Brazil´s Bidding Rounds

Houston, November 7th 2018

Heloisa Borges Bastos Esteves

R$1.79 trillion

GDP (2016) 10th

largest oil producer, the

largest of Latin America

207.7 million

Population

Penalties

Criteria Brazil at a glance

15

Billion boe of oil and

gas proven reserves

7th largest oil products consumer

7th Largest foreign investments

attractor

~50% Energy supply

And what the oil and gas industry represents

13% Oil and Gas Industry

5th

largest country

(8.5 billion km²)

Production Sharing Contracts Law n. 12.351/2010

~ 2% of sedimentary areas = pre-salt

polygon

Brazil: three fiscal regimes

Concession Contracts Law N. 9,478/1997

~ 98 % of sedimentary areas:

Hundreds of blocks and fields under

contract: only ~ 4% of these

sedimentary areas

5,0 million km2 – onshore

2,5 million km2 – offshore

7.5 million km2

Transfer of Rights Law n. 12.276/2010

10 fields

Source: ANP/2018

Brazil: diversified environment

Concession

• 424 fields

• 322 blocks

Production Sharing

• 4 fiels

• 7 blocks

96 Groups

• 49 Brazilian

• 47 Foreign

The greatest transformation in the Brazilian E&P sector, completing the opening which started in 1997

Diverse and Competitive E&P Market

Petrobras divestment plan

Bidding round

schedule and

open acreage

Need of

additional service

companies

Improvements in

the energy policy

O&G scenario in Brazil

Unique E&P opportunity:

- fast production development

- reserves and production growth

Creation of a competitive, open,

diverse and internationally

referred refining and fuels market

Development of a diverse and

competitive supply chain and

services market

A diverse oil industry

94%

6%

Petrobras Others

2018

Future

Goal: to create a regulatory environment that enables the establish of a real oil industry in Brazil, with a

significant number of players operating in each environment

94% of the Brazilian production is operated by

Petrobras.

Only 29 companies operate

production fields in

Brazil

Only 43 companies

produce in Brazil

Petrobras´ divestment

plan (more than 100

concessions)

+

Partnerships with majors in

the big mature fields

+

Bidding Rounds/

Open Acreage

A diverse oil industry with

multiple players

and operators

Only 4 companies

operate production in

Brazilian deep water (feb,2018)

A diverse oil industry (open and competitive market)

Goal: to attract the right players for each environment

Pre-salt Conventional Offshore Onshore

Supported by oilfield service companies, suppliers and financial institutions

The right players

Qualification requirements

Consortia

Documents shall be submit individually by each of the members.

• Biding rounds: only winner bids; • Contract transfers: required for ANP´s approval.

Technical Legal

Tax and Labor

Compliance

Economic and

Financial

Economic and Financial Requirements

a) Financial Statements

b) Independent auditor’s report

c) Summary of Financial Statements (foreign bidders).

Qualification Level Minimum Net Equity (in R$)

Operator A R$ 152,000,000.00

Operator B R$ 68,000, 000.00

Operator C R$ 5,500,000.00

Operator D R$ 750,000.00

Non-Operator 25% of the required for operators

Technical Requirements

2 a 29 points 30 a 80 points >= 81 points + Currently operating offshore areas

Operator D

Onshore areas, (except remote

areas)

Operator B

Shallow waters and

Onshore

Operator A

Deep water,s

shallow waters

and Onshore Consortia

Non-Operator Operator D

Marginal Fields

Legal requirements & Tax Compliance

a) Corporate documents - if amended since the lastest submission to ANP;

b) Declaration of absence of restraints on the execution of the Contract;

c) Declaration on relevant legal or judicial claims

d) Tax, Labor and Federal Contributions Clearence Certificates

2017

2018

2019

Predictability for the Oil Market

2020

2021

Brazil 16ª Round 6

Brazil 14ª Round

7 Brazil 17ª Round

Brazil 18ª Round 8

Brazil: 5-year Bidding Rounds Plan

To be

confirmed:

Open Acreage - First Wave

ONSHORE Oportunities

Petrobras

Divestment Plan

80% onshore areas 8% onshore areas Large number of onshore

fields to be available in the

Topázio Project

Open Acreage - Second

Wave

Brazil: onshore opportunities

Brazil: offshore opportunities

Pre-Salt 6th Bidding Round 16th Bidding Round

Bidding Rounds

• 5 effective members: 3 from ANP and 2 from the society, plus a federal prosecutor

• Judges enrolment and qualification

• Judges the offered bids

Bidding Comission (CEL)

• Publishes the tender protocols and contract models;

• Coordinates the documents analysis;

• Coordinates the bidding rounds and the public sessions.

