1st Cycle of Permanent Sharing Offer: Collection 72% of Maximum

(ANP, 16.Dec.2022) — The 1st Cycle of the Permanent Production Sharing Offer (OPP), held today 16 December 2022 by the ANP, had four blocks auctioned, out of the 11 on offer, generating R$ 916,252,000.00 in signature bonuses (72 % of maximum possible). In addition, R$ 1.44bn in investments are foreseen by the winning companies in the first phase of the contracts alone (exploration phase). 

“Today we had a good result for Brazil. The amount collected in signature bonuses represents 72% of the maximum that could have been collected if all areas had been auctioned. With this, we guarantee minimum investments of R$ 1.44bn, which will result in economic activity, jobs and income for Brazilians. This shows that the areas with the greatest potential were the object of interest for oil and gas exploration and production companies,” said ANP Director-General Rodolfo Saboia. 

Source: ANP

He also highlighted the fact that two of the areas, Água Marinha and Norte de Brava, had competition. “In Água Marinha, the minimum percentage of excess oil was exceeded by 220% and, in the case of Norte de Brava, the percentage offered had a premium of almost 171.73% in relation to the minimum. With this, we guarantee more resources for Brazilian society in the long term, through greater collection on the profit from oil production resulting from the auction”, he added. 

As in all rounds under the sharing regime, in this event the signature bonuses (amount paid in cash by the companies that win areas in the bidding process) were fixed and determined in the public notice. 

Thus, the criterion for choosing the winning companies was the oil surplus for the Union. The bidding notice established a minimum percentage of excess oil, based on which the companies made their bids.  

The oil surplus is the portion of oil and/or natural gas production to be shared between the Union and the contracted company, according to criteria defined in the contract, resulting from the difference between the total volume of production and the portions related to royalties due and to the cost in oil (portion of production corresponding to the company’s costs and investments in operating the field). 

The signing of the contracts is expected to take place by 28 April 2023. 

The recording of the transmission of the public offer session is available on the ANP YouTube channel . 

What is the Permanent Offer

The Permanent Offer is currently the main type of bidding for areas for exploration and production of oil and natural gas in Brazil. In this format, there is a continuous supply of exploratory blocks and areas with marginal accumulations located in any onshore or offshore basins.  

Once your registration is approved in the Permanent Offer, the company can declare interest in one or more of the blocks and areas offered in the Invitation to Bid. After approval by the Special Bidding Committee (CEL) of one or more declarations of interest, a Permanent Bid cycle begins, with the release of its schedule by the Committee. The cycles correspond to the holding of public sessions for the presentation of bids for one or more sectors that had a declaration of interest. On the day of the public session, registered companies can make offers for blocks and areas with marginal accumulations in the sectors being auctioned in that cycle.  

Currently, there are two types of Permanent Offer: Permanent Concession Offer (OPC) and Permanent Production Sharing Offer (OPP), according to the contracting regime (concession and sharing). Three cycles of the OPC have already been carried out and today the 1st Cycle of the OPP took place. 

What is the Open Acreage 

The Open Acreage is currently the main model for the bidding of areas for exploration and production of oil and natural gas in Brazil. In this format, there is a continuous supply of exploration blocks and areas with marginal accumulations located in any onshore or offshore basins. 

Once its application has been approved in the Open Acreage, the company may express interest in one or more of the blocks and areas offered in the tender protocol. After approval by the Special Bidding Commission (CEL) of one or more expressions of interest, a cycle of the Open Acreage begins, with the disclosure of its schedule by the Commission. The cycles correspond to the holding of public bidding sessions for one or more sectors that had an expression of interest. On the day of the public session, registered companies can make bids for blocks and areas with marginal accumulations in the sectors being tendered in that cycle. 

Currently, there are two models of the Open Acreage: the Concession Model (OPC) and the Production-Sharing Model (OPP), according to the contracting regime (concession and production-sharing). Three cycles of the OPC have already been held, and today the 1st Cycle of the OPP has occurred. 

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