Oil and Gas Newsletter no5

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

Resolution that grants the extension of exploration phase deadlines approved

On June 02, 2022, the Collegiate Board of the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) approved ANP Resolution No. 878/2022, which grants concessionaires and contractors the right to request an extension of 18 months to the exploration phase of their respective concession and production sharing contracts.

Contractors and concessionaires should request the extension of exploration phase deadlines within a period of up to:

  1. 90 days prior to the deadline of the current exploratory period, for active E&P contracts;
  2. 90 days prior to the decision point for which extension is sought or deadline of the active discovery assessment plan (DAP) activities, for E&P contracts whose exploration phase has been extended for the assessment of a late discovery; or
  3. 60 days after the date of publication of ANP Resolution No. 878/2022, for E&P contracts suspended under Board Resolution No. 637/ 2021, in order to minimize the uncertainties and negative impacts caused by the COVID-19 pandemic in the oil and gas industry.

Click here to read ANP Resolution No. 878/2022 in full.

 

ANP publishes resolution on local content certification

On June 09, 2022, the ANP published ANP Resolution No. 879/2022, amending ANP Resolution No. 19/2013, which provides for the criteria and for the performance of local content certification activities. The amendments are related to the following certification proceedings: currency conversion; resale transactions of domestic products; services and sets of foreign origin; and certification standards for domestic systems.

To access ANP Resolution No. 879/2022, click here.

 

Resolutions approved regarding the National Hydrogen Program, parameters for the bidding for the Ametista Block, and incentives for production from fields and marginal accumulations

On June 23, 2022, the National Energy Policy Council (CNPE) approved resolutions concerning (i) the National Hydrogen Program (PNH2) and its governance; (ii) the technical and economic parameters for bidding on the Ametista Block in the ANP’s Permanent Offer system under the production sharing regime; and (iii) measures to stimulate the development and production of fields and oil and natural gas accumulations that present marginal cost-effectiveness.

As to item (iii) above, it is worth clarifying that the new regulation recommends the adoption of measures by the ANP to encourage E&P activities in fields and accumulations with marginal cost-effectiveness, as well as to optimize the regulatory framework to encourage modernization, debureaucratization, simplification and regulatory speed, in order to further increase the attractiveness of investments. Furthermore, it was recommended that the ANP and Brazil’s Energy Research Office (“EPE”) present studies on the environmental compensation of greenhouse gas emissions in oil and natural gas exploration and production activities, which is one of the sector’s demands under the Program for the Revitalization and Production Incentives of Marine Fields (PROMAR).

For more information, 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
No. 13/2022 Upstream: Regulatory impact assessment (RIA) of ANP Resolution No. 19, dated June 14, 2013, which establishes the criteria and proceedings for carrying out local content certification activities: definition of the “Total Value of the Complete System” of systems of foreign origin without a commercial transaction tax document. Until July 25, 2022 N/A
No. 14/2022 Upstream: Review of ANP Resolution No. 725, dated April 05, 2018, which addresses the ANP3 Technical Standard, which deals with the submission of geochemical data, determining the method, proceedings and deadlines for the delivery of such geochemical data to the ANP. The purpose of the new regulation is to simplify and clarify the proceedings provided for by ANP Resolution No. 725/2018, aiming to reduce the levels of non-compliance in the submission of such data.

Furthermore, it is proposed to update the ANP3 Standard, which is responsible for establishing rules and deadlines for the submission of geochemical data to the ANP, as well as to solve problems to facilitate compliance with standards in order to prioritize the reported results. In addition, the new Regulation includes the new technologies used for submitting the data.

 

Until July 29, 2022 August 19, 2022 | 10am to 12pm
No. 15/2022 Downstream: To gather extra contributions and information on the draft resolution that amends ANP Resolution No. 791, dated June 12, 2019, in order to include the provision for the reduction of the individual annual target for reducing greenhouse gas emissions for the commercialization of fuels, due to the proof of biofuel acquisition through a Long Term Supply Agreement. Until August 08, 2022 August 17, 2022 | 2:30pm to 5:30pm
No. 16/2022 Downstream: Review of ANP Resolution No. 53/2015, in order to establish procedures for the establishment of diesel oil A S10 stock inventories, in the event of the issuance of a fuel supply statement “alert” for the second semester of 2022, taking into account the global geopolitical scenario and the estimated increase in demand for this type of product.

