Legal Regulation of Petroleum Upstream in Brazil

  • Marilda Rosado de Sá RibeiroEmail author


The chapter aims at providing an overview of Brazilian Oil and gas Upstream sector. We initially summarize facts and numbers that show Brazil is a relevant player in the world scenario. The historical background indicates the evolution of the legislation and the dominant role player along the decades by the Brazilian State-owned oil company (Petrobras). The different phases of the industry are explained not only around the main events. The legal back ground and the main drives for each of the changes are analyzed. The successive changes and the opening of the market occurred in the 1990s are commented in light of the legal domestic and international tradition. Moreover, the article explains the institutional roles of each of the main players and the impact of the pre-salt discoveries in such scenario. The three different types of exploration and production contracts now in force are put into perspective, and its main features are also analyzed. Some of the issues that are included as hot topics were subject to various discussions in the past years: Unitization, local content, arbitration and Government participation. Some comments about environmental aspects are also relevant to the overall picture. Finally, among the present challenges, some thoughts about the corruption scandals and the impact of new plans concerning foreign investment finalize the panorama provided.

1 Introduction

Brazil is still a player that deserves attention in the international oil and gas market, especially nowadays, when measures are being taken to remedy some of the negative effects of certain legal changes made in past years.

Currently, the total reserves of oil in Brazil comprises 22.657,1 millions of barrels, from which more than a half are already proved. The total oil production in the country during 2016 reached 918.731.017 barrels and the oil refining capacity was 2.409.336 barrels per day. Moreover, by the end of the same year, there were 8.527 producer wells in Brazil, of both oil and natural gas (ANP 2017a, b, c).

Regarding the Brazilian reserves of natural gas, its total amount corresponds to 636.835 millions of cubic meters, while the proved reserves consist of 377.406 millions of cubic meters. The country’s total production of natural gas last year was 37.890.450,3 thousand cubic meters and the current capacity of processing this resource is 95.650,0 thousand cubic meters per day. Furthermore, there are 110 gas pipelines in operation, with total extension of 11.696 km (ANP 2017a, b, c).

Petrobras remains in the top of the producers ranking of the country. During last year, the company’s production consisted of 748.360.717,7 barrels of oil and 29.771.797,6 thousand cubic meters of natural gas, reaching around 80% of the total production in Brazil. However, other 46 companies also act in the Brazilian upstream (ANP 2017a, b, c).

Despite the challenges, Brazil currently shows a firm intention to resume foreign investments in the oil and gas sector, as well as in the infrastructure sector in general, as will be seen below in this article.

Notwithstanding, providing an overview of the upstream in Brazil requires an understanding of the major phases of the oil and gas industry in the country. We tried to summarize and set into historical perspective the drives and events that influenced and created the background scenarios of the evolution.

Moreover, one cannot omit the developments occurred after the unprecedented corruption scandal that affected Petrobras and the whole chain of supply and various players mostly in the service industry. Therefore, we shall also comment the main aspects related thereto that affect the upstream side of the business.

2 Historical Background

The evolution of the oil and gas in the country suffered dramatic changes during the past decades. Before the advent of the Law No. 9.487, from 1997, the Petroleum Law, foreign investments were not so significant, basically limited to Petrobras’ services providers and transnational companies that acted in the downstream, mainly fuel retailers. The only former opening, through the risk contracts, did not create an impressive wave of investments in the late 1970s.

The Petroleum Law brought an important launch in the Brazilian oil and gas market by setting forth the promotion of bidding rounds by the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis—ANP (Brazilian National Agency of Petroleum, Natural Gas and Biofuels). At that point, foreign investors started to make significant investments in the country, notably in the exploration and production sector.

In such context, especially in the late 1990s, among the different areas of the industry, certainly the upstream was scrutinized with more encompassing evaluations, both by investors and newcomers, as well as by Brazilian scholars and Brazilianists, academics from different countries and with a diversity of approaches. Certain developments were also analyzed by other countries which led comparative law efforts in analyzing Brazilian experience aiming at improving their own regulations.

Locally, the challenges faced in each of the phases commented herein below provided an excellent opportunity for an interdisciplinary boom of studies and synergy in problem solving, From the legal perspective, the efforts required to implement the different innovations also gave inputs and opportunity for different fields of law (de Sá Ribeiro 2014).1

The main features of some of the initiatives can be related to the famous pendulum of the resource nationalism (de Sá Ribeiro 2009a, b). The ideals consecrated in those years found a positive reaction in other the Latin American countries. Brazil also showed signs of the back and forth movements which echoed all the theories and discussions consecrated under the realm of the sovereignty over the national resources.

Looking backwards until the 1950s, one can evaluate the cycles of the Brazilian industry development and the major role played by oil and gas, and more particularly by the Brazilian State-owned Oil Company Petroleo Brasileiro S.A. (Petrobras). However, it must be said that the difficult times in the 1950s and 1960s made Brazilian oil and gas history different from other countries, where earlier oil discoveries were abundant and oil became soon a curse that would lead to a vulnerability in their economies, falling into the trap known as “Dutch disease”. In Brazil, most of the initial investments were directed to refining activities, aiming to slightly reduce the country’s dependence on imported fuels, as well as give a better equilibrium to the balance of trade. Only in the late 1970s a virtuous cycle was started with the Campos Basin discoveries.

We shall do a brief review of the heroic times of the oil and gas history in Brazil in this chapter, but we could name in simple terms the following phases2:
  1. 1.

    Between the creation of the National Council of Petroleum (Conselho Nacional de Petróleo) and Petrobras (1938–1953)

  2. 2.

    Intermediate phase (1953–1977)

  3. 3.

    Risk contracts (1977–1988)

  4. 4.

    Two post-democratization transition periods (1988–1997)

  5. 5.

    New petroleum regime introduced by Law No. 9.478/97 (1997–2007)

  6. 6.

    Unread signs of change (2007–2010)

  7. 7.

    Post pre-salt hybrid regime (2010–2016)

  8. 8.

    Emerging of the present scenario (2017–)


2.1 Brazilian Oil and Gas Legislation Before 1997

Differently from other minerals, oil was regulated by the so-called Oil Legislation (Legislação do Petróleo), which was scattered throughout several statutes. It began with the Decree-Law No. 395 from 1938 that created the National Oil Council, regulated “the import, export, transmission, distribution and trading of crude oil and oil products in the country, and, also to the oil refining industry imported or produced in the country”.

The Brazilian Federal Constitution had determined as from 1934 that mineral resources ownership belongs to the State (Bucheb 2007). Thereafter, Law No. 2.004 of 1953 set the basis of the oil and natural gas legal system in Brazil, defining the roles of the National Petroleum Council and establishing the “Sociedade por Ações Petróleo Brasileiro Sociedade Anônima—Petrobras”. Law No. 2004/53 also defined the scope of the Federal Government’s monopoly on the exploration and exploitation of oil and other fluid hydrocarbons and rare gases, as their refining and transportation, to be carried out exclusively by Petrobras and its subsidiaries.

The concept of monopoly consists in either the exclusivity in the domain, the exploration or the utilization of a particular good, service or activity (Silva 2002, p. 191). In economic sense, it means control of production and prices and the power to act exclusively in the market as the only seller. The monopoly established in that time can be classified as a legal monopoly, as it was created by the law.

Before the enactment of the Brazilian Constitution of 1988, since there was no express prohibition there had been an expansion of the concept of service contract held by Petrobras with service providers to common industry activities. A hybrid kind of contract was conceived, “Contrato de Prestação de Serviço com Cláusula de Risco” (The Service Contract with Risk Clause). In the international scene of oil and natural gas, the development had already prepared the ground for the hybrid contracts from the 1980s, which features different solutions of models adopted in other countries.

