Information on the Concession
Agreement, the qualification process
and the rules for Brasil Round 6
Daniel Pedroso
General Manager of Licensing
Agência Nacional do Petróleo
Concession Agreement
• The text remains the same from Brasil Round 5, with
small improvements
• Exploration Phase
– Fixed duration, stipulated in the Initial Tender Protocol
and in the Final Tender Protocol
– 100% relinquishment of the block after a pre-defined
period
– Minimum Exploration Program
• Expressed in Work Units
• Factor in judging the bids
– Possibility of extending the Exploration Phase
• Late discoveries
• Natural gas market and technological issues
Concession Agreement
Duration of Exploration Phase - Onshore
Basin
Exploration Periods
(years)
Potiguar
1* + 1**
Recôncavo
1* + 1**
Espírito Santo
1* + 1**
* Possible extension of period to be decided
** Additional period of 1 year – MEP of 1 exploratory well
Concession Agreement
Duration of Exploration Phase – onshore, shallow waters
Basin
Exploration
Periods (years)
Barreirinhas
5 + 1*
Campos
4 + 1*
Espírito Santo
Foz do Amazonas
Santos
5 + 1*
5 + 1*
4 + 1*
* additional year – MEP of 1 exploratory well
Concession Agreement
Duration of Exploration Phase – onshore, deep waters
Basin
Exploration
Periods (years)
Barreririnhas
6 + 2*
Campos
4 + 2*
Camamu-Almada
Jequitinhonha
6 + 2*
6 + 2*
Pará-Maranhão
6 + 2*
Pelotas
6 + 2*
Santos
4 + 2*
Sergipe-Alagoas
5 + 2*
* Additional years – MEP of 1 exploratory well
Concession Agreement
Work Units (WUs)
Exploration
Well
(WU/well)
2D
Seismic
(WU/km)
3D
Potential
Geochem.
Seismic
Methods
(WU/Block)
(WU/km2) (WU/Block)
Minimum
Depth
Financial
Guarantee
First
Period
(US$/WU)
Shallow
waters
1.000
0,16
0,8
0
0
Gr.Canárias
Deep
waters
1.000
0,08
0,40
0
0
Fm. Ubatuba/
Mb.Tamoios
12.000
Onshore
1.000
10
50
10
10
Gr. Ilhas
1.000
6.000
Concession Agreement
• Minimum Exploration Program
– Non-exclusive work accepted for compliance
with proposed MEP in accordance with the
reduction factor
• Accepted surveys
– Onshore: 2D, 3D, potential methods and geochemistry
– Offshore: 2D in transition zone and 3D in any depth of water
– Guaranteed by letter of credit or insuranceguarantee
Concession Agreement
• Concession Agreement Management
– blocks in the same sector, bid for in the same
round, having the same consortium composition are
grouped in a sole Concession Agreement, with
various objects (blocks) individually negotiable
• One financial and performance guarantee
for the various blocks
• AWP (Annual Work Program), notifications,
etc. delivered by Agreement
Concession Agreement
Blocks awarded to
the same consortium
- unified under the
same Agreement
Concession Agreement
• Production Phase
– Start of the Declaration of Commerciality
• 180 days for the presentation of the
Development Plan
– 27 years duration, extendable
– Same agreement terms as Brasil Round 5
• Only small improvements
Concession Agreement
• Minimum local content
Operational
Minimum local content
Qualification
Required for the Exploration Development Stage
Phase
Block
A
30%
30%
B
50%
60%
C
70%
70%
Concession Agreement
• Draft Agreement
– Prepared from Brasil Round 5 Concession
Agreement
– Available for public consultation at the
beginning of March
– Discussions to be held during the Legal-Tax
Seminar, in March
Brasil Round 6 qualification
process and rules
Daniel Pedroso
General Manager of Licensing
Agência Nacional do Petróleo
Brasil Round 6
Schedule
Areas announcement and schedule
December 11th, 2003
Roadshow - Rio de Janeiro (public hearing)
January 22nd, 2004
Publication of Initial Tender Protocol
February, 2004
Data Package Available
March 1st, 2004
Technical Workshop
March, 2004
Publication of the Draft Concession Agreement
March, 2004
Legal-Tax Seminar
March, 2004
Publication of Final Tender Protocol and
Concession Agreement
July, 2004
Deadline for Declaration of Interest and
Beginning of Aug, 2004
presentation of documents
Deadline for payment of Participation Fee
August, 2004
Bidding Conference
August, 2004
Signature of the Concession Agreement
Up to November, 2004
Brasil Round 6
Qualification
• Qualification procedures identical to those of
previous rounds
• Brazilian or foreign companies may participate
in the process
– If successful, the Brazilian company will sign
the Concession Agreement
• Qualification
– Technical, legal and financial qualification
– Payment of the participation fee
• Bidding in public session
Brasil Round 6
Qualification
• Process conducted by a Special Licensing
Committee, with representatives from the ANP
and from society
– Technical Qualification
– Legal Qualification
– Financial Qualification
Brasil Round 6
Qualification
• Qualification of parent company or controlling
group
– Company which, if successful, will provide a
Performance Guarantee if it is not the
signatory of the Concession Agreement
– a large operational subsidiary company can
be qualified at ANP’s criteria
• Company able to assume all the
responsibilities of the Concession Agreement
Brasil Round 6
Technical Qualification
• Establishes operational capability
• Operational classification based on objective
criteria
– Class A – unrestricted operator
– Class B - operator restricted to onshore and
shallow waters blocks
– Class C - operator restricted to onshore and
mature basin blocks
– Non-operators: Can only participate when
associated to qualified operators
• Weighting of non-operator activities
– Facilitates technical advancement
Financial and Legal Qualification
• Blocks “A and “B”
