Brazil′s petroleum, natural gas, and biofuels regulatory agency, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis ("ANP") made available for public consultation a draft regulation seeking to revise unitization rules.
To download the draft regulation, please click here. Suggestions and comments to the draft regulation must be submitted to ANP by no later than April 16, 2013, either by e-mail (email@example.com), fax (+55 21 3797 6399), or in person at ANP′s headquarters in Rio de Janeiro. A public hearing at which ANP will respond to such comments is expected to be held on May 10, 2013, at ANP headquarters. Those who wish to attend the public hearing must register with ANP by May 6, 2013.
Analysis of the draft resolution reveals the following:
- Notification procedure. The operator will have ten (10) days to inform ANP of the existence of a pool outside of its area, counted from the time concessionaires become aware of such extension.
- Agreement for the Individualization of Production ("AIP"). In the event the pool extends to an area that is subject to a concession, production sharing agreement, or assignment regime with different companies or consortia, the parties must enter into an Agreement for Individualization of Production ("AIP").
- Execution of the AIP with the Federal Government. If the pool extends to an area which is not subject to a concession or any other regime ("open acreage"), the parties must enter into the AIP directly with the federal government, based upon the assessments and technical information provided by ANP. In this case, if the pool extends to an area located in the pre-salt or other areas deemed strategic by the government, the federal government will be represented by Pré-Sal Petróleo S.A. ("PPSA"). If the pool is not located in a strategic area, the federal government will be represented by ANP.
- Commitment of Individualization of Production. In the event the pool extends to an area under concession, production sharing agreement, or assignment regime with the same companies or consortia, the parties must enter into a Commitment of Individualization of Production and submit it to ANP within 180 days counted from the notice of the existence of a share pool, mentioned on the first item above. Please note that this is a new instrument created by ANP, considering that previous regulation restricted the execution of an agreement to cases involving only different companies or different consortia.
- Report. Parties shall report quarterly to ANP the progress of the negotiations regarding the conclusion of the AIP and submit the following information to ANP, among others:
- Schedule of activities;
- Division of the rights and obligations concerning the federal union; and
- Studies performed of the shared pool.
- Local Content. During the exploration phase, parties must comply with the local content percentages provided under the contracts governing the unitized area. In the development phase, local content will be determined by a percentage based upon the volume of oil in the unitized area and the percentages determined under the respective contracts.
- Government Take. The AIP must provide the obligations of the parties with respect to the government take, according to the provisions of the original contracts governing the unitized area. In this regard, the government take corresponding to the open acreage must be paid by the operator of the unitized area and deducted from the share of oil due to the federal union.
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.