The first draft of Petrobras risk contract was made after the explanatory memorandum No. 217/76 as a result of the comparative research made in the 1970s by Petrobras and based in international experience of Petrobras Internacional S.A. (BrasPetro).

The Risk Contract consisted in the providing of technical services by either an international oil company or a private Brazilian company through pre-established remuneration. The contract was divided in exploration and Production phases. The exploration phase, if successful, would lead to the development of the field, enabling the commercial production. In the production phase, the Risk Contract changed its nature, becoming a purchase contract where the Oil Company received the reimbursement of the expenditures made in both phases. Thereafter the oil was sold to the foreign company under the purchase contract terms. Through the years some improvements, which were considered to be allowed by the law, were added to the risk contract model through negotiation (de Sá Ribeiro 2014).

2.2 The 1988 Brazilian Constitution and the Constitutional Amendment No. 9 from 1995

All the national legal landscape applicable to the oil and gas was modified by the 1988 Constitution, which raised the monopoly to a constitutional level and banned the execution of new risk contracts via article 177, item I—before the relevant amendments.

This impediment also reached any association mode, joint venture or, under Brazilian law, consortium or society that by their nature would give profit sharing to partners. In fact, even some forms of project finance were forbidden.

During 1995, there was an intense debate regarding the maintenance or the removal of provisions that ensured oil monopoly, as structured by Law No. 2.004/53 and by the 1988 Constitution.

Only a few years later, there was the enacting of an amendment that rendered the monopoly “flexible”, allowing concessions to private companies (the Amendment No. 9 in 1995). Further to the amendment, with the subsequent ordinary legislation, there was a new reorientation in the Brazilian legal system regarding oil and gas, going into an opposite direction of what had been consecrated in the Constitution itself. Such changes were at the center of the institutional debate on the role of the State and the criticism about State interventionism (Barroso 2005, p. 274).

The State intervention in the economic domain was framed in the same legal regime for private companies, as article 173 of the Constitution, in accordance with the new wording introduced by the “Emenda Constitucional” No. 19/98 (Constitutional amendment) (Barroso 2005, p. 281; Loureiro 2010, pp. 303–326).3

The 1980s were affected by the relative decline of the State interventionism, so that certain administrative activities could be provided by the private sector. This minimal State model, informed by the principle of subsidiarity, favored the strengthening of the fundamental principle of free enterprise. The Government, therefore, should play a more limited role, either regulating or surveying the private sector.

Amendment No. 8 and 9 from 1995 introduced the Regulatory Agencies through the modifications to the article 21 and article 177 of the Brazilian Constitution. In the Brazilian legal system, the regulatory agencies were attributed an autonomous nature, as special entities (natureza autárquica).

The creation of ANP was fundamental for the new balance of power of such new regime. The new regulations are commented below in a panorama of novelties and changes along the past 20 years.

2.3 The Years After 1995

As from 1995, the constitutional basis was modified by various amendments and gave the framework for the so called The New Petroleum Law of the 1990s. Brazil went through a period of increasing expectations for economic growth and social development. In the first decade after Law No. 9.478/97, the Petroleum Law introduced positive institutional changes and a series of successful Bidding Rounds created a cycle of stability and brought a diversified set of investors to the country.

In hierarchical terms, the Brazilian oil and gas industry is regulated by the constitutional and legal framework, as well as by presidential regulations, regulations of the National Energy Policy Council and, finally, by ANP.

At the time of the Petroleum Law enactment, there was some conceptual uncertainty regarding the applicability of the concession tradition in Brazilian law to the oil sector. Gradually interpretation and relevant studies contributed to the design, and it was valid to assume that some compatibility existed among the guidelines derived from the Federal Constitution, the Concessions Law and the Petroleum Law.

Concession and permission for benefit of the public service, in accordance with the Constitution, are defined as contracts. It is the Federal Government competence to legislate about its general rules because of art. 22, item XXVII. Both the law and the Constitution regulate matters of exclusive competence of the Federal Government, namely “general rules of bidding and contracting”.4

The enactment of Concessions Law illustrates a dominant tendency in those years. It was considered that the concession legal system was undergoing a crisis, which was motivated by the absence of adequate instruments to promote an equilibrium between, on the one hand, the State obligation of monitoring and, on the other hand, the assurances to investors regarding the values of taxes and Government take (Eizirik 1994, p. 43). In a way it occurred a concession’s rebirth, adjusted to the concern with the business risk and efficiency (Wald 1994, p. 268).5

Oil Companies with interests in Brazil spent much time examining in detail the Brazilian scenario. They analyzed also the total to which the Government would be entitled and other settings on taxes and policies, which included exporting, shipping and exchange rights and other important matters for investors.

The years between 1996 and 2002 were very bustling in Brazil, taking into account the emergence of a broad forum for discussions involving the relationship between the State, Petrobras and the new actors. It was also hard to familiarize investors with the new oil and gas legislation. There are legal provisions that referred explicitly to Petrobras that did not automatically extend to other companies. The impact caused by the presence of private companies brought new challenges for the accommodation of conflicts of interests in a stage that was set for a long time to the participation of a single company.

Yet a second wave of regulatory changes came forth in the past 7 years. Some features of the implemented changes may have put at risk the success of the above referred initial phase of modernization occurred in the 1990s, in spite of the unarguably good news that occurred along the time. Among all, the reserves and numbers involved in the so-called pre-salt discoveries, actually the Santos Basin Pre-Salt which are highlighted below should be only excellent, but gave rise to background political decisions that may have provoked an overall postponement of important decisions. Since the approval of several Bills in 2010 that modified the Brazilian regulatory framework, three structural changes have been carried out: the introduction of the Production Sharing Contract regime in the Pre-Salt area, by Law 12.351/2010, the Pre-Salt Law; the setting up of a new national oil company, the Pré-Sal Petróleo S.A.—PPSA (Pre-Salt Petroleum SA); and the assignment of 5 billion barrels of the oil in place from the Pre-Salt to Petrobras, without public bidding, through the execution of “onerous assignment”.

3 Twenty Years of the Petroleum Law (Law No. 9.478/97)

3.1 Background

Understanding of the present stage of the Brazilian oil industry requires a brief evaluation of the major changes introduced by Law No. 9.478 dated 1997, at the time considered the new Petroleum Law during many years after its enactment.6

An interesting transition period was the organization of the review of assets by Petrobras, which created a portfolio of exploration and production areas under activity. Such process occurred between 1995 and 1997, prior to enactment of the new Petroleum Law, when Petrobras studied which would be the areas where it would be ready to establish joint ventures.7

As for the production areas, the law acknowledged Petrobras’ right to keep the most part of the areas where it had invested in previous years (article 32). As for areas where Petrobras had already performed exploration activities (article 31), the law set the necessary procedures to be followed for the negotiations between Petrobras and ANP. As a result, 397 concession contracts were executed between Petrobras and ANP, among those 115 for exploration, 51 for development and 231 for production.8

In the first years, the interpretation of the law caused some controversies. One of the major issues was the possibility of extension of the contracts executed for the exploration areas. Of the contracts extended some had been negotiated by Petrobras with other Oil Companies. Those negotiations were consummated in addenda to the concession contracts allowing 34 new concessionaries to invest in those early years in the Brazilian oil industry through joint ventures with Petrobras. The whole process was later named round zero.

