On April 22, 2021, the Brazilian National Energy Policy Council ("CNPE") published CNPE Resolution No. 05/2021 ("Resolution"), which establishes the technical and economic parameters for the 2nd Bidding Round under the Production Sharing regime for the Surplus Volume contracted under the Transfer of Rights regime ("2nd Bidding Round").

The 2nd Bidding Round will offer the surplus volume of the Sépia and Atapu fields, located in the Santos Basin. Petrobras will have 30 days, counted from the Resolution's publication, to exercise its preferential rights to be Operator with at least 30% participating interest in each offered field.

The Resolution set the signature bonus due to the Federal Government at (i) BRL 7,138,000,000.00 (seven billion one hundred and thirty-eight million reais)  in the Sépia field and (ii) BRL 4,002,000,000.00 (four billion and two million reais) in the Atapu field.

During the term of the Production Sharing agreements, the minimum percentage of the federal government's profit oil was defined as follows: (i) 15.02 percent for the Sépia field and (ii) 5.89 percent for the Atapu field, considering the price of a barrel of Brent oil of USD 50.00 (fifty US dollars) and the average daily production of 14,500 (fourteen thousand and five hundred) barrels of oil per active producing well, pursuant to the table on the Tender Protocol.

In the production phase, each month the contractor(s) will acquire the production share corresponding to the cost oil, observing the limit of 80% (eighty percent) of the gross value of production in each offered area. Costs that exceed 80% will be accumulated for acquisition in subsequent years.

The Resolution further establishes that the contractors' owed amounts to Petrobras under the Production Sharing regime will be recoverable as cost oil, under the compensation provided for in CNPE Resolution No. 03/2021 (for more information, please refer to our previous Legal Update).

The minimum mandatory local content applicable in the production development stage of the Sépia and Atapu fields shall observe the following criteria: (i) 25 percent for the well construction; (ii) 40 percent for the collection and offloading system; and (iii) 25 percent for the stationary production unit. Such percentages will not be subject to local content waiver mechanisms.

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 2020. 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.