Latin Lawyer – 21 November 2017
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados is among six firms to confirm their roles as counsel in recent oil and gas auctions that have succeeded in attracting big names to Brazil’s hyrdocarbons sector, but where lower than expected interest suggests regulatory changes have not been enough to dispel wider concerns over the health of industry and the country.
Brazil 14th oil and gas auction smashed signature bonus records / iStock/brazzoMattos Filho advised ExxonMobil in connection with both the auction of pre-salt blocks that took place in October, and September’s 14th oil and gas bid round. The Texan company hired Mattos Filho for a farm-out agreement related to the latter bid round as well. Ecopetrol, CNPC and BP also hired Mattos Filho for the pre-salt bid round, with BP obtaining specific advice regarding the production-sharing contract. Norway’s Statoil received advice from the same firm regarding a farm-out linked to the 14th bid round.
Schmidt, Valois, Miranda, Ferreira, Agel Advogados advised OP Energia in the pre-salt auction and ExxonMobil on the due diligence for a farm-in transaction related to the same auction. Total hired Vieira Rezende Advogados for both the pre-salt auction and the 14th bid round; QGEP hired Vieira Rezende, while Murphy Oil Corporation hired Campos Mello Advogadosfor transactions related the 14th bid round.
Other firms that worked on both sets of auctions, but could not disclose more information due to confidentiality reasons were Trench, Rossi e Watanabe and Tauil & Chequer in association with Mayer Brown. Veirano Advogadosrepresented two clients that qualified for the 14th bid round but did not launch bids. Again, client confidentiality obligations mean Latin Lawyer cannot reveal more details.
It is thought Vinson & Elkins also worked on the bid rounds, though this could not be confirmed prior to publication. Latin Lawyer was unable to identify any other firms involved.
Consortia involving industry leaders BP, ExxonMobil, Shell, Statoil and Total won six pre-salt blocks under a production-sharing regime in the pre-salt auction, which took place in October. Three of these consortiums also included Brazil’s state-controlled oil company Petrobras. Two blocks offered were not sold.
The winning consortia paid a combined 6.2 billion reais (US$1.8 billion) in signing bonuses, short of the 7.7 billion reais (US$2.3 billion) expected. Despite the shortfall, authorities deemed the auction a success since this is the first time that private companies have had the option to operate pre-salt reserves.
Tauil & Chequer partner Alexandre Chequer is similarly upbeat: “the number of qualified companies, the quality of the competition, and the participation of the biggest oil companies in the world is a clear vote of confidence in Brazil.”
The influx of more and better companies will have knock-on effects for the whole industry, says Veirano’s Luis Pacheco: “The success of the auctions has sent a message to the suppliers of services and goods that soon there will be an increase in the procurement of equipment and services by different operators.”
Observers credit recent reforms surrounding the pre-salt contracting regime for attracting the big names. Alexandre Calmon of Vieira Rezende: “The very successful results of the pre-salt Brazilian bid rounds crown a regulatory environment improvement process initiated 15 months ago by the Brazilian government.”
Changes include ditching the condition that Petrobras be the mandatory operator of the pre-salt blocks and more flexible local content rules. In the past, burdensome regulation has been blamed for lacklustre interest in the pre-salt areas, thought to be some of the most productive in the world.
Yet some feel the changes do not go far enough. “My feeling is that it’s still a difficult regime. If we had concessions rather than production-sharing contracts, the outcome most likely would be all the projects would have been awarded,” says Mattos Filho’s Giovani Loss.
The government seems to have taken note, recently announcing plans to replace the production-sharing regime with the more widely used concession regime for the pre-salt areas. “The government realised it could have collected more signature bonuses if it had used a concession contract instead,” says Schmidt Valois’ Rogério Miranda.
