Petrobras Applauds New E&P Law that Governs Local Content Surpluses 

(Aaron Simonsky, Energy Analytics Institute, 27.Dec.2024) — On 26 Dec. 2024, the Brazilian government enacted Law 15,075/2024, which addresses the possibility of transfer of local content surpluses among contracts in the exploration and production (E&P) of oil and natural gas.

This is in accordance with Article 2, main section, item X, of Law 9,478, dated 6 Aug. 1997, state-owned Petrobras announced 27 Dec. 2024 in an official statement.

This new legislation will allow for the extension of the production sharing agreements (PSAs) terms to be requested under conditions that demonstrate advantages for the Brazilian Federal Union.

According to Petrobras, the new legislation will take effect as follows:

1. Admits the transfer of local content surpluses among E&P contracts, including the possibility of accounting for surpluses in contracts where there is no minimum commitment, such as the “Round Zero” contracts,
2. Allows the Brazilian Executive Branch to reduce the royalty rate of concession contracts for the E&P sector from the “Round Zero” by up to 5% as an incentive for investments in local content, as per the regulations to be published,
3. Authorizes the granting of differentiated quotas of accelerated depreciation for tankers exclusively employed in cabotage activities of oil and its derivatives, as well as for maritime support vessels used to provide logistical support and services to fields, facilities, and offshore platforms, provided they are built in national shipyards,
4. Possibility of extending production sharing contracts (PSCs), including ongoing contracts, as long as it is demonstrated that it is advantageous for the Federal Union of Brazil, and
5. Inclusion, in the amount to be deducted from the Union’s oil and natural gas commercialization expenses, of costs incurred by Pré-Sal Petróleo S/A (PPSA) in managing the PSCs and the contracts for the commercialization of the Union’s oil and gas.

“Petrobras considers the new law an important milestone for the oil and gas sector in Brazil, bringing benefits to the entire national industry and enabling new investments in Production Sharing Agreements,” Petrobras said in the statement.

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By Aaron Simonsky reporting from Belize City. © Energy Analytics Institute (EAI). All Rights Reserved.