– Minimum of R$ 20 million net equity
• Blocks “C”
– Minimum of R$ 3 million net equity
– Companies with net equity over R$ 1 million can
participate in a consortium
• Companies that do not reveal their controlling
partners/shareholders will not be qualified
• Special applicable criteria
– Companies from tax havens
– Companies from non-cooperating countries
• Necessary documentation as per the Initial Tender
Protocol
Participants of Previous Rounds
• Documents to be sent:
– Expression of Interest
– Power of Attorney and Confidentiality
Agreement
– Declaration on relevant pending litigation
– Supplementary information:
• Latest financial statements
• Declaration that documents delivered will
remain valid
• Report any substantial modification to the
information provided
• Qualification is not automatic
Participation Fees
• Paid by all companies wishing to participate in
Brasil Round 6
• Paid by groups of sectors
– Seventeen groups, in Brasil Round 6
– US$ 5.000 to US$ 50.000
• Give rights to:
– Data Package and Information
– Present bids for blocks, if the company is
qualified
Participation Fees
Participation
Basin
Barreirinhas
Participation
Basin
Sector(s)
Fee
(US$)
SPOT -T3
SPOT -T4
5,000
SREC-T2
SREC-T3
5,000
SES-T2
Espírito Santo
SES-T4
SES-T6
Campos
Espírito Santo
SPOT -T5
Recôncavo
CamamuAlmada
Campos
SPOT -T2
Potiguar
Barreirinhas
Sector(s)
SBAR-AR2
SBAR-AP1
SBAR-AP2
SCAL-AP1
SCAL-AP2
SC-AR2
SC-AR3
SC-AP2
Fee (US$)
15,000
30,000
30,000
25,000
50,000
15,000
Espírito Santo
Foz do
Amazonas
SES-AR2
SES-AP1
SFZA-AR1
SFZA-AR2
Jequitinhonha
SJ-AP
30,000
SPAMA-AP1
SPAMA-AP2
30,000
Pelotas
SP-AP3
30,000
Santos
SS-AR3
SS-AR4
25,000
Santos
SS-AP1
50,000
SEAL-AP2
50,000
5,000
Pará-Maranhão
SergipeAlagoas
ALL SECTORS
50,000
15,000
460,000
Consortia
• Formed up to the bidding conference
• Conditions:
– Operator qualified for the Block
– Operator participation of at least 30%
– No participant with less than 5%
– Companies can only participate in one
consortium competing for each Block
• They can be in different consortia for other
Blocks
• Affiliates have the same restrictions
Bidding Conference
•
•
•
•
Public and transparent process
Sectors offered sequentially
Individual bidding for each block
Results for the blocks of one sector known
before the bidding for the following blocks
• Each company or consortium must deposit a
bid bond of sufficient value
– Reusable by the losing consortia
– Bid bond presented in flexible number and
values
Bid Evaluation
• Bidding methodology
– Sealed envelopes delivered together, by
basin sector
• Individual bidding for each block
– Final Grading
• Signature Bonus weighting (30%)
• Local content weighting (40%)
– Specific items
• Exploration Program weighting (30%)
Bidding Conference
Restrictions for the presentation
of bids
*Possible relaxation of restrictions for the
presentation of bids for onshore blocks being
studied
Bid Evaluation
Signature Bonus
• The Signature Bonus cannot be less than the
minimum value
– Any offer less that the minimum values will be
disqualified
• Minimum values
– Established by block for offshore sectors, in
accordance with the evaluation made by the
ANP
• Details to be published in the Initial Tender
Protocol
– For onshore blocks, R$ 10,000
Bid Evaluation
Minimum Exploration Program
• Offers for the Minimum Exploration Program
will be expressed in whole numbers of Work
Units (WUs)
– The WUs offered will be included in the
Concession Agreement, and must be carried
out in equivalent exploration work during the
First Exploration Period
Bid Evaluation
Commitment to Acquire Local
Goods and Services
• Local minimum content applicable to the Exploration
Phase and the Development Stage:
Operational
Local minimum content
Qualification
Required for the Exploration Development Stage
Phase
Block
A
30%
30%
B
50%
60%
C
70%
70%
• Additional specific commitments for determined
operations will be considered in the bid evaluation
• Commitments will be included in the Concession
Agreement
Bid Evaluation
Commitment to Acquire Local
Goods and Services
• The grade obtained for the Acquisition of Local
Goods and Services will have a weighting of
40% of the final grade
• Exploration (15%)
• Development (25%)
Final Tender Protocol
• Definitive document with the Brasil Round 6
rules
• In addition to the information in the Initial
Tender Protocol, it will contain:
– Place, date and time of the bidding
– Order of offering the sectors
– Model of the financial guarantees
• Model of the Letter of Credit
• Model of the Insurance-Guarantee
– Model of the Concession Agreement
Signing of Concession
Agreement
• Up to 90 days after the confirmation of the
results
– By the end of November 2004
• The Brazilian company must be formed
• It may also be signed by an Affiliate of the
qualified company, against delivery of:
– Documentation of the signatory company
– Performance Guarantee supplied by the
qualified company
Information and Clarification
• Technical workshop
– Programmed for the end of March
• Participation of ANP technicians and
representatives of data acquisition
companies
• Legal-tax seminary
– Programmed for the end of March
• Participation of ANP technicians and from
other government bodies
Portal
www.Brasil-Rounds.gov.br
• All information on the Round
• Regularly updated, including:
– Initial and Final Tender Protocols
– Concession Maps
– Basic information / schedule
– Pertinent legislation
– Questions and answers
– Results of previous Rounds
– Information on E&P activities in Brazil