3.2 Biddings: 1st to 13th Bid Round

In the year of 1998 there was a political stability resulting from the consolidation of democratic institutions and enforcement of constitutional rights. This background allowed the reorganization of the energy sector and the attraction a significant number of foreign investors.

From 1999 to 2015 ANP held 13 bidding rounds, which can be divided into two groups. The first group is formed by the first four rounds and is characterized by ANP leading the entire bidding process, from the definition of blocks until the signing of the concession contracts. The second group, which is made up of the last rounds, adopted a different procedure, in which ANP depends on the Conselho Nacional de Política Energética—CNPE (National Energy Policy Council) definitions on oil and natural gas production policy and its guidelines for conducting biddings in exploratory blocks (Fig. 1).
Fig. 1

General numbers of the bidding rounds (Source: National Petroleum Agency)

The results of the first years of the Bid Rounds show a growing curve that allowed a positive diversification of players in the Brazilian oil and gas industry. The numbers and values of individual rounds received an optimist view, although in comparative terms with some other countries, they might not be so impressive. The expansion of operations to a larger number of sedimentary basins and the diversification of operations was one of the most relevant consequences of the changes along those years.

It is hard to describe in detail all the steps of the learning curve of the process.

From the first to the fourth bid round the administration got experience in the negotiation, consolidated the policy and procedures to attract investment. The criteria for award and the importance of each factor suffered changes along the years. It should be acknowledged that while the Bids took place each year the dialogue between the industry and the ANP helped reaching some improvements.9 Some of the changes in the concession contract draft of each generation incorporated some of the proposed suggestions.

It is not until the seventh bid round that the public bidding experience started to show more significant results, reaching of BRL 1 Billion (approx. USD 638 billion). In the same year 16 areas that were inactive, but kept with marginal accumulations, were included in part B of the tender documents of the 7th Bid Round reaching BRL 3 Billion (approx. USD 1.914 billion) in results. The most important result of that part of the rounds was the diversification and entrance of new local operators.10

In spite of some of the difficulties and rigidity of the system for the local content, the 7th Bid Round at the time was considered very successful.

Notwithstanding, the suspension of the 8th Bid Round was the beginning of the investors’ distrust. Although it is not our propose to discuss in depth the interruption of the Eighth Bid Round, some aspects deserve to be remembered (de Sá Ribeiro 2009a, b).

Right from the start of the preliminary process there were signs of the growing interference of CNPE in the previous autonomy of ANP. Among many resolutions of the CNPE the Resolution No. 6/2007 excluded from the 9th Round 41 blocks related to possible accumulations in reservoirs located in the pre-salt area of Santos Basis. After many years of postponements and uncertainties, in December 2012, the CNPE determined that ANP should perform the necessary legal steps for the effective cancellation of the event. In February 2013, directors of ANP effected the cancellation of the round and ordered the return of all participation fees and bid bonds to participants. At the end of 2014, almost all the companies participating in the 8th Bid Round had received back the fees. Such was an anticlimax of that period that had started in 1997.

Among the various aspects subject to analysis and critique, one sees that at the international level, some of the decisions were considered an infringement to the legal principles of legal security, interdependence and cooperation, frustrating the confidence of foreign and domestic investors. The international community could see signs of danger set under an emerging “culture of expropriation” in Brazil. This attitude fit in the contemporary extension of the expropriation concept that includes the so-called regulatory expropriation.

Not all the changes were visible to the civil society at large as a turning point. For the players in the market however, it became clear that all regulatory changes were related to the discovery of the Pre-salt in the Santos Basis. We shall give some highlights herein below which allow a better understanding of such new policy.

The fact is that the 9th Bidding Round and the 10th Bidding Round, organized in the years of 2007 and 2008 only included onshore areas.11

After the 10th Bidding Round of Exploratory Blocks, Brazil spent 5 years without promoting oil and gas bids. Effectively, during this gap, some advances were discussed, such as the sharing of royalties’ incomes between the Federal Government and the States, as well as legal and institutional aspects of the exploration of the Pre-Salt area.

For the 11th Round (2013) 172 blocks in mature basins were offered, totaling 121,200 km2 of area. The resumption of bidding rounds has again drawn attention to Brazil, raising the attention of national and international industry. The extension of areas included in the Bid provided a better understanding of the potential oil reserves of the country. The changes implemented in the concession contract model of the 11th Round sought to give signs of a greater legal certainty to contractors.12

The 12th Bidding Round of the ANP sought to promote oil and natural gas in onshore basins, focusing on areas with potential for gas and still little known geological or technological barriers to overcome. The possibility of exploration and production of unconventional resources did not encounter the expected enthusiasm of companies. To date, the Brazilian legal system does not have specific regulations for the exploration and production of unconventional sources of oil and gas. The lack of clear guidelines from the environmental agencies in charge about the adoption of hydraulic fracturing techniques generated insecurity, therefore both Environmentalists and civil society itself were reluctant to understand the implications of such techniques. Moreover, judicial challenges of the inclusions of hydraulic fracturing techniques resulted in suspension of some concession contracts (Zeitoune 2016, pp. 159–169).

More recently, in October 2015, ANP held the 13th Bidding Round, offering 266 blocks, of which 182 were territorial and 84 offshore. These blocks were located in 22 sectors in 10 Brazilian sedimentary basins.13

Of the 266 blocks offered in the 13th Bidding Round, only 37 were sold, ensuring investments of around R$340 Million of Reais (approx. U$ 216, 92 Million). The bid winners were 17 companies, among which were present six foreign companies from the following countries: Argentina, Bermuda, Canada, China, France and Panama.14

In spite of ANP’s efforts, the results were very criticized both in the press and by the industry. Another noteworthy sign was the absence of Petrobras. Moreover, such absence might have resulted from the lack of interest of major companies. Another driving force that explains the modest results of this Bid was the situation of the oil market worldwide, with declining prices.

3.3 New Bidding Rounds

After years of uncertainty, the Brazilian Government finally is demonstrating its commitment to resume a regular agenda of bids. ANP announced the promotion of a new series of the Bids for this year and the others to come.

In fact, the promotion of bids is followed by a microeconomic agenda supported by the Government and by some changes on the legal frameworks with the purpose to generate a boost on investments. After all, 20 years have elapsed since the approval of the Petroleum Law.

According to this agenda, four bids were announced for this year of 2017. Other six were already approved by CNPE for 2018 and 2019. ANP’s General Director tried to convey an optimistic approach and create a new turning point for the industry (de Sá Ribeiro 2017).

Official evaluation considers that the areas to be offered this year are among the world’s most attractive ones and the scheduled bids might generate indirect investments 2.5 times higher than direct investments. This means that, in case of success, the direct investments may reach around US$ 83 billion, while the indirect ones will be between US$ 166 and US$ 207.5 billion.

Regarding the bids planned for 2017, the first one has already occurred—the 4th Bidding Round of Areas with Marginal Accumulation was held in May and 8 of the 9 offered areas were awarded.15

The 14th Bidding Round of blocks for exploration and production of oil and gas is planned for September 27. It will offer 287 blocks in the maritime sedimentary Basins of Sergipe-Alagoas, Espírito Santo, Campos, Santos and Pelotas, and in the onshore Basins of Parnaíba, Paraná, Potiguar, Recôncavo, Sergipe-Alagoas and Espírito Santo. The results of this bid are expected to expand the Brazilian oil and gas reserves and production, to increase knowledge regarding sedimentary basins, to decentralize exploratory investment, and to develop the small oil industry, both Brazilian and foreign companies in the Country. One of the aims is to provide the demand for local services and goods, and also creating jobs and granting income distribution (de Sá Ribeiro 2017).16

Finally, the 2nd and the 3rd Production Sharing Bidding Rounds are both planned to happen simultaneously just on October 27. Both bids will offer areas within the Pre-Salt polygon. In the 2nd one, the areas to be offered are the unitized non-contracted ones adjacent to the prospects of Carcará, Gato do Mato and Sapinhoá, in Santos Basin, and Tartaruga Field, in Campos Basin. In the 3rd one, on its turn, the offered areas consist of Pau Brasil, Peroba and Alto de Cabo Frio-Oeste, in Santos Basin, and Alto de Cabo Frio-Central, in both Santos and Campos basins.

