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Decree Regulates Petrobras’ Divestments

26Abr2018Apr26,2018
Infrastructure and Energy; Oil and Gas

On April 25, 2018, the Brazilian President Michel Temer sanctioned the Decree No. 9.355/2018 (“Decree”), that established the rules for governance, transparency and good market practice for assignment of oil, natural gas and other hydrocarbons exploration, development and production rights, by Petróleo Brasileiro S.A. – Petrobras (“Petrobras”), its subsidiaries or controlled companies.

The special procedure foreseen in the Decree also applies to the transfer of goods, rights and infrastructure related to the purpose of the assignment of rights, without prejudice to the particular regime of the private companies on a free competition basis to which Petrobras is subject. 

The Decree’s main objectives for the divestment of Petrobras are: (i) encouraging the adoption of governance methods that ensure the accomplishment with Petrobras’ corporate purpose; (ii) granting impersonality to the managing of Petrobras’ exploration and production portfolio; (iii) granting legal security to the assignment procedures; (iv) granting quality and integrity to the decision process that determines the assignment of rights; and (v) enabling the obtaining of the best financial and economical outcomes for Petrobras.

The assignment procedure foreseen in the Decree shall not be applicable to the hypothesis of: (i) formation of partnership or consortium in which the choice of the partner derived from specific characteristics; (ii) unfeasibility of the performance of the procedure on a free competition basis,  as provided for in the Decree; and (iii) right to withdrawal derived from partnership agreements. 

The special procedure is divided in seven phases, which are: (i) preparation; (ii) interest consultation; (iii) preliminary proposal presentations; (iv) binding proposal presentations; (v) negotiation; (vi) results; and (vii) signing of legal documents. The phases (ii) to (iv) shall be published at Petrobras´ website.

The preliminary proposals phase and the binding proposals phase differs in the sense that, in the first, the interested parties who submits preliminary proposals may withdraw from the submitted proposal without incurring in any encumbrance or penalties, whilst in the second, the submitted proposal will be binding, with exception to modifications resulting from the negotiation.

Finally, the Decree establishes the guidelines for monitoring and transparency during the assignment procedures, and defines that the control entities shall have access to the documents and information deemed necessary for the performance of the activities related to the assignment of rights procedures. Petrobras shall attribute the degree of confidentiality during the submission of requested documents and information, maintaining the confidentiality where applicable. 

To have access to the full Decree click here (in Portuguese only).

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