On December 21, 2020, the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) published (i) Resolution No. 835/2020, which extends the effective term of certain ANP resolutions with measures related to the public health emergency situation caused by COVID-19 (“Resolution No. 835”), and (ii) Resolution No. 836/2020, which defines the procedures to be followed by entities regulated by the ANP that perform oil and natural gas exploration and production activities, also in consideration of the COVID-19 situation (“Resolution No. 836”).
In a speech on 24 November 1992, marking her Ruby Jubilee on the throne, Queen Elizabeth II said, “1992 is not a year on which I shall look back with undiluted pleasure. In the words of one of my more sympathetic correspondents, it has turned out to be an annus horribilis.”
Annus horribilis. This is a moniker that oil and gas insiders might well apply to 2020 given the disastrous effects on the industry from Covid-19 pandemic (“Pandemic”) and its accompanying recession which brought a precipitous fall in demand and price. Indeed, in May the price of crude oil briefly went negative for the first time in history. This was followed by massive layoffs across the board and sharply curbed investments in planned and ongoing projects. Several major oil companies announced profound changes in their long-range focus from hydrocarbons to greener energy.
Brazil’s oil and gas industry was by no means immune from Covid-19´s fallout. In a June 29 communique, the Brazilian Petroleum Institute (“IBP”) predicted that the negative effects of the pandemic would last through the end of 2021. In addition, the pandemic returned Brazil to recession after three years of modest recovery. Despite this adversity, the Brazilian oil and gas sector, led by a proactive National Petroleum Agency (“ANP”), managed to largely maintain focus on long-term industry goals, benefiting from certain short-term regulatory relief discussed below.
On November 27, 2020, Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) published the draft tender protocol (“Draft Tender Protocol”) for the 17th Concession Bid Round (“17th Concession Bid Round”) for exploratory blocks, establishing the procedures and rules for participation in the bid, as well as the concession contract draft, the preliminary schedule…
On November 10th, 2020, the Brazilian Economy Minister, Mr. Paulo Guedes, affirmed that Centrais Elétricas Brasileiras S.A. – Eletrobras will be privatized by December 2021. Eletrobras, a mixed-capital company controlled by the Federal Government, is the largest power company in Latin America and, in Brazil, is responsible for 30% of the power generation…
On September 1st, 2020, the Brazilian House of Representatives approved the text of the New Gas Law after 7 years of debates among government, institutions, market players and society. To understand the relevance of this expected change in law and its potential impacts on the Brazilian gas scenario in the next few years, it is important to take a quick look at the background that has brought Brazil to this point.
The current Gas Law (Federal Law No. 11,909) was enacted in 2009, but was not sufficient to encourage a more competitive market opening process – mainly due to the fact that Petrobras continued to exercise its dominant position in the entire gas value chain. The first amendment to the current Gas Law was proposed in 2013 by means of the Bill of Law No. 6,407, and its review gained strong support in 2016, when the Brazilian Federal Government launched the Gas for Growth Initiative.
The Gas for Growth Initiative aimed to reform the Brazilian gas regulatory framework to promote the gas market opening process as Petrobras had decided to divest its gas midstream assets. In 2019, after presidential elections, the Brazilian Government put together the New Gas Market Program, which continued with the same goals and principles of the former Gas for Growth Initiative, to create a competitive and unbundled gas market in Brazil.