Another comment that is relevant is the growing awareness by Government authorities that attention should be given to the post salt areas scattered throughout the country. That is a complete different approach as opposed to the excessive strategic concentration in the pre-salt area of Campos Basin. The recent debates on the subject have raised a number of issues by the industry and provided insight to the plans of the Ministério de Minas e Energia—MME (Ministry of Mines and Energy).17 Such plans focus the development and restoring of the economy of such areas around Brazil.

The bids planned for 2018 are the 4th Production Sharing Bidding Round and the 15th Bidding Round of Exploratory Blocks. Offering blocks at Santos and Campos Basins, the 5th Bidding Round of Onshore Mature Fields, with areas still to be defined, and the 15th Bidding Round of Exploratory Blocks, with onshore and offshore areas, including blocks in deep-water outside the Pre-Salt polygon. For 2019, on its turn, CNPE approved the promotion of the 5th Production Sharing Bidding Round, the 6th Bidding Round of Onshore Mature Fields and the 16th Bidding Round of Exploratory Blocks.

Marketing a calendar of the Bid Rounds in a package has the advantage of giving to potential investors worldwide a positive sign of regular promotion of bids towards the present and future.18

All the challenges involved in the preparation for the next years include the risk rating of the country after the turmoil generated by the corruption scandals and already anticipated. The main focus of such scandals was Petrobras, however it spread to other segments of economic activity in which this company acts, both in Federal and state levels.

3.4 Institutional Aspects of the Oil and Gas Industry

3.4.1 Brazilian National Agency of Petroleum’s Historical and Present Importance

ANP emerged in the wake of constitutional and legal reforms operated in Brazil during the 1990s, which created regulatory agencies in order to modify the State’s intervention within the economic activities. In this new legal framework, several regulatory agencies were created in the areas of energy and telecommunications, among others, and ANP acquired an increasing importance.

Decree No. 2.455/98 organized ANP and defined roles and positions within its hierarchical structure, allowing the performance of routine functions by its administrative bodies. This Decree imposed that, until August 1998, ANP should recover all the data previously in custody of Petrobras and take over the management of all matters related to the sectors of exploration and production (upstream) and midstream of refining and distribution (downstream) in Brazil. Therefore, in these early years, the task was huge, once there was no structure compatible with the challenge imposed by the regulation of the “opening process”, where there was a single dominant company in the market—Petrobras.

Another new element, in terms of general policy of the oil industry, was the creation of the CNPE, which is an advisory body of the President whose purpose is to formulate policies and guidelines intended for rational use of energy resources and other goals.

Since the publication of CNPE Resolution No. 08/2003, this Council started to exercise more effectively its role in the Brazilian oil and gas industry. Through this resolution, CNPE, for the first time, established policies regarding oil and natural gas production and set guidelines for conducting bids of exploration blocks. From this moment on, all bidding rounds promoted by ANP started to depend on CNPE’s approval of the blocks to be offered in the bids as well as its authorization for the organization of the bidding rounds itself.

It is necessary to establish a landmark in relation to ANP’s normative power in the case of the upstream. With the concession contracts in force, ANP had the power to issue general and abstract regulations regarding granted activities. Although with more limited autonomy, the Agency continued to play a fundamental role in the regulation of the industry in Brazil after the changes implemented in the last 10 years.

3.4.2 The Distribution of Regulatory Powers After the Pre-salt

With the introduction of the new regulatory framework for oil and natural gas exploration and production, through the publication of Laws No. 12.351/2010, No. 12.304/2010 and No. 12.276/2010, the regulatory and supervisory powers of ANP were extended to the scope of the contracts of production sharing and onerous assignment. However, the pre-existing tendency to limit ANP’s independence was intensified as from 2010.

Since its creation, ANP’s Board of Directors’ members are appointed by the President, after having their names approved by the Senate (article 52, II, CF and article 11, paragraph 2, of Law No. 9.478/97). Also, the controlling stake in Petrobras by the Federal Government with the ownership and possession of at least 50% of the shares plus one share of the voting capital was confirmed in the Petroleum Law (article 62 of Law No. 9.478/97).

CNPE has a key role, which was strengthened in the regulatory framework after 2010. All its proposals must be submitted to the President, which emphasizes the political nature of this body and the centralizing policy tendency of the Government at the time. Among other duties the CNPE has to propose to the President: I—the pace of hiring the blocks under the production sharing regime, following the energy policy and the domestic industry development and capacity to provide goods and services; II—the blocks that will be destined to direct contracts with Petrobras under the production sharing regime; III—the blocks that will be included in the production sharing regime. Actually, its meetings are not so frequent and its composition reveals a strong influence of the MME (Ministry of Mines and Energy) itself. According to the new system, there is the need for presidential approval of the proposals submitted by CNPE (article 9o, caput, of Law No. 12.351/2010).

The MME also plays a decisive role. Pursuant to article 8 of Law No. 12.351/2010, sharing contracts shall be executed by the Federal Government, through the MME. The Ministry will provide the technical and economical parameters of production sharing contracts to CNPE (article 10, III), which in turn will propose to the Presidency of the Republic (article 9o, IV) that is in charge of the final decision. It is also noteworthy MME’s competence of proposing to CNPE, after hearing the ANP, the definition of blocks that will be subject to concession or production sharing (article 10, II) and, also the authority to approve the drafts of bidding documents and production sharing contracts drawn up by ANP.

ANP remained with the task of the promotion of biddings and, as consequence, it is up to the Agency the preliminary outlines of the bid invitation and the contract to be adopted (article 11, II and III). Actually, the Agency must comply with the guidelines previously set by the MME (article 10, IV), with which it shall comply (article 8, caput), and the CNPE.

The new legislation created a new entity, whose performance and role raised overall criticism. PPSA is a public company with the role of managing the production sharing contracts. Pursuant to article 8, § 2, PPSA will not take risks and is not liable for costs and investments related to the exploration, evaluation, development, production and decommissioning of exploration and production facilities resulting from production sharing contracts.

The compatibility between PPSA’s functions and its legal nature, that was defined by law as a public company under private law, are questioned. Its “regulatory” roles were perceived as a duplication of ANP’s regulatory functions. One must acknowledge the first years of PPSA’s activities showed a trend towards more specialized roles concerning unitization and commercialization not performed by other regulatory entities.

4 Brazilian Exploration and Production Contracts, from Concession to Production Sharing

4.1 Concession Agreement

The twenty-first century brought a revolution to the Brazilian administrative legal framework, influenced by the constitutionalization of this legal discipline, with strong effect on the concession contracts in the oil industry. Among the jurists with constitutional and administrative law background, Binenbojm (2006, pp. 42–43) approached the concession concept under principles of the administrative law theory. According to his analysis, the concession is seen as a regulatory compromise in which one of the most important aspects is the “guarantee of stability and predictability of the rules of the game to the investor in relation with the Government”.

