Brazil: Unitization In Brazil

Last Updated: 17 November 2015
Article by João Almeida and Priscila Park

The unitization in Brazil follows the basic principles of unitizations in the international oil and gas industry. In terms of specific regulations, it is adapted to the Brazilian regime which today involves concession, production sharing and the onerous assignment to Petrobras.

The unitization as in any other country applies to the situations that a reservoir extends the boundaries of a contracted block. The goal is to regulate the participation of the parties form the different contracted blocks or between the parties from one block and the Government in case the reservoir extends to an area not yet granted to an oil company. The concept is that the parties would be entitled to a fair interest of the reservoir considering the original participation in the blocks involved in the unitization. The main goal is to prevent predatory field production and optimize costs and results.

In Brazil, the unitization is regulated and supervised by the National Petroleum Agency ("ANP"), having the authority to approve the contracts and to impose the terms and conditions if the parties do not reach an agreement.  The Federal Law 12,351/2010 and ANP Resolution 25/2013 are the legal framework of the unitization in Brazil. They define the main requirements of the unitization contract, the rules for the non-contracted areas, local content, government take among many other rules.

Although the agreement needs to be approved by ANP, the parties are entitled to freely negotiate its terms under certain requirements of the legislation. The definition of the parties vary depending on the location of the reservoir. If it is located on a contracted area with different companies or consortiums, the companies or consortiums therein located must execute a unitization agreement. This is the ordinary situation which the oil companies define the conditions of the agreement.

A different situation can happen with contracted areas of the same company or consortium with identical composition and percentages of participation with a reservoir crossing both areas, such company or consortium shall execute a Commitment Term of Unitization of Production. Such document is necessary as the different areas have different agreements and obligations. Therefore, it is necessary to define the participations, the rules of local content and the government take.

A third situation involving a non-contracted area is also possible and it has been happening in different cases in Brazil. If a reservoir is located in a contracted area and extends to a non-contracted area, the Brazilian Government will be the party of the unitization agreement. This does not prevent the area to be offered in a bid round, but the future holder of the rights of the area (concession or production sharing agreement) will be subject to such agreement. In this case after definition of the future concessionaire or contracted party, the unitization agreement may be adjusted.

The unitization of non-contracted areas will also vary depending of the location of the reservoir. If the shared reservoir is located in the pre-salt area or in strategic area and extends to a non-contracted area, the Brazilian Government will be represented by Brazilian Pre-salt Public Company - PPSA[1] ("PPSA"). Otherwise, if not located in such areas, the government will be represented by ANP.

An interesting situation can happen because of the recent change of the legislation in Brazil creating the production sharing regime. Some areas of the pre-salt were granted before the new legislation under the concession regime and there could be an unitization of an area under the concession regime and another under production sharing regime. It is also possible the execution of the PPSA unitization agreement with a party holder of a concession in the pre-salt. In such situations the unitization agreement will also have to deal with the differences of the regimes, government take etc.

The expenses of the parties should be proportional to the interest the parties would have in the reservoir subject to unitization. Although the parties could set different terms in the agreement, that is unlikely to be agreed by parties. In case of a unitization with a non-contracted area, the Government would also be responsible for its interest in the expenses. However, the legislation sets forth that the Government should not make any disbursement to pay the costs for its interest, being its share of costs of production and investments in the development phase deducted from the amount to which is entitled in the production of the shared reservoir. Such deduction shall not exceed the amount equivalent to 20% of the monthly production of the shared reservoir. Although, the rationale of upstream in Brazil is that the Government should not make investments, this rule could turn an economic viable reservoir into non-viable. It is not just the carrying aspect, but mainly the limitation on the deduction which makes this rule over protective in favor of the Government.

The redetermination is another important topic of unitization. This is one of the requirements of the law and it is a standard of the industry to have limitations and rules for the request of redetermination by one of the parties. Besides the rules of the agreement, ANP may request a redetermination is made when technically justifiable. This is another provision criticized for situations of unitization in non-contracted areas. Such rule could be used by Government to request redeterminations above the limits provided for in the agreement. 

Local content which is one of the main concerns of the oil companies in Brazil also has some specific rules in case of unitization. In the exploration phase, the parties shall comply with the commitments of local content following the provisions in the agreements that govern the contracted areas that contains the shared reservoir, subject to individualized inspections. In the stage of development of the production phase, the local content shall comply with the proportionality, calculated based on the consideration between the original volume of equivalent oil of the areas subject of unitization; and  the respective commitments of local content defined in the agreements that govern the contracted areas that contains the shared reservoir. For the non-contracted areas it shall be considered the local content commitments of the contracted areas.

If the Parties do not voluntarily execute the Unitization Agreement within the period established by ANP, a petition shall be submitted to ANP by the parties informing what prevented the execution of the unitization agreement and the petition shall comprise a proposal for solution. Based on these information provided by the parties and other information that ANP may request, a technical report will be prepared either by ANP itself or by third parties accepted by ANP. The report shall be submitted to ANP's Board which will define the terms for the unitization agreement to be executed by the parties.

With the increase of the offshore production over the years, unitization agreements in Brazil became more frequent and it tends to become even more frequent in the future. According to Brasil Energia Petróleo e Gás magazine[2], a research made by GEE, a group of economy and energy of the Federal University of Rio de Janeiro (UFRJ) indicates that there are 20 to 25 billion of oil barrels in fields that will require unitization of production and oil company officers estimate that 50% to 60% of the oil to be produced in the year of 2020 will come from assets of areas that will need unitization. The same article informed that PPSA expected to conclude 6 cases of unitization this year but had already identified another 19 areas that may be subject to unitization due to the extent of the reservoir to non-contracted areas in the pre-salt polygon. 16 out of these 19 cases were foreseen to start production between the years of 2014 and 2015.

[1] Pré-Sal Petróleo S.A.: Government company in charge of the management of the production sharing agreements (compulsory for the pre-salt and strategic areas).

[2] Editions of June 2nd and August 14th, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.