Oil and Gas Newsletter no4

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.

Enjoy your reading!
Demarest Oil and Gas Team

NEW RESOLUTIONS

ANP publishes resolution on the classification of oil fields and accumulations as marginal.  

On May 17, 2022, ANP Resolution No. 877/2022, which provides for procedures for the classification of fields and accumulations as marginal, was published. Such Resolution was the first dedicated to the classification of fields and accumulations that present economic or production considered as marginal, based on their cost-effectiveness.   

This Resolution is the result of the regulatory agenda of the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) and will contribute to different initiatives aimed at encouraging oil and gas exploration and production activities in these areas.  

In addition to establishing deadlines for classification analysis, the new Resolution defines the criteria for classifying fields and accumulations as marginal.  

To access ANP Resolution No. 877/2022, click here.  

 

UPCOMING PUBLIC CONSULTATIONS AND HEARING

Below is the list of public consultations published by ANP whose contribution periods are still open:

 

PUBLIC CONSULTATION AND HEARING (ANP)  SUBJECT   

CONTRIBUTION PERIOD   

PUBLIC HEARING DATE  

N° 11/2022  Downstream – Obtain contributions and additional information on the resolution draft that revises specifications of 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 S10 and S500 diesel specifications; (ii) inclusion of requirements for good practice procedures concerning 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 07, 2022 | 2:00 PM to 6:00 PM  

No. 12/2022  Downstream – The revision of ANP Resolution No. 685, dated June 29, 2017, which establishes specifications and rules for the approval of quality control of biomethane from landfills and sewage treatment plants. 

Until June 27, 2022 

July 08, 2022 | 2:00 PM to 5:00 PM  

RELEVANT DECISIONS

 

ANP approves submission of the Working Group Report on incentives for Fields and accumulations of marginal economy to the Ministry of Mines and Energy  

On May 12, 2022, the ANP Collegiate Board approved the submission to the Ministry of Mines and Energy (“MME”) of a report drafted by the Working Group (“WG”), based on studies of potential incentives to fields and accumulations of marginal economy, in accordance with the guidelines of the National Council for Energy Policy (“CNPE”) Resolution No. 04/2020.  

The documentation shows the mapping of the Agency’s ongoing or completed actions, which will serve as incentives for development and production in marginal fields and accumulations.  

For further information, click here

 

Hearing on the quality of hydrous ethanol  

On May 13, 2022, the ANP held public hearing No. 8/2022, which discussed amendments to three resolutions concerning the quality control of hydrous ethanol (ANP Resolutions No. 9/2007, No. 19/2015, and No. 828/2020).  

The purpose of this public hearing, according to the Agency, is to extend the application of these resolutions to economic agents involved in the direct sale of ethanol, carried out by suppliers to retailers (gas stations) and transporters-retailers (TRRs), as well as from TRRs to gas stations, as regulated by Provisional Measures No. 1.063/2021 and No. 1069/2021, and by ANP Resolution No. 855/2021.  

To know more about the matter, click here.  

If you wish to watch the recording of public hearing No. 8/2022, click here

 

ANP authorizes the operation of the first corn ethanol producer in Mato Grosso do Sul  

On May 23, 2022, the ANP published an authorization for the operation of the ethanol production facility of the company Inpasa Agroindustrial S.A. According to ANP, the facility located in the city of Dourados, Mato Grosso do Sul, is the first in the state to use corn as raw material for ethanol production.   

 The facility has an authorized production capacity of 1,250 m³/d (cubic meters per day) of hydrous ethanol and 1,250 m³/d (cubic meters per day) of anhydrous ethanol. With this authorization, an increase in ethanol (hydrous and anhydrous) production of 8% is expected.  

According to data assessed by the ANP, ten (10) corn ethanol production facilities are currently under construction in Brazil, and three (3) authorized facilities are in the process of expansion. These new construction and expansion initiatives will have the capacity to add nearly 5 million liters per day to the national supply of hydrous ethanol and 3 million to the supply of anhydrous ethanol by 2023. 

 

ANP publishes updates on requests to amend ANP Resolution No. 833/2020  

On May 27, 2022, the ANP released updates regarding production individualization agreements and annexation of areas in contracts for oil and natural gas exploration and production, including a request to amend the Local Content Clause, within the context of ANP Resolution No. 833/2020. Among the eighteen (18) requests received, seven (7) were the result of amendments to production individualization agreements, two (2) resulted in annexation of areas, four (4) requests were rejected for not fitting the Resolution, and five (5) resulted in withdrawals.   

More information is available here.  

To consult the list of requests received, click here

 

OPPORTUNITIES

Upstream Opportunities

Bahia Terra Cluster’s binding phase concluded 

On May 04, 2022, Petrobras announced the conclusion of  the binding phase for the process of selling onshore production fields located in the Recôncavo and Tucano Basins, in the state of Bahia, jointly called Bahia Terra Cluster. 

According to the company, the consortium constituted by the companies PetroRecôncavo S.A. (60%) and Eneva S.A. (40%) submitted the best proposal, worth more than $1.4 billion, considering firm and contingent payments, and was invited to the negotiation phase. 

To access the full press release, click here

 

The binding phase for the sale of the Tartaruga Field has begun  

In a press release published on May 10, 2022, Petrobras informed the beginning, on the same date, of the binding phase for selling its entire participation in the Tartaruga field, located in the shallow waters of the Sergipe-Alagoas Basin, in the State of Sergipe.   