 

 

July 04, 2022 to Jul/08/2022  July 12/2022 | 2:00 PM to 6:00 PM
No. 17/2022 Downstream: Obtain contributions and additional information on the draft resolution that includes the trading of biodiesel between producers of this biofuel in the list of operations generating ballast for the issue of Decarbonization Credits (CBIOs), by virtue of the authorization of this type of trading in article 18 of ANP Resolution No. 734/2018 (item VIII), included by ANP Resolution No. 857/2021. July 06, 2022 to August 19,2022 August 31, 2022 | 3:00 PM to 5:00 PM

RELEVANT DECISIONS

Carrying out of public consultations and hearings to amend ANP Resolution No. 802/ 2019 approved

On June 30, 2022, the Collegiate Board of the ANP approved the carrying out of a public consultation and hearing with the purpose of addressing the draft that amends ANP Resolution No. 802/2019, which provides for the mechanisms for generating the reserve required for the primary issuance of Decarbonization Credits (CBIO). The mentioned Resolution includes, in its attachment, a table that presents the biofuel commercialization operations eligible to generate reserve for the CBIO issuance.

The purpose of the amendment is to include the commercialization of biodiesel among producers in the list of eligible operations for the generation of CBIO – the reason being that this type of commercialization between producers was not allowed at the time of the publication of ANP Resolution No. 802/2019, a subject amended by ANP Resolution No. 857/2021.

For further information, click here.

OPPORTUNITIES

Upstream Opportunities

Petrobras announces the sale of UEG Araucária S.A.

On June 03, 2022, Petrobras released a teaser regarding the sale of its shareholding (18.8%) in UEG Araucária S.A. (UEGA), a company based in the city of Ararucária (PR), close to the Bolivia-Brazil gas pipeline (GASBOL). The company owns as an asset a natural gas power plant (combined cycle, with two gas turbines and 1 steam turbine), which has a total installed capacity of 484MW.

To read this teaser in full, click here.

 

Petrobras announces injunction that suspends the sale of the Bahia Terra Cluster

On June 10, 2022, Petrobras informed that it had been summoned, on June 9, 2022, by an injunction issued by the Court of Appeals of the State of Rio de Janeiro, determining the suspension of contract negotiations with the consortium constituted by the companies Petrorecôncavo and Eneva.

These negotiations related to the sale process of the onshore production fields based in the Recôncavo and Tucano Basins, in the state of Bahia, jointly referred to as the Bahia Terra Cluster. Petrobras filed an appeal to the preliminary injunction, but its request for suspensive effect was denied by the competent Court.

For further information, click here.

 

Sale of Golfinho and Camarupim Cluster approved

On June 23, 2022, Petrobras’ Executive Board approved the sale of its entire interest in maritime concessions part of Golfinho Cluster and Camarupim Cluster, in deep waters in the post-salt, located in the Espírito Santo Basin, to BW Energy Maromba do Brasil Ltda. (BWE).

The total value of the sale could reach USD 75 million, including USD 3 million paid on the execution date of the sale and purchase agreements, USD 12 million to be paid on the closing of the transaction, and up to USD 60 million in contingent payments, depending on future Brent crude oil prices and the development of the concessions. Click here to learn more.

 

Brazilian refinery and logistics assets are up for sale, according to teasers released by Petrobras.

On June 27, 2022, Petrobras informed that it had restarted the sale proceedings of (i) the Presidente Getúlio Vargas Refinery (REPAR), in Paraná; (ii) the Abreu e Lima Refinery (RNEST), in Pernambuco; and (iii) the Alberto Pasqualini Refinery (REFAP), in Rio Grande do Sul, as well as the logistics assets integrated into such refineries.

