Second Transfer Of Rights Surplus Volume Bidding Round: Ordinance Regulating Co-Participation Agreement Published

• Published date: 24 June 2021
• Subject Matter: Government, Public Sector, Energy and Natural Resources, Energy Law, Government Contracts, Procurement & PPP
• Law Firm: Tauil & Chequer
• Author: Mr Bruno Triani Belchoir and B'rbara Eiroa Leite

On June 1, 2021, Brazil's Ministry of Mines and Energy ("MME") published Ordinance No. 519/2021 ("Ordinance"), which regulates the Co-participation Agreement to be executed between the Assignee of the Transfer of Rights Agreement and the Contractor of the Production Sharing Contract of the Surplus Volume for the Sépia and Atapu Fields, during the Second Transfer of Rights Surplus Volume Bidding Round ("Co-participation Agreement").

Minimum Content.

The Ordinance establishes that the Co-participation Agreement must include at least the following information: (i) identification and definition of the Co-participated Area; (ii) the Co-participated Area Operator, as designated by the Parties; (iii) the division of rights and obligations of Parties that involve or impact the Federal Union and the public interest; (iv) Participating Interests of the Parties; (v) the possibility of amending the Participations; (vi) the obligations of the Parties related to the payment of Government takes; (vii) percentages and Local Content rules; (viii) the Development Strategy of the Co-participated Area, to be replaced by the Development Plan by means of an Amendment; (ix) the term of the Co-participation Agreement; (x) the amount due to the Assignee as Compensation before the gross up, pursuant to the Tender Protocol of the Second Production Sharing Surplus Bidding Round; (xi) the possibility of adopting a procedure to propose sole risk operations; and (xii) dispute settlement mechanisms.

E&P Regime.

The Exploration and Production regime to be applied in the Sépia and Atapu Co-participated Areas is unrelated to the regime applicable to the area contracted under the Transfer of Rights regime and to the area contracted under the Production Sharing regime.

Operator Appointment.

The Parties shall appoint the operator from the Sépia and Atapu Co-participated Area within a maximum term of 60 days counted from the date of the public session of the Second Transfer of Rights Surplus Volume Bidding Round contracted in the Transfer of Rights of the Atapu and Sépia fields. If the operator is not designated as noted above, the Brazilian National Agency of Petroleum, Natural Gas and Biofuels ("ANP") will make the appointment, explaining its choice.

Redeterminations.

The Co-participation Agreement Redeterminations will be submitted for ANP's approval in the Amendment to the Co-participation Agreement.

A Redetermination will not necessarily mean a revision of the Compensation amount before...