Furthermore, there is also a reasonable recognition by authors of the concept of “legitimate expectations” of investors in the realm of the administrative process of ANP (de Sá Ribeiro 2009a, b).

In the Brazilian doctrine, the concession legal institute is divided in three groups that have different nature: public service, public works and economic exploration of the public goods.

The contemporary vision of the Brazilian administrative law aligns with the analysis of the production and exploration oil contracts, which adopts a typology of contracts with legal-economic parameters. This analysis allows classifying the Brazilian petroleum concession agreement into the tax-royalty model, adopted in other countries. In fact, this contract evolved within the Brazilian legal system, giving rise to important debates and contributions (Bucheb 2007).

4.2 Production Sharing Agreement

Among the changes consecrated by the new regulatory framework referred to above, competent authorities understood the Concession Agreement Model didn’t fit the purpose of conducting what was seen as the new State’s interests, considering the consequences that arose from the confirmation of Santos Basin Pre-Salt reserves.

The Brazilian Government chose and obtained congressional approval for the adoption of the Production Sharing (Partilha de Produção) model as the new paradigm for strategic areas.

Under such regime the State takes part in the management of the operation through Petrobras, keeping the oil extracted. The contracted Oil Company should perform the exploration and production at its own risk obtaining as payment the oil itself.

We only highlight the most important characteristics of the contract:
  1. 1.

    The investor must support all the costs of the operation. Initially, Petrobras would be the operator of all the blocks under the production-sharing regime, with a minimum participation of 30%. However, according to article 1st of Law No. 13.365, dated November 2016, which modified the Law No. 12.351, from December 2010, this requirement was abolished.

  2. 2.

    The bidding winner will eventually participate in a consortium with the public company that manages all the production-sharing contracts PPSA and with Petrobras, if the latter choose to participate.

  3. 3.

    The agreement is divided in two phases. After the exploration phase, if there is a commercial discovery and the production is successful the oil will be paid in natura, according to the rules set for the thereunder.


4.3 Onerous Assignment

The onerous assignment is a sui generis contract, which has no precedent in any other country. Its hybrid nature reflects the reorientation of the State in the oil and gas sector. The Federal Government signed an “onerous assignment contract” with Petrobras under the Law No. 12.276/2010. Through this process, the Federal Government implemented a huge operation of capitalization of Petrobras using certain unexplored pre-salt areas.

This institute consists in the assignment of non-contracted Pre-Salt areas to Petrobras without any bid process, with a corresponding limitation for Petrobras to produce more than 5 million of equivalent oil barrels. In return, Petrobras payment should be made primarily through federal public security debt, valued in the market (Filho 2016, p. 25). Among the issues to be stressed, there are the lack the transparency and the complex volumetric criterion adopted (de Sá Ribeiro 2014, p. 499 and sequence). This Petrobras capitalization is still cause for questioning, especially with regard to the value attributed to such reserves and the rights of minority shareholders of Petrobras after the remarkable drop in oil prices in the international market.

5 Hot Topics

There are some issues that were controversial even before the radical changes introduced by the 2010 legislation. Others appeared just recently, but as whole they demonstrate how complex was the impact of the new phase of the upstream in Brazil. On the other hand, the new controversies show where we stand now. It is true that a deep analysis of each of those topics would go beyond the scope of this chapter. However, we will mention some of them to make an overall picture of the current state of oil in gas industry in Brazil.

5.1 Unitization

In Brazil, the unitization process was first mentioned in the contracts for risk services, in the 1970s, in which, through a simple clause, the celebration of a Unitization Agreement was recommended in case a reservoir was discovered by the signatory of the contract in an area covered by another contract (de Sá Ribeiro 2014).

The institute of unitization establishes that in case an oil reservoir overpasses the exploration and production field borders it should be exploited jointly by the relevant holders of Exploration and Production (E&P) rights of the fields in which it is located.

Later, this institute was set forth by Article 27 of the Brazilian Petroleum Law, whereby when fields are extended underneath neighboring blocks with different concessionaires they should celebrate a Unitization Agreement. Furthermore, if the involved companies do not reach a consensus, ANP should determine, based on an award,19 the fair distribution of rights and obligations over the oil field, what demonstrated the mandatory nature of unitization in Brazil.

However, as anticipated, there were substantial changes in the oil and gas legal framework, mainly motivated by the discovery of huge oil and gas reserves in the pre-salt area in the Santos Basin. The new framework extended the unitization process to E&P contracts not only under the concession system, as previously established by the Petroleum Law, but also to those under production sharing and onerous assignment regimes (Agel 2017; Braga and David 2018).

Among the changes we may also highlight one particular aspect of Law no 12.351/2010 and ANP’s Resolution no 25/2013. The first one revoked Article 27 of the Petroleum Law and established a particular process of unitization for the pre-salt areas. ANP’s resolution, in its turn, regulated unitization in general.

According to this resolution, when the company verifies a shared deposit, it must notify ANP within ten business days, so that the Agency will formally communicate all involved parties of this discovery. Furthermore, if the shared deposit is located underneath areas from different owners of E&P rights, a Unitization Agreement must be executed between the related companies. On the other hand, if it reaches non-contracted areas, the company must celebrate a Unitization Agreement with the Brazilian Government. This issue became a hot topic in the past few years. Since the Bid Rounds were not taking place some debates went on trying to abbreviate solutions for this specific situation.20

The obligation of unitization became even clearer upon de edition ANP’s resolution, which stated the suspension of the development and production of the shared reservoir while the Unitization Agreement is not approved.21

In sum, the classic legal and technical doctrine and precedents as well as international oil companies usually consider the Unitization Agreements the one and only solution to reach the maximum recovery of the oil field through efficient and low-cost operations (Smith and Weaver 1989). It is not without a reason that the Association of International Petroleum Negotiators (AIPN) developed a Joint Operating Agreement (JOA) specifically for unitization processes, the Unit Operating Agreement (UROA).

In general terms one could say that, according to the Petroleum Law, ANP intervention shall occur only if the parties involved are unable to reach an agreement by themselves.

Decree 2.705/1998 is also very relevant to the subject, because it sets forth the standards to rule the calculation of Government take applied to oil production. When it comes to payment of royalties and special participations the Decree makes references to the unitization agreement (Borges 2014).

Most likely, each grantee will make payments proportional to its rights on the unit. In spite of that, due to the difficulties to settle the terms of the unitization agreement, troubles are not out of the way. In fact, there are clear signs that ANP holds enough power to impose joint and several liabilities upon the signatories of the unitization agreement not only regarding Government take, but also the accomplishment of other obligations foreseen on the agreement.

Another interesting aspect of Petroleum Law is the role assigned to the ANP in dispute settlement concerning unitization process. Article 20 provides that the internal regulations of the ANP shall provide for the procedures to be adopted for the solution of conflicts between economic agents, and between them and users and consumers, emphasizing conciliation and arbitration. In this context, doctrine already considered that the Petroleum Law provided for an administrative forum for conflict resolution, calling it mistakenly arbitration. The new legislation clarified this ambiguity.

5.2 Local Content

The policy of mandatory local content is aimed at stimulating purchases from local providers. This issue provoked continuing discussion in the oil industry. The rules applicable to the concession contract were reviewed periodically and had a significant change after the 7th Bid Round. ANP opened channels of dialogue with the industry in an attempt to bring a solution to the growing criticism on the subject. With the crisis in the worldwide petroleum industry and due to the impact of the drop in oil prices, the negative effects of the rigid concepts of the Brazilian systems increased and such debate was intensified.