The sale of these refineries is guided by Decree 9,188/2017 and the Petrobras Divestment Systematics, through independent competitive processes that are currently at different stages. The transactions are in line with Resolution No. 9/2019 of the Brazilian National Council for Energy Policy and are part of the commitment signed by Petrobras with the Administrative Council for Economic Defense (CADE) in June 2019 to open up the refining sector in Brazil.

To access the teasers of these opportunities, click here.

 

Public bidding opportunities with Petrobras

Below are the main contracting opportunities made available by Petrobras to date, through the Petronect platform (click here to access):

 

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) July 15, 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) July 15, 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) July 15, 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) July 15, 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) July 15, 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 July 27, 2022 | 4:00 PM 7003656258
Supply of Marine Well Completion Goods and Services in the TOT-3P Well Design Concept July 14, 2022 | 5:00 PM 7003791841
Integrated Maintenance Services for RNEST – Abreu e Lima Refinery July 15, 2022 | 2:00 PM 7003855614
Services of response to security incidents and emergencies at Petrobras’ Onshore Units July 28, 2022 | 5:00 PM 7003698583
Public Bidding of three Pumping Modules, with their respective accessories and services for Jubarte complementary projects August 29, 2022 | 5:00 PM 7003853277
Chartering and operation services of Dynamic Positioning Maritime Drilling Units, divided into 3 non-exclusive lots July 19, 2022 | 12:00 PM 7003820695
Chartering of OTSV-vessel type July 14, 2022 | 5:00 PM 7003864326
Chartering of PLSV-vessel type+Services Provision July 29, 2022 | 4:00 PM 7003857389
Chartering of OSRV 750 vessel type July 21, 2022 | 5:00 PM 7003869273
Chartering of AHTS vessels (Lots A and B) July 26, 2022 | 4:00 PM 7003868489
Chartering of support  PSV 4500 vessel type- Lot 4 – General foreign-flag cargo July 12, 2022 | 5:00 PM 7003873191
Chartering of support  PSV 4500 vessel type – Lot 3 – Multi-Purpose foreign-flag July 12, 2022 | 5:00 PM 7003873189
Chartering of support PSV 4500 vessel type – Lot 2 – General foreign-flag cargo or REB July 12, 2022 | 5:00 PM 7003873188
Chartering of support PSV 4500 vessel type – Lot 1 – Multi-Purpose foreign-flag or REB July 12, 2022 | 5:00 PM 7003873186
Chartering of support vessel type PSV 4500 July 12, 2022 | 5:00 PM 7003873184

 

 

* Dates are expressed here as dd/mm/yyyy

** Please note that the deadlines in the table above are constantly changing, corresponding to deadlines announced at the time of publication of this newsletter.

 

More info in Portal Petronect

OTHER TOPICS

GEOAnp receives pipeline information update

 On June 01, 2022, the ANP published an update to GEOAnp, a georeferenced data map that includes information on pipelines, in order to increase the availability of information to the general public about the activities of the oil, natural gas, and biofuels sector.

To access the platform, click here.

 

ANP launches dynamic dashboard on facility tankage

 On June 09, 2022, as published on the ANP website, a dynamic dashboard was inaugurated with information about the tanking (storage) capacity of the agents regulated by the ANP. The dashboard does not include product stock information, showing only the capacity of the market agents’ facilities.

To access the panel, click here.

 

Gasbol’s Public Call No. 03/2021 Judgment result is available

 On June 13, 2022, the result of the Public Call No. 03/2021 of the Bolivia-Brazil Gas Pipeline (Gasbol) was published by Transportadora Brasileira Gasoduto Bolívia Brasil (TBG). To access the publication in the Brazilian Official Gazette, click here. The result of Public Call No. 03/2021 can be found here.

 

Gaspetro sale approved

On June 22, 2022, Petrobras informed the market that the Administrative Council for Economic Defense (CADE), in a hearing held on the same date, approved by majority vote the disposal operation of 51% of Petrobras Gás S.A. (Gaspetro) to Compass Gás e Energia S.A. (Compass), without restrictions. The transaction is still subject to the other conditions precedent outlined in the share purchase agreement.