ANP

Regular Licensing Rounds

Enrolment

Public Consultation

End of the consultation period

Draft tender protocol tender

Public Hearing

Tender Protocol

Deadline for enrolment and documents submission

Bid Day

Qualification

Deadline for signature documents submission

Contract signature

Open Acreage Bidding Rounds

Technical and

Economical Parameters

Companies studies

Enrollment

Declaration of interest

Disclosure of na interest

and the bidding

schedule

Deadline for new

enrollments

Offer submition

(public session)

Open Acreage Cycles

Awarded Blocks

Signature of the Concession Contracts

Winners qualification documents

Bidding homologation

Awarded Blocks

Permanently including new areas

Director Board Approval

Environmental Guidelines

Public Hearing about the new Areas

Re-publish the Tender Protocol

Open Acreage Cycles

Deadline for new

enrollments

Bid Day Valid declaration of interes: starts

a cycle

Bid bond and new declaration of

interest

Up to ninety (90) days

Up to thirty (30) days

Up to seventy (70) days

Special Bidding Comission (CEL): will publish the events and dates after each declaration of interest

Enrollment in Bidding Rounds

Enrollment is mandatory for each interested company, even those intending submit bids through a consortium.

Companies must enroll separately for each bidding round.

Fill out an electronic enrollment form

Submit the enrollment documents

Pay the participation fee R$ 2,250.00

Any company that fills the electronic enrollment form and pay the participation fee: right to access the data sample for the sectors available on the Open Acreage. All companies enrollment will be analysed by the Commission

Any company with a valid enrollment is able to submit offer for all the sectors and in any cycle of the Open Acreage Concession Offer since then;

Companies can apply and pay the participation fee at any time. However, the deadlines must be observed during the cycles.

Enrollment in the Open Acreage

The enrollment is made once and it´s valid all through the

cycles

When the company joins a cycle documents that were modified since its

last submission must be sent in the latest version.

Technical Data Package for the Open Acreage

The payment of fees for accessing the technical data package is optional.

Fees change according to the quantity and localization of the sectors, and techical data packages may be acquired at any time.

Fixed fees by sector or group of sectors: R$3,500.00 (Marginal Accumulations Areas) to R$ 194,500.00 (High Potential Deep Waters).

Access to the Technical Data Package

Fill out the electronic

enrollment form Fee + Annex IV

Confidentiality Agreement and

Proof of the representatives

powers

Declaration of Interest

At any moment an enrolled bidder can submit the Declaration of Interest (Anexo XIII)

Every declaration of interest must be followed by a bid bond

The approval of the first bid bond followed by the a declaration of interest shall initiate a cycle of the Open Acreage Concession Offer

Submission of Bids

Exploration Blocks

Signature Bonus

80%

Minimum Exploratory Program

20%

Marginal Acummulation Areas

Signature Bonus

100%

Signing the concession agreement

Signature documents

Signature bonus

Financial Guarantee for the Exploratory Program (30% of the

minumum investment)

Once these three conditions are met, the company is able to sign the concession agreement;

Brasil-Rounds

http://rodadas.anp.gov.br/en/

For More Information:

http://rodadas.anp.gov.br

rodadas@anp.gov.br

THANK YOU

NATIONAL AGENCY OF PETROLEUM, NATURAL GAS, AND BIOFUELS – ANP

Avenida Rio Branco No. 65, 12º - 21º Floors Rio de Janeiro – Brazil

Tel: +55 (21) 2112-8100