Recently, difficulties and distortions in the system saw an increase in the number of non-compliance occurrences and demonstrated the need for review of this framework. Since early 2016, the local content requirements in the E&P sector have been under discussion. Finally, in April 2017, new rules were approved by the CNPE. With a few exceptions, the main rule is that, for each bidding round, ANP will set forth minimum percentages of mandatory global local content, so that concessionaires are free to choose the expenditures to be made at each stage.

5.3 Arbitration

Regarding Arbitration, this method of conflict solution was contemplated in Article 43, X, of Petroleum Law, according to which the concession contract shall duly reflect the conditions of the tender and the winning proposal, and shall have, as essential clauses, rules on dispute settlement related to the contract and its performance, including conciliation and international arbitration. By providing arbitration as a means of dispute resolution between concessionaires, the legislator placed Brazil in line with international practice, where the arbitration is the enshrined means of dispute resolution in the oil industry contracts. It is performed in either private contracts in the industry or exploration and production contracts with the host countries.

Investors are usually concerned about the neutrality and impartiality of the courts of the host countries for the solution of conflicts, this is why Arbitration is such an important factor for attraction of foreign investments. In addition, it also makes possible that experts in the field decide the controversial issue.

In this context, it is worth mentioning the controversy on the doctrine of arbitrability of contracts entered into by the State in light of the Brazilian legal system. The legal status of private law nature of certain public enterprises and joint stock companies reflected significantly on the possibility of using arbitration. With regard to state-owned enterprises exploiting economic activity, there was no obstacle to arbitration under Article 55, paragraph 2 of Law No. 8.666/93. There was an understanding on the need of a law authorizing the use of arbitration for these companies, otherwise, they would be unable to insert an arbitration clause in the works, services, purchases and disposals, related to its support activities.

Interestingly, the issue is less controversial in relation to public service providers state-owned enterprises, behold, the arbitration is permitted under Article 23, XV, of Law No. 8.987/95. However, in the case of concession contracts for oil exploration and production, regardless of the debate about its administrative contract nature, the express permission of Petroleum Law, for the use of arbitration in the concession contracts, has eclipsed this discussion.

In line with Article 43, X, of the Petroleum Law the concession contracts in the bidding rounds of ANP so far contained clauses providing for arbitration as a means of dispute settlement. The arbitration evolved with time clarifying all these issues. Some criticism was addressed to subsequent changes in language of the clause and to its ad hoc nature. References to forum choice might be interpreted as a weakening of the choice for arbitration.

From 1993 to 1996, there was not an express provision authorizing arbitration in public contracts until the Petroleum Law. Against the legal ambiguity the Court of Auditors in its decision No. 361/2008, established two conditions for using arbitration: legal provision authorizing its use and discussion of disposable rights. Along with this understanding, Law No. 13.129 from 2015 represented a quality leap. Among its innovations, it is important to highlight this law expressively authorized the public administration to participate in arbitration processes regarding disposable patrimonial rights.

Very recently, the action for annulment of the arbitration procedure from May 14, 2015 between ANP and Petrobras reinforced those ideas and added that the arbitral award must respect the limits of arbitration clause (art. 32, IV, Arbitration Law; the judge may appreciate the legal limits and the adequacy of arbitration). Just 13 days after the judgment there was the enactment the Law No. 13.129/15 reforming Law No. 9.307/96 (Arbitration Law), consecrating those ideas and adding the publicity principle and the impossibility to use equity as a source of law.22 As cross reference with the 13th Bid Round—2015, the arbitration clause was implemented in compliance with the new arbitration Law.

5.4 Government Participation

There are some issues that have been discussed recently in the domain of government participation. Actually, if one overviews the general Brazilian tax system there are many taxes applicable to oil and gas activities that are not specific to the segment. Among all, we could quote the income tax, importation tax and others, related to equipment and activities necessary to research, exploration and production (de Sá Ribeiro 2014, pp. 538–539).

We focus hereunder the government participations foreseen under article 45 of the Petroleum Law. The definition of same is an extraordinary financial compensation due to society. The first discussions followed Decree 2705/98, when ANP took the lead of the process of implementation of criteria foreseen under the law (Gutman 2007, p. 11).

The concession contract reproduced the criteria established under the above referred decree and added to same obligation of investments in research and development. The main government participations foreseen under the law are the following: I—signature bonus; II—royalties; III—special participation and IV—payment due to retention of area.

The signature bonus is payable before the execution of the concession contract. The tender documents establish the basic rules and conditions as well as its minimum value. The value of the bonus is related to the importance of the block included in the bidding. In areas of low economic relevance, ANP can dismiss the payment (de Sá Ribeiro 2014, p. 539).

The attractiveness of the areas according to the classification by ANP in three types of area (new frontier, mature basins and high potential), is also related to the exploratory risk. Such factors review the estimates of ANP regarding the possibility of existence of a reservoir or the amount of recoverable oil (Calmon 2016, pp. 62–63).

The royalties are a financial compensation made by the companies to the government. They represent a percentage over the value of production of each field payed monthly. In Brazil its legal basis was first established under Law 2,004/53 and then later in two other laws: Law 7,543/85 and Law 7,990/89, which foresaw the same 5% set forth previously. Article 47 of the Petroleum Law increased the basic rate to 10%, allowing its reduction until 5%, a rule that is still prevailing. The criteria to be followed for such rate take in consideration the geological risk and productivity. Other aspects of distribution of royalties are not commented herein below (de Sá Ribeiro 2014).23

The special participation defined under article 50 of the Law is payed quarterly over the liquid result of the fields that reach considerable volume according to the criteria set forth under article 22 of Decree 2,705/98. The implementation of the imposition of such special participation to the companies required many studies and surveys by ANP. More specific rules for ascertainment of payable values by concessionaires were set forth in Regulation 12/2014. The complexities of implementation of the procedures in criteria by ANP resulted in relevant discussions. One could quote the features of the unitization processes, allowed deductions and other items, for example relating to temporarily admitted equipment (Calmon 2016, pp. 66–67). One should mention that the new legislation did not include special participation in the production sharing agreements.

Finally, the eventual conflict of interests that may arise around the topic of special participation is well represented in the discussion of the outline of the commercial discoveries included in the development plans of the concessionaires and the classification of the reservoirs as one only large reservoir or smaller reservoirs that would not be contiguous and imply payment of special participations.24

In what concerns the payment of retention of area, foreseen under articles 51 and 52 of the Petroleum Law, they are applicable only to onshore fields.

Finally, it is important to highlight that, among the many changes in the oil and gas regulation, above mentioned, ANP also intends to reduce royalties from 10% to 5% for the production of new frontier areas and mature basins with geological, logistic and economic risks.

