New Regulations On Offshore Power Generation

• Published date: 22 November 2022
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, Energy and Natural Resources, Corporate and Company Law, Energy Law, Oil, Gas & Electricity, Government Contracts, Procurement & PPP
• Law Firm: Tauil & Chequer
• Author: Débora Yanasse, Bruno Belchior and B'rbara Eiroa Leite

(i) Overview

Following the enactment of Decree No. 10,946/2022 ("Decree"), the Brazilian legal framework for offshore power generation projects has been further regulated by (i) MME¹ Ordinance No. 52/2022 ("Ordinance"); and (ii) MME/MMA² Joint Ordinance No. 03/2022 ("Joint Ordinance"), which are the result of public consultations Nos. 134/2022 and 135/2022, held by MME in September.

The Ordinance establishes the rules and additional guidelines for the assignment of use of offshore areas for power generation, while the Joint Ordinance instructs for the creation of the Unified Portal for Managing the Use of Offshore Areas ("PUG-Offshore³"). Both the Ordinance and the Joint Ordinance became effective simultaneously on November 1, 2022. For a better understanding of this new regulatory structure, we present below the key provisions of each diploma.

(ii) MME Ordinance No. 52/2022

The Ordinance applies to offshore projects for power plant operation under the regime (i) of independent power production; or (ii) self-production. Although addressed by the Decree, the Ordinance clarifies that the free use assignment for technological research and development projects will be regulated by a specific MME ordinance.

The use assignment for implementing hybrid power projects in oil and gas E&P areas is also not encompassed by the Ordinance, which expressly sets forth that use assignment will not be granted in relation to prisms overlapping with:

1. Areas under oil and natural gas E&P contracts;
2. Areas awarded under bidding procedures with the respective oil and natural gas E&P contracts pending signature; and
3. Pre-Salt and strategic areas.

Pursuant to both the Decree and the Ordinance, such projects will be regulated by a joint diploma to be issued by the Brazilian National Electric Energy Agency ("ANEEL") and the National Agency of Petroleum, Natural Gas and Biofuels ("ANP").

Brazilian National Electric Energy Agency's Role.

In line with the Decree, the Ordinance delegates to ANEEL the attribution to execute the Use Assignment Agreements and to perform all administrative acts necessary for its formalization. Such acts may include:

• Execution, termination and amendment of Use Assignment Agreements;
• Promotion of public tenders to offer prisms defined by the MME under the Planned and Independent Assignments procedures; and
• Definition of calculation and payment methods, as well as the applicable sanctions for default or delay and discounts in payments due to the Federal Government.

ANEEL is also responsible for setting the technical, operational, economic-financial and legal requirements for qualification purposes of companies interested in participating in the tender procedure.

The Ordinance requires ANEEL to prioritize the use of the PUG-Offshore platform to manage the offshore areas. PUG-Offshore allows for the monitoring of proceedings, visualization of areas in use and required...