP/Inmetro Joint Resolution No. 1, of 2013), establishes the requirements applicable to measurement systems for oil and natural gas production and transportation facilities. Such measurement systems have a direct impact on the calculation for government participation (such as royalties), reservoir management, equipment operational control, and natural gas transportation contracts.
The revision of this regulation is expected to improve the balance of the regulatory cost – imposed on companies by measurement requirements – reducing or eliminating determinations, without creating a metrological risk. Thus, the Agency points out that the main change proposed is the creation of flow categories, according to the production characteristics of the field and the reality in which the companies are inserted. As a result, the requirements for low-flow measurement systems (such as marginal fields) will be more flexible, reducing regulatory costs of low-production fields and increasing the appeal of investments. On the other hand, high flow measurement systems (such as pre-salt fields) will have additional requirements, ensuring higher measurement quality over large volumes and reducing the occurrence of failures or unavailability of these systems.
On April 6, 2022, a public hearing was held to address aspects related to the revision of ANP Resolution No. 757/2018, which regulates the following activities in Brazilian sedimentary basins: data acquisition and processing; preparation of studies; and access to technical data for exploration, development, and production of oil and natural gas.
As informed by the Agency, the revision aims to simplify the rules and include some demands of the sector, in order to adapt the Resolution to new technologies and new calls for bidding rounds, as well as to ensure the maintenance of technical data collection and promote greater dissemination of data from the Brazilian sedimentary basins.
Among the main aspects to be amended, we highlight: (i) inclusion of the definition of reprocessed data; (ii) release of public data sharing by individuals and companies that may access them; (iii) extension of the confidentiality periods for non-exclusive data, from ten (10) to fifteen (15) years, and for exclusive data, from five (5) to ten (10) years; (iv) application of a different secrecy period, of thirty (30) years, for non-exclusive data acquired in areas of interest to the Federal Government; and (v) establishment of the Annual Activity Plan (“PAA”), to be sent to the ANP by data acquisition companies (EADs) authorized to perform activities of acquisition, processing, reprocessing and study of technical data.
According to the ANP, data collected by the Agency point to a recovery in oil production in one hundred and twenty-four (124) producing fields ceded by Petrobras to other companies as of 2019, as part of the divestment process carried out by the company. Prior to the divestments, from 2012 to 2020, production from these fields fell by approximately 60% to 57.7 thousand barrels of oil per day (bbl/d). For these same fields, there is a growth forecast of 122% until 2025, reaching 125.6 thousand bbl/d.
The fields at issue are located in both onshore and offshore environments. The onshore poles of Alagoas (AL), Cricaré (ES), Lagoa Parda (ES), Macau (RN), Miranga (BA), Ponta do Mel and Redonda (RN), Remanso (BA), Riacho da Forquilha (RN), Rio Ventura (BA) and Tucano Sul (BA) have companies from Brazilian economic groups such as 3R, Imetame, Origem, PetroRecôncavo, Potiguar, Recôncavo E&P, Seacrest Cricaré and SPE Miranga as new concessionaires. The offshore fields of Baúna (Santos Basin), Maromba, Pampo-Enchova and Pargo (Campos Basin) are now operated by companies from the Karoon, BW Offshore, Perenco, and Trident Energy groups.
The data was provided via the Annual Production Program, submitted by companies holding E&P contracts to the ANP, which discriminate forecasts for production, injection, movement and burning of oil, natural gas, water, and other fluids, referring to the production process of each field or development area.
On April 11, 2022, the ANP published the “Annual Report on Operational Safety of Oil and Natural Gas Exploration and Production Activities – 2021”. The document presents operational safety performance indicators for the oil and natural gas E&P industry in 2021, in addition to information on the regulation related to the topic, assignment of rights, decommissioning (deactivation) of facilities, and sustainability.
In the document, the following challenges for the industry were pointed out:
- Challenge #1: Ensuring availability and integrity of critical systems and equipment, with implementation of contingency in case of failure, training in critical procedures, and control of inspections and maintenance;
- Challenge #2: Improving incident investigations and including lessons learned in the operational safety management system, in order to avoid recurrence of deviations;
- Challenge #3: Commitment and objective proactivity of top leadership, with planning and availability of resources for the security of operations, primarily in structural integrity processes, and respective development of indicators and metrics for monitoring and continuous improvement;
- Challenge #4: Establishing project guidelines and improving corporate project management processes, so that carbon risk is considered in decision making.
On April 13, 2022, the ANP held the public session for the 3rd Cycle of the Permanent Concession Offer (“OPC”). At the time, 59 exploratory blocks in six different basins were auctioned, resulting in a total of BRL 422,422,152.64 in signing bonuses – a premium of 854.84% – and will result in at least BRL 406,290,000.00 in investments, during the exploration phase alone.
In the 1st Cycle, which took place in 2019, 33 blocks and 12 areas with marginal accumulations were auctioned, which generated BRL 22.3 million in signing bonuses and BRL 320.3 million in investments. In the 2nd Cycle, in 2020, 17 blocks and one area with marginal accumulations were acquired, generating BRL 56.7 million in signing bonuses and BRL 160.6 million in investments.
The following companies were the winners of the bidding procedures: (i) Shell Brasil; (ii) Ecopetrol Óleo e Gás; (iii) TotalEnergies EP; (iv) CE Engenharia; (v) Imetame; (vi) ENP Ecossistemas; (vii) Seacrest; (viii) Petroborn; (ix) NTF; (x) Newo; (xi) Origem; (xii) Petro-Victory; and (xiii) 3R Petroleum.
As reported on April 14, 2022, ANP’s Board of Directors approved the creation of a working group (“WG”) responsible for drafting regulations containing guidelines and principles of negotiated and non-discriminatory access by interested third parties to essential facilities. Such facilities are production pipelines, natural gas treatment or processing facilities, and liquefied natural gas (“LNG”) terminals.
As announced by the Agency, the WG will conduct preliminary studies and regulatory impact analysis and then prepare a draft resolution. After internal approval, the draft will go through public consultation and hearings before the final publication of the resolution. The creation of the WG was already contemplated in the ANP’s Regulatory Agenda for the biennium 2022-2023, under code 2.12., which can be accessed here.
On April 26, 2022, the Dynamic Dashboard of the Exploration Phase was updated, as reported by the ANP. The update presents information regarding the first phase of oil and natural gas exploration and production contracts.
The Dashboard, whose issue launched in May 2021 contained information from 2019, now presents data from 1998, the year the Agency was created. Such data refers to inactive Discovery Evaluation Plans, Commercial Viability Statements and drilled exploratory wells, and it is possible to see the drilled wells that presented Notification of Discovery.
On April 29, 2022, the ANP held the public hearing No. 6/2022, which dealt with the proposed revision of ANP Resolution No. 44/2009, which regulates the reporting of incidents and the submission of the Detailed Investigation Report (“DER”) for incidents occurred.
Among the main proposals are: (i) strict deadlines for first communication, prioritizing events of greater criticality, including situations of risk to national fuel supply; (ii) extension of deadline for submission of the DER, from thirty (30) to ninety (90) days; and (iii) provision for the current concept of disclosure, by the regulatory authority, of guidance manuals.