 

 

ANP seminar releases data on oil and natural gas exploration

On June 22, 2022, the ANP held the 2nd Seminar on Information Disclosure Requirements for Oil and Natural Gas Exploration. Among the information presented in the seminar, the agency released a 38% increase in the number of exploratory wells drilled in 2021. The number of blocks under concession and production sharing agreement was not amended, remaining at 246. In addition, three commerciality declarations were made in 2021, one in the Parnaíba Basin and two in the Recôncavo Basin.

To access the event recording, click here.

 

ANP receives proposals for Local Content TAC

On June 21, 2022, the ANP published the partial result of the proposals of Conduct Adjustment Agreement (”TAC”) of local content, received by the companies operating E&P areas.

Up to June 15, 2022, 24 proposals have been received, related to 52 E&P contracts and amounting to BRL 1.90 billion in investment commitments in local content made by the companies, within the scope of the documents presented.

For further information, click here.

 

ANP holds seminar on improving the rules for calculating special participation

A recording of the event “Improving the Regulatory Instruments related to the Calculation Proceedings of the Special Participation” is available on the ANP’s Youtube channel. The purpose of the seminar was to reinforce the advertising of the review process of the regulations concerning the calculation of the Special Participation (SP) (ANP Regulatory Action No. 1.23 of the Regulatory Agenda 2022-2023). To access the ANP’s Youtube channel, click here.

 

RN’s State Legislature approves law that regulates the exploration of local piped gas services

On June 15, 2022, the State Legislature of Rio Grande do Norte (“RN”) approved a bill that regulates the exploration of piped gas in the state. The Bill aims to regulate such matter, providing for distribution services, commercialization, and the relationship between the various agents that are part of the natural gas market chain. The matter is still pending sanction by the State Government.


Sergipe introduces short-distance natural gas transportation tariff

In order to attract investments in infrastructure and gas flow, the state of Sergipe initiated a debate about new developments in the natural gas market. The proposal is to create a new short distance tariff which is exclusively for the transportation of natural gas injected into the network, so that the gas is transported from a Natural Gas Processing Unit (NGPU) or liquefied natural gas (LNG) terminal located in the state of Sergipe and consumed within the state itself. The measure is aimed at an economic recovery focused on reindustrialization.

For further information, click here.

 

Public hearing held regarding payment to landowners

On June 29, 2022, the ANP held a hearing on the draft resolution that deals with the review of ANP Decree No. 143/1998, which, in turn, regulates the proceedings related to the calculation and payment to landowners. The proposal is to make the current standard rate, 1 percent on gross production revenue, more flexible, ranging between 0.5 percent and 1 percent. This amendment would have no effect on fields that are currently in production or on current landowners.  To access the recording of Public Hearing No. 10/2022, click here.

 

Consolidated national data for the regulated sector in 2021 released

 On June 30, 2022, the ANP published data related to the development of the oil, natural gas, and biofuels sector in Brazil for the year 2021.

According to ANP data, national oil production in 2021 reached 2.9 million barrels per day, so that production in the pre-salt represented 74% of national production – an average of 2.1 million barrels per day for the year. As for natural gas, production reached 133.8 million cubic meters per day, with pre-salt gas production accounting for 67.5% of total production.

In terms of oil production, there was a 1.45 percent decrease compared to 2020. Natural gas production, however, showed a 4.70% increase over the previous year.

In the biofuels sector, ethanol and biodiesel production reached 30 billion and 6.5 billion liters, respectively. At the same time, national oil product production reached 2 million barrels per day. The sales of oil products by the distributors registered 122.7 billion liters.

As a result, there was (i) 8.28 percent decrease in ethanol production; (ii) a 4.98 percent increase in biodiesel production; (iii) and a 3.35 percent increase in petroleum product production.

Information on the data can be found in more detail in Statistical Yearbook 2022.