On May 4, 2016, the National Agency of Petroleum, Natural Gas and Biofuels – ANP published Resolution No. 20/2016, which establishes the criteria and the equation for calculating the neutralization of weight variation on the percentage of global  commitment and of each item sum, for the purpose of monitoring compliance with local content obligations.

From now on, the calculation of the neutralization will be based on a formula proposed by ANP, which considers the weight effectively allocated by the companies in each local content item, excluding items for which there has been no investment.

Initially, during the process of Consultation and Public Hearing No. 25/2015 conducted by ANP to obtain the input of the industry on this matter, the Resolution was supposed to apply only to concession contracts from the 7th Bidding Round onwards. However, the approved Resolution was adapted to also cover the Onerous Transfer and Production Sharing Agreement, bringing  a wide advantage to the industry.

The Resolution is an answer to an old market demand and will be applied retroactively to all Concession Contracts currently in effect, including inspection procedures already in progress.

The complete resolution is available on  ANP's official website (Portuguese only).

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2016. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.