08-08-2018

After the approval by the National Agency for Petroleum, Natural Gas and Biofuel (“ANP”), on November 28, 2017, for starting the process of permanent offer of oil and natural gas exploration and production areas, the ANP placed for public consultation, on April 26, 2018, the pre-tender protocol and the draft of the concession contracts for the areas subject to the Permanent Offer, which were published the following day.

The Permanent Offer consists of continuous offers of fields and blocks returned (or in the process of being returned) and of blocks offered in previous bids and not acquired.

On April 11, 2018, at the Board of Executive Officers Meeting No. 118/2018, the inclusion of 46 unacquired blocks in the 15th Round of Bids, held on March 29, 2018 was approved. With this, the First Cycle of the Offer will have 884 blocks in onshore and offshore basins with exploratory risk and 14 areas with marginal accumulations in 15 sedimentary basins, totaling 346,034.94 km². Of this total of 884 blocks 148, distributed in 8 sedimentary basins, are being offered, since they already have their environmental analysis. The other 736 blocks will have their bidding started as soon as their environmental analysis has been completed and a public hearing has been held on the subject.

Unlike the traditional rounds, in order to hold a public session of the Permanent Offer, it will be necessary for a company to present a declaration of interest accompanied by an offer guarantee for a particular sector(s). Only after the approval of this guarantee by the Special Bidding Committee (“CEL”), will the bidding schedule for the sector of interest begin.

The CEL will then publish the dates of: (i) registration and payment of the participation fee; (ii) presentation of offer guarantees accompanied by declarations of interest; (iii) holding the public bidding session; (iv) determination of the winning bidders and, finally; (v) ratification of the bidding and signing the concession agreements. The public bidding session must take place no later than 90 days after the approval of the guarantee.

The schedules of the cycles of the Permanent Offer will be published on the ANP website whenever a new cycle begins. They will include dates and deadlines regarding payments, delivery of documents and other relevant information.

Registration to participate in the Permanent Offer began on May 2, 2018. After registration, interested parties may express interest in the blocks and fields included in the First Cycle of the Offer at any time. Below, the schedule for the first stage of the Permanent Offer.

Activities Date
Publication of blocks and areas with marginal accumulations 11/30/2017
Evaluation of areas and blocks by interested persons As of 11/30/2017
Publication of rules for holding and participation in the permanent offer 04/27/2018
Publication of the technical and economic parameters of the areas and blocks 04/27/2018
Start of registration 05/02/2018
Start of the deadline for the submission of an offer guarantee accompanied by a declaration of interest As of 07/20/2018
Offer presentation As of 11/01/2018
Those interested in participating in the Permanent Offer process must be qualified or qualify before the ANP during the process, according to the characteristic of the area in which they are interested, as indicated in the table below, as operators or non-operators, being qualified at the following levels:
Qualification Requirements
Operator A Qualified to operate in blocks located in ultradeep waters, deep waters, shallow waters, onshore and in areas with marginal accumulations
Operator B Qualified to operate in blocks located in shallow water, onshore and in areas with marginal accumulations
Operator C Qualified to operate only in blocks located onshore and in areas with marginal accumulations
Operator D Qualified to operate only in areas with marginal accumulations; and
Non-Operator Qualified to act in a consortium.
A participation fee must be paid in one installment and in the amount of R$ 2,250.  This gives access to a sample of data from all sectors of the First Cycle of the Offer.  There is an option to pay an access fee for the complete package of technical data by signing a Confidentiality Agreement and payment of a fee ranging from R$ 32,500.00 to R$ 194,500.00, depending on the block of interest.

Offers for blocks with exploratory risk must be composed of the amount of the signature bonus and the minimum exploratory program (“PEM”). Offers for areas with marginal accumulations will comprise exclusively the value of the signature bonus.
It is interesting to note some particularities of the Permanent Offer, such as:

  1. The flexibility of the tender protocol, in which new areas may be included and/or areas acquired excluded during the Permanent Offering process;
  2. The percentage reduction (from 100% to 30%) required as financial guarantee for compliance with the PEM offered by the bidders; and
  3. The reduction of the minimum signature bonus for mature basins and for the Tucano Sul Basin (fixed signature bonus of R$ 50,000).
In order to adapt to the different types of areas offered, the ANP has prepared 2 models of concession contracts for the Permanent Offer, one for exploratory risk areas and one for areas with accumulations.

The local content commitment required in the permanent offer must be in accordance with the table below:

Exploration Stage Production Development Stage
Onshore Blocks 50% 50%
Offshore Blocks 18% Well Construction 25%
Collection and Drainage System 40%
Stationary Production Unit 25%
Marginal Accumulations 0% 0%
It is worth noting that CNPE Resolution 9/2018, published on August 1, 2018, updated the sectors proposed for offer in the 16th Bidding Round, scheduled for the second half of 2019, removing the blocks in mature land basins which composed the areas to be offered in the 16th Bidding Round, since the Permanent Offer process will include all blocks of mature basins. The new frontier onshore basin sectors have also been excluded because of the possibility that all onshore areas will be bidded only under the Permanent Offer.

The ANP is already planning the Second Cycle of the Permanent Offer which will bid 1,039 blocks in 20 mature sedimentary basins and in new frontiers. The rules for participation and the technical and economic parameters of the second stage of the Permanent Offering will be announced by the end of December 2018.