ANP updates resolution that softens regulations

The Brazilian National Agency of Petroleum, Natural Gas, and Biofuels (ANP) published on June 17, 2020, Resolution ANP No. 820/2020, which amends Resolution ANP No. 816/2020, to modify deadlines and procedures to be observed by regulated agents engaged in the activities of exploration and production of oil and natural gas (E&P) during the period of efforts to combat the new coronavirus (Covid-19).
Below we highlight the main changes established by ANP.
General orientations

• Submission of guarantees: ANP included guarantees required to enter into contracts and amendments thereto in the list of documents that must be submitted primarily through the Electronic Information System (SEI). The submission of guarantees and other documents which naturally depend on physical versions to be valid will enable their prior analysis by the agency, with the definitive acceptance being conditioned to the delivery of the physical versions. The submission of financial guarantees provided in the Minimum Exploratory Program (PEM) must comply with the contractual terms.

• Electronic signature: the electronically produced document signed using the ICP-Brasil key system must also be sent by institutional e-mail, for verification of signatures, in addition to being submitted via SEI for registration in the process.

Technical Data

• Issuance of Appraisal Report for PEM’s deduction: in addition to the raw seismic data which were already subject to ANP’s expedited analysis, ANP allowed processed seismic data to be assessed through expedited (but not sample) analysis for the purpose of issuance of Appraisal Report restricted to the PEM’s deduction.

• Non-conformities in the technical data program: if ANP finds, after definitive analysis of the technical data program submitted to expedited/sample analysis, that it does not comply with the technical standards established by the agency, the operator will be subject to fine equivalent to the monetary value of the Work Units contained in the technical data program. This penalty will apply even if the E&P contract is already expired at the time of the non-compliance confirmation.

Analysis of operational security risk 

• Internal audits: the term in the internal audits cycle of each installation, concerning technical regulations for operational safety already listed in the resolution, remains extended, but limited to the maximum term set forth in Management Practice No. 7 of the Operational Safety Management System (SGSO).

• Risk analysis: requests for extension of the term of validity of the five-year risk analysis maturing in 2020 and 2021, which were previously extended by the resolution term, must now be substantiated by the operator and indicate the new term of validity requested.

• Non-essential activities to supply guarantee: ANP defined, for the purposes of article 27 of the resolution, which activities are considered non-essential to supply guarantee:

o activities limited to the Exploration Phase of Contracts;

o activities performed in the Production Phase of Contracts which do not impact the volumes of oil and natural gas produced; or

o other activities at ANP’s discretion.

• Changes in on-board personnel (POB) or work schedule: ANP has established that the management of changes involving reduction of POB or modification to the work schedule must take in consideration, especially, if such changes are aligned with the installation’s emergency response capacity and performance of critical procedures. The management of changes shall be permanently available for consultation, at any time, by ANP.

Start and restart of installations operation

• Installations whose operation is interrupted by reduction of POB or demobilization of personnel on account of Covid-19: the start and restart of installations operations which have been interrupted due to drastic reduction in POB or personnel demobilization for suspicion or confirmation of Covid-19 will not be subject to prior inspection by ANP, but will require prior and express authorization following submission, and subsequent approval ANP, of the documents listed in the caput of article No. 29 of the resolution.

• Remaining installations: other hypotheses of operations restart not contemplated in the previous item are conditioned only to the previous submission of the documents listed in paragraph 2 of article No. 29 of the resolution. The operator is not exempt from preparing and making available the documents mentioned in the previous item for potential inspection.

• Risk control: ANP may adopt precautionary or supervisory measures when it deems as insufficient the documentation stating that the risks associated with the operations are controlled.

Government Take

• Compositional analyses of natural gas: ANP has suspended the deadline for submission of compositional analyses of natural gas intended for determination of the reference price by ANP. In case the analyses are submitted during the validity period of the resolution, ANP will take them into account to determine the reference price in the respective months of production.

• Submission deadline after the resolution’s expiration: the compositional analysis of natural gas must be delivered within 60 days following the resolution’s expiration. The previous deadline was of 30 days.

Local content

• Local Content Reports: the deadline for submission of Local Content Reports whose original deadlines fall within March 1, 2020, and the resolution’s expiration date was extended. The submission deadline is of 60 days following the resolution’s expiration.

• Quarterly Expenses Reports and Quarterly Certification Reports: the deadlines concerning the Quarterly Expenses Reports and the Quarterly Certification Reports with assessment period from the first quarter of 2020 until the resolution’s expiration date were also extended by up to 60 days following the resolution’s expiration.

ANP Resolution No. 816/2020 will remain in force until December 31, 2020, except if earlier revoked – fully or partially – by ANP in case the conditions of the public calamity caused by the COVID-19 outbreak change.
For more information, please contact Mattos Filho’s Infrastructure and Energy practice.