The concession regime in the 14th bid round, which took place in September, may explain its 3.8 billion reais (US$1.2 billion) signature bonus haul (a record for Brazil) as well as the participation of ExxonMobil. The Texan company and Petrobras headlined the event by submitting the largest signing bonus, US$700 million, for a block in the Campos basin. ExxonMobil’s presence is significant, because the company is widely regarded as one of the industry’s leading players and had kept a low profile in the Brazilian market until this year.
Despite record signature bonuses, only around 13% of the areas offered ended up being awarded. In one area considered by industry specialists to be one of the most attractive, only one block was awarded. Trench Rossi partner Danielle Valois says low oil prices, political uncertainty and questions over the government take were largely to blame.
In total, 20 companies from eight countries participated in the 14th bid round. Seventeen of them acquired blocks, of which 10 are Brazilian and seven are from other countries. The signing of contracts is expected to occur until 31 January 2018.
Pre-salt bid round
Counsel to CNPC
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Giovani Loss and Felipe Feres and associates Nilton Mattos, Fernando Ludke, Luis Izu, Fernanda Fernandes, Maria Clara Coelho and Gabriel Ferreira
Counsel to BP
In-house counsel – Humberto Quintas and Anna Guimaraes
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Giovani Loss and Felipe Feres and associates Nilton Mattos, Fernando Ludke, Luis Izu, Fernanda Fernandes, Maria Clara Coelho and Gabriel Ferreira
Counsel to ExxonMobil
In-house counsel – David Bertoch, Bryan Siddoway and Rafael Rincon
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Giovani Loss and Felipe Feres and associates Nilton Mattos, Fernando Ludke, Luis Izu, Fernanda Fernandes, Maria Clara Coelho and Gabriel Ferreira
Schmidt, Valois, Miranda, Ferreira, Agel Advogados
Partners Paulo Valois and Rogério Miranda
Counsel to OP Energia
Schmidt, Valois, Miranda, Ferreira, Agel Advogados
Partners Rogério Miranda and Gustavo Braga
Counsel to Total
Partner Alexandre Calmon
Counsel to unidentified
Trench, Rossi e Watanabe Advogados
Partner Danielle Valois and associates Felipe Ferenzini, Bernardo Pedrete, Julia Gomes, Gabriela Bezerra and Andre Sarian
Tauil & Chequer Advogados in association with Mayer Brown
Partners Alexandre Chequer, Bruno Belchior and Victor Galante
Fourteenth bid round
Counsel to ExxonMobil
In-house counsel – David Bertoch, Bryan Siddoway and Rafael Rincon
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Giovani Loss and Felipe Feres and associates Nilton Mattos, Fernando Ludke, Luis Izu, Fernanda Fernandes, Maria Clara Coelho and Gabriel Ferreira
Counsel to Rosneft
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Giovani Loss and Felipe Feres and associates Nilton Mattos, Fernando Ludke, Luis Izu, Fernanda Fernandes, Maria Clara Coelho and Gabriel Ferreira
Counsel to Statoil
In-house counsel – Miguel Strauss, Leticia Andrade and Luciana Gomes
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Giovani Loss and Felipe Feres and associates Nilton Mattos, Fernando Ludke, Luis Izu, Fernanda Fernandes, Maria Clara Coelho and Gabriel Ferreira
Counsel to Total
Partner Alexandre Calmon
Counsel to QGEP
In-house counsel – Tatiana Fioretti and Miguel Mirilli
Partner Alexandre Calmon
Counsel to Murphy Oil Corporation
Campos Mello Advogados
Partners Leonardo Costa and Sandoval Amui and associate Fernando Fernandes
Counsel to unidentified
Trench, Rossi e Watanabe Advogados
Partner Danielle Valois and associates Felipe Ferenzini, Bernardo Pedrete, Julia Gomes, Gabriela Bezerra and Andre Sarian
Tauil & Chequer Advogados in association with Mayer Brown
Partners Alexandre Chequer, Bruno Belchior and Victor Galante
Partner Luis Pacheco
