Ordinance No. 218/2013 of the Ministry of Mines and Energy (Ministério de Minas e Energia - "MME") went into effect on June 21, 2013. Such Ordinance establishes general guidelines for the Brazilian Oil, Natural Gas, and Biofuels Agency (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis - "ANP") to promote the first bid round under the production sharing regime.

Such guidelines include the following:

  • Qualification as "Operator A". Bidders will have to be qualified as an "Operator A", according to ANP?s criteria. In the event bidders decide to present their bids as a consortium, only one company will have to be qualified as Operator A.
  • Profit oil sharing. The split of the profit oil between the contracted party and the Government will vary according to the price of the barrel of oil and the average production per producing well. The calculation of this average production will not consider wells with technical and operational restrictions.
  • Participation of the Government to be offered. The percentage of the profit oil to be offered to the Government in this bid round shall consider (i) the price of the oil barrel between US$ 100.00 and US$ 110.00, and (ii) average production of 12,000 barrels/day, per active producing well. 
  • 35-year term. MME established the maximum term allowed by law 12,351 of 2010 for this production sharing contract - 35 years. 

The official text of such ordinance, as published in the Brazilian Official Gazette, is available here.

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.