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CNPE publishes Resolution No. 2/2019 over the Transfer of Rights (TOR+) Bid

Oil and Gas

The Brazilian National Council of Energy Policy (Conselho Nacional de Política Energética - "CNPE") published yesterday (March 7th), in the Federal Official Gazette (Diário Oficial da União – DOU), the Resolution No. 2/2019, which provides guidelines for the bid round under the Production Sharing regime for surplus volumes contracted under the  Transfer of Rights (TOR+) regime.

Through an extraordinary meeting held last week, the CNPE established that the bid will contemplate Atapu, Búzios, Itapu and Sépia areas, in the Santos Basin, and the bid winner must pay a compensation to Petrobras for the investments made in the respective areas up to the execution date of the Production Sharing Contract.

The published resolution establishes that the amount of said compensation will be calculated based on current market parameters, by the deferral of the production volume contracted under the Transfer of Rights (TOR+) Regime, resulting from the execution of the Production Sharing Contract, in order to maximize the Net Present Value (Valor Presente Líquido - "NPV") of the Federal Government and maintain Petrobras' NPV,  which, in its turn, will be calculated based on the execution date of the Production Sharing Contract.

The rules concerning the payment of this compensation shall be defined by means of a co-participation agreement to be entered into by and between Petrobras and the contractors of the Production Sharing Contract. Said agreement shall also establish (i) the unification procedure of the development and production operations within the areas containing co-participated reservoirs; and (ii) the proportional participation of each contractor in the co-participated reservoir.

It is also important to highlight that the rules concerning the drafting of the co-participation agreement will be defined by means of an act of the Ministry of Mines and Energy (Ministério de Minas e Energia – "MME") and that, once concluded, the agreement will still have to be submitted to the National Agency of Petroleum, Natural Gas and Biofuels (ANP) for approval.

Furthermore, the Resolution No. 2/2019 provides that the bid winner may recover as cost oil the amounts paid as compensation to Petrobras, corresponding to its participation in the reservoir.

Please click here to access CNPE Resolution 2/2019 in full.

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