5.5 Environmental Matters: General Aspects and Shale Gas

Brazil is one of the countries that draws the attention from the international community and environmentalists. One of the main reasons is the fact that the world’s largest watershed and rainforest are located within its territory.25 Brazilian Constitution acknowledges the environment as one of the legally protected interests subject to proposition of class actions.26 Furthermore, Law No. 6.938 disposes about national environment policies, its objectives and mechanisms. Among the instruments of national environment policies established by such law are the adoption of environmental quality standards, the analysis of environmental impact and licensing, and the review of polluter and potentially polluter activities. The federal legislator also determined that any environmental damages lead to strict civil liability,27 as well as administrative and/or criminal liability.28

Another important tool for the protection of the diffuse right of an ecologically balanced environment is the requirement of licenses to perform polluter and potentially polluter activities. Therefore, specific rules about environmental licenses were set forth by Conselho Nacional do Meio Ambiente—CONAMA (National Board of Environment), through its Resolution No. 237 from 1997. The Ministério do Meio Ambiente—MMA (Ministry of Environment) and the Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis—IBAMA (Brazilian Institute of Environment and Renewable Natural Resources) are also entitled to set forth environmental rules. In fact, the different levels of the Brazilian Federation (the Federal Government, member-states and municipalities) hold jurisdiction to rule environmental matters, respected their limits.29

In what concerns the oil and gas industry, the Petroleum Law states the protection of the environment, under its Article 1, IV. Such law also determined that, within ANP’s roles of regulating, contracting and monitoring the industry’s activities, the Agency should promote the environment preservation.30

An essential issue regarding environmental licenses is the importance of timing and its effect in expenditures. It is well known that the upstream activities require large sums of investments. For this reason, each phase of the E&P contract must be strictly planned, by both the company and the Agency, observing the expenditure of time and the respective costs. Therefore, investors may be dramatically affected by any delay in the issuance of licenses. As a means to avoid such trouble, a joint rulemaking between ANP and the environmental entities responsible for licensing is highly recommended (Zeitoune 2016, pp. 190–195). For instance, a current challenge is the licensing process for some of the areas from the 11th and 12th Bidding Rounds, whose exploration and production require the use of fracking, yet to be regulated in Brazil.

6 Present Challenges and Perspectives

The plans for and next years, already commented above, are within a context of review of the preceding policies. The appetite for investments in the oil and gas industry in Brazil show a different approach, more open to the need of a regular calendar of bids. There is a growing awareness on the part of the Government of the competition of other countries and the need for Brazil to give clear signs and increase attractiveness for investment. This should encompass also post salt areas (IBP 2017).

ANP’s present forecast includes a direct investment of US$ 83 billion in the Brazilian oil and gas sector. ANP also calculates that more than 300 wells might be drilled from those new bids planned for the next years, implying the need of 17 new platforms and simultaneous operation of more than 20 drilling rigs (Schüffner 2017). For these expectations to become true it will be necessary to confirm the potential of the areas after the bids. It should also be stressed that the Brazilian Government must implement governance measures that restore investors’ trust in the Country.

One cannot omit the developments occurred after the unprecedented corruption scandal that affected Petrobras and the whole chain of supply and various players mostly in the service industry (Paduan 2016). In this particular, a whole chapter could be written, so radical were the consequences and the resulting changes that swept over the contractual structure of Petrobras, its risk rating and even its size. Such an in-depth analysis would go beyond the scope of this chapter.

The turmoil was followed by various measures by the Government that took charge in Brazil after President Dilma’s impeachment, and ever before, after the so called “Lava Jato Operation”. We can eventually identify the birth of a new phase as a result of the radical adjustments that may be taken at different levels to restore the trust and increase again the investments in Brazil. The positive signs resulting from Petrobras measures and decisions adopted in the past 2 years may give rise to opportunities yet to be dimensioned to its full extent.

It is true that the scenario Brazil is experiencing is still far from the ideal, but finally we can see the possibility of recovery of good conditions, and a presumption of the dynamism of the industry for a new turning point. Now, in 2017, there would be a favorable moment for new solutions, intensifying the exploitation of Brazil’s huge underexplored sedimentary basins. So far, a small percentage of the total amount of basins is under concession.31

Finally, the challenge faced when the first partnership process was implemented is renewed in the moment when Petrobras negotiates new joint ventures. Also to be mentioned is the sale of assets and reorganization of its portfolio by Petrobras as from 2016.32 In the late 1990s the tradition of the joint operation agreements found a compatible structure within the framework of the Brazilian consortia (de Sá Ribeiro 2014). However, many issues had to be solved from commercial law standpoint, accounting, tax and other issues (Rosa 2011).

Brazilian scenario in an international perspective, a large bibliography produced locally by “think talks” provide in depth analysis and criticism from universities that focus energy studies and oil and gas law. Other issues have been studied by a new generation of jurists that showed new perspectives going beyond oil and gas (Junior and Caetano 2016; Castro 2016).33


  1. 1.

    The comments provided were acquired during the experience working as from the late 1970s with the Brazilian State owned company Petrobras until 1999. Thereafter, other experiences and the academic developments allowed a background which now can be useful in the updating about new developments presented.

  2. 2.

    This table is herein used with the sole purpose to give a panoramic overview about the phases of the oil and gas industry in Brazil. Therefore, we will not strictly follow its chronology.

  3. 3.

    Other issues deserved further development within the discussion on the constitutional framework applicable to oil (Di Pietro 2006, pp. 638–648; Caetano 1996; de Moraes 2001, pp. 162–163; Bucheb 2007, pp. 6–7).

  4. 4.

    Therefore, some authors argue that, if the concession and permission for benefit of public service are in the field of contracting, Law No. 8.987/95 is applicable to all entities of the Federation, in the part that represents general rule (dos Santos 1995, pp. 319–323).

  5. 5.

    The consecration of the concession for the operation of economic activity in the Petroleum Law overcome the initial doubts, and was later supported by doctrinal interpretation.

  6. 6.

    The regulatory structure is explained in a separate section below where we describe the relevance of the creation of the ANP under the guidelines set forth by such law.

  7. 7.

    It is also worth mentioning the great effort made by ANP to consolidate all oil and gas exploration and production data raised by Petrobras throughout its existence in a public exploration and production database named BDEP, making them accessible to all new incoming companies.

  8. 8.
  9. 9.

    ANP followed the same pattern of yearly workshops prior to the Bid, with a calendar that remained stable for many years.

  10. 10.

    Information available at the website: Last view: July 11th, 2017.

  11. 11.
  12. 12.

    Information available at the website: Last view: August 2nd, 2017.

  13. 13.

    Information available at the website: Last view: July 11th, 2017.

  14. 14.


  15. 15.

    Please, consider that this chapter was last reviewed in July 2017.

  16. 16.

    Information available at the website: Last view: July 11th, 2017.

  17. 17.

    The debate organized by the Brazilian Petroleum Institute (IBP) and the GEE (Group of Economic and Energy) of the Economics Institute of the Federal University of Rio de Janeiro on June 2017 has the suggestive title: “Attractiveness of the Brazilian Upstream beyond the Pre-Salt”.

  18. 18.

    For further information about all the bids planned for 2017 and 2018, as well as the concluded bids, view the website of the rounds: last access, July 12, 2017.

  19. 19.

    Initially, there was the need for interpretation of the law, for clarification of the reference to award—which could not be understood as arbitration award (de Sá Ribeiro 2014, p. 154).

  20. 20.

    In Unitization Agreements involving these non-contracted areas (which may also be referred to as “open areas”), the Brazilian Government must be represented by PPSA, whenever the open area is located in the Pre-Salt polygon or in strategic area, as set forth in the Article 4, IV, of the Law 12.304 from 2010.

  21. 21.

    In these terms, the need for a shared production regime is clear. Therefore, the owners of E&P rights over the areas the deposit is located shall execute a Unitization Agreement, in order to perform a coordinated management of the shared reservoir, ensuring efficient exploitation of the reservoir, protecting the rights of both the owners and operators and, above all, preserving the productive life of the deposit. Through this solution, all the risks and expenses arising from the development of the deposit are equally shared by the neighbor concessionaires, as well as the profits.

  22. 22.

    This condition has been used by several countries to protect their sovereignty over the natural resources, for example, the Mexican petroleum law enactment in 2013, in their article 21 prohibit use equity as a source of law.

  23. 23.