Petrobras holds a 25% interest in the field and Maha Energy Brasil Ltda. is the operator, with a 75% interest.  

As informed by the company, average production in the 1st quarter of 2022 was approximately 202.26 bbl/day of light oil (37º API) and 2,161 m3/day of associated gas. 

Click here to access the full press release. 

 

Petrobras releases teaser for UFN-III sale  

On May 31, 2022, Petrobras announced that it had begun the teaser phase for the sale of the entire Nitrogenated Fertilizer Unit III (UFN-III). 

UFN-III is a nitrogen fertilizer unit, located in the city of Três Lagoas, State of Mato Grosso do Sul. Its construction began in 2011 but was halted in 2014, and about 81% of the project was completed. According to the information released by the teaser, the buyer is expected to commit to finishing the construction. When completed, the unit will have a projected urea and ammonia production capacity of 3,600 tons/day and 2,200 tons/day, respectively. 

Click here to access the teaser. 

 

 

Public bidding opportunities with Petrobras

Below are the main contracting opportunities made available by Petrobras so far, through the Petronect platform:

OPPORTUNITY 

DEADLINE**  

PETRONECT CODE 

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 13, 2022 | 5:00 PM  

7003744874 

SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with ROV (Lots A and E) 

June 13, 2022 | 3:00 PM  

7003813137 

SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with ROV (Lots B and F) 

June 13, 2022 | 3:00 PM 

7003813138 

SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with ROV (Lots C and G) 

June 13, 2022 | 3:00 PM 

7003813139 

SDSV 2022 – Chartering of SDSV + Provision of Shallow Diving Services + Provision of specialized technical services with ROV (Lots D and H) 

June 13, 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 ROV 

June 27, 2022 | 4:00 PM 

7003656258 

Supply of Marine Well Completion Goods and Services in the TOT-3P Well Design Concept   

June 22, 2022 | 5:00 PM 

7003791841 

Contracting of Pull in – Pull out Services including electric ROV fronts  

June 13, 2022 | 5:00 PM 

7003820086 

Chartering and operation services of Dynamic Positioning Maritime Drilling Units, divided into 3 non-exclusive lots  

June 28, 2022 | 12:00 PM 

7003820695 

Chartering of OTSV-type vessel 

June 30, 2022 | 5:00 PM 

7003864326 

Chartering of PLSV-type vessel + Services Provision 

June 29, 2022 | 4:00 PM 

7003857389 

* Dates are expressed here as dd/mm/yyyy 

** Please note that the deadlines in the table above are constantly changing, so they correspond to deadlines disclosed at the time of publication of this newsletter. 

Read in full at Petronect Platform

OTHER TOPICS

Oil production in Brazil grows 2.2% in March  

On May 04, 2022, according to a press release published by the ANP, around 2.981 MMbbl/d of oil was produced in Brazil during the month of March, representing an increase of 2.2% in production when compared to the previous month, and of 4.8% compared to March 2021.   

Additionally, 134 MMm3/d of natural gas was produced, which means an increase of 0.9% in production when compared to February, and of 6.6% compared to the same month in 2021. In total, 3.827 MMboe/d of oil was produced during March 2022.  

To access ANP’s data collection, click here

 

Special Participation collection reaches a new record 

According to information released by the ANP, a total of BRL 14.9 billion was collected as payment for Special Participation (“EP”) related to production in the first quarter of 2022. The figure represents a 20% increase in revenue when compared to the previous quarter. As reported by the Agency, it was the fifth time in a row that EP has broken collection records.  

Such increase in the amount collected is directly related to higher reference prices of oil, which follows the price of Brent oil in the international market.  

To access values distributed to the beneficiaries, click here

 

New version of RenovaCalc  

The ANP has launched the eighth version of RenovaCalc – Biodiesel Route for biofuel certification. As of May 17, 2022, only calculations performed using version 8 are accepted for the purpose of approving biodiesel route certifications.   

RenovaCalc is a performance calculator for fuel production units, within the scope of the RenovaBio program. It assigns an Energy-Environmental Efficiency Score (NEEA) to the biofuel producer based on information about its production process and cultivation data for biomass used to produce biofuel. This score makes up the factor for the issuance of Decarbonization Credits (CBIOS), which can be subsequently traded by the biofuel producer.  

For further information about the changes brought by the 8th version of RenovaCalc, click here

 

The total number of fields with extended production phase reaches 56  

As informed on May 20, 2022, ANP reached the mark of fifty-six (56) fields with the extension of the production phase approved – most of them from Round Zero – of which twenty-nine (29) are onshore and twenty-seven (27) are offshore, in the Campos, Recôncavo, Potiguar, Alagoas, Espírito Santo, Amazonas, Santos, and Camamu basins.   

The list of requests for extension of the production phase can be accessed here. 

 

ANP advises companies to present onshore decommissioning programs  

On May 24, 2022, the ANP published instructions for companies that intend to submit Facility Decommissioning Programs (“PDI”) for onshore fields. The purpose of the Agency is to align its position with contractors who submit the PDI for onshore fields, subject to the provisions of ANP Resolution 817/2020, in order to minimize the time for analysis of the documents submitted and, consequently, accelerate the PDI approval process.  

Click here for further details.  

If you would like to see the presentation published by the ANP, click here 

 

ANP updates the list of agencies that can issue Local Content Certificates 

On May 30, 2022, the ANP released an updated list containing the Local Content Certification Entities that are allowed to issue Local Content Certificates.  

The updated list can be found here