    Art. 47. Royalties well be paid monthly, in Brazilian currency, from the date of start of the commercial production of each field, in and amount correspondent to 10% of the oil or natural gas production. §1° Taking in account the geological risks, the expectations of production and other pertinent elements, ANP may foresee in the correspondent tender, the reduction of royalties’ value established in the caption of this article to an amount correspondent to, at least, 5% of the production. § 2° The criteria for calculation of royalties’ value will be established by presidential decree, according to the market prices of oil, natural gas or condensed, to the products’ specifications and to the location of the field. § 3° The burn of gas in flares, detrimentally of its commercialization, and the loss of products occurred under the concessionaire’s responsibility will be included in the total volume of the production to be counted in the calculation of the royalties.

  24. 24.

    Conflict of Competence No. 139.519—RJ (2015/0076635-2).

  25. 25.

    For instance, we may highlight the Rio Declaration on Environment and Development and the Agenda 21, both resulting from the ECO-92—the United Nations Conference on Environment and Development, that took place in Rio de Janeiro, Brazil, in 1992. Also, another emblematic event was Rio+20—the United Nations Conference on Sustainable Development, that occurred in the same city, in 2012.

  26. 26.

    Article 5, LXXIII from the Constitution of the Federal Republic of Brazil, from 1988.

  27. 27.

    Article 14, paragraph 1 from Law No. 6.938 from 1981.

  28. 28.

    Article 225, paragraph 3 from the Constitution of the Federal Republic of Brazil, from 1988, and Articles 3 and 21 from Law No. 9.605/98. The criminal liability is still controversial. For further information, read de Sá Ribeiro (2014), p. 555.

  29. 29.

    Article 24, VI from the Constitution of the Federal Republic of Brazil, from 1988.

  30. 30.

    Article 8, IX from Law 9.478 from 1999, the Petroleum Law.

  31. 31.

    Information available at ANP’s website: Last view: July 12, 2017.

  32. 32.

    For further information, view Petrobras’ website:

  33. 33.

    For further information, see also LLM and PhD dissertations and thesis, including Lima (2010), Cavalcanti (2010) and Parente (2016).



The author thanks Daniela Lorena León Graça, master’s student and lawyer, as well as Jorge Pedroso and Patricia Winter, both associates of Lobo de Rizzo Advogados, for their contribution to this chapter.


  1. Agel S (2017) Luz no fundo do poço: unitização. In: Revista TN Petróleo, Year XIV, n. 112Google Scholar
  2. ANP (2017a) Available at: Last view: July 12, 2017
  3. ANP (2017b) Available at: Last view: July 11th 2017
  4. ANP (2017c) Statistic Yearbook 2017. Available at:ção. Last view: August 2, 2017
  5. Barroso LR (2005) Temas de Direito Constitucional, tomo III. Renovar, Rio de JaneiroGoogle Scholar
  6. Binenbojm G (2006) Uma teoria do direito administrativo. Renovar, Rio de JaneiroGoogle Scholar
  7. Borges CMB (2014) Análise da unitização da produção de petróleo no Brasil e seus impactos sobre a política de conteúdo local e receitas extraordinárias. Tese de Doutorado em Planejamento Energético. Universidade Federal do Rio de JaneiroGoogle Scholar
  8. Braga LP, David OB (2018) Why the Unitization Process is an important issue when dealing with the Brazilian Pre Salt Polygon. J World Energy Law BusGoogle Scholar
  9. Bucheb JA (2007) Petróleo: a Regulamentação das Atividades de Exploração e Produção de Petróleo o Gás Natural no Brasil. Editora Lumen Juris, Rio de JaneiroGoogle Scholar
  10. Caetano M (1996) Princípios Fundamentais do Direito Administrativo. Almedina, CoimbraGoogle Scholar
  11. Calmon A (2016) As participações governamentais nos Regimes de Exploração de Petróleo e Gás Natural no Brasil. In: Filho JCR (ed) Cartilha do Direito do Petróleo no Brasil. Lumen Juris, Rio de JaneiroGoogle Scholar
  12. Castro ELF (2016) O direito internacional dos investimentos e apromoção do direito ao desenvolvimento: reflexos do petróleo, 1st edn. Gramma, Rio de JaneiroGoogle Scholar
  13. Cavalcanti PM (2010) Direito internacional dos investimentos e a exploração de petróleo por meios não convencionais. Dissertação de Mestrado em Direito. Orientador: Marilda Rosado de Sá Ribeiro. Universidade do Estado do Rio de JaneiroGoogle Scholar
  14. de Moraes A (2001) Regime Jurídico da concessão para exploração de petróleo e gás natural. In: Revista de Informação Legislativa, Brasília, v.37, n. 148, out./dez., 2000: Revista de Direito Constitucional e Internacional, São Paulo, v.9, n. 36, jul./setGoogle Scholar
  15. de Sá Ribeiro MR (2009a) Parecer sobre a Oitava Rodada de Licitações. In: de Sá Ribeiro M (ed) Novos rumos do Direito do Petróleo. Renovar, Rio de JaneiroGoogle Scholar
  16. de Sá Ribeiro MR (2009b) Sovereignty over natural resources investment law and expropriation: the case of Bolivia and Brazil. J World Energy Law Bus 2:129–148CrossRefGoogle Scholar
  17. de Sá Ribeiro MR (2014) Direito do Petróleo, 3rd edn. Renovar, Rio de JaneiroGoogle Scholar
  18. de Sá Ribeiro MR (2017) Brazilian oil and gas industry: an update. To be published in Who is WhoGoogle Scholar
  19. Di Pietro MSZ (2006) Direito Administrativo, 19th edn. Atlas, São PauloGoogle Scholar
  20. dos Santos MW (1995) Reflexões sobre a licitação na Lei de concessão e permissão de serviços públicos. Boletim de licitações e contratos, São Paulo, n. 7, julGoogle Scholar
  21. Eizirik N (1994) Concessão de Serviço Público: tendências legislativas. In: Revista de Direito Administrativo, n. 196, Rio de Janeiro, abril/junhoGoogle Scholar
  22. Filho JCR (2016) Marco Regulatório – Estado Interventor e Estado Regulador – Regimes Vigentes no Brasil: Contrato de Concessão e Contrato de Partilha de Produção – Contrato de Cessão Onerosa. In: Filho JCR (ed) Cartilha do Direito do Petróleo no Brasil. Lumen Juris, Rio de JaneiroGoogle Scholar
  23. Gutman J (2007) Tributação e outras obrigações na indústria do petróleo. Freitas Bastos Editora, Rio de JaneiroGoogle Scholar
  24. IBP; GEE (2017) Discuss text of the debate organized by IBP and GEE about “Attractiveness of the Brazilian Upstream beyond the Pre-Salt”, held in Rio de Janeiro, on June. Available at Last view: 20.07.2017
  25. Junior X, Caetano E (2016) Direito internacional dos investimentos: o tratamento justo e equitativo dos investidores estrangeiros e o direito brasileiro, 1st edn. Gramma, Rio de JaneiroGoogle Scholar
  26. Lima JC (2010) Direito internacional dos investimentos e a indústria do petróleo brasileiro. Orientador: Marilda Rosado de Sá Ribeiro. Dissertação de Mestrado em Direito. Universidade do Estado do Rio de JaneiroGoogle Scholar
  27. Loureiro LGK (2010) Premissas para uma leitura integrada da indústria da energia na Constituição e para a identificação de uma politíca energética e constitucional – a próposito dos Art.s. 173 e 175 da Carta. In: Revista Eletrônica de Direito Admistrativo Econômico, n.23, agosto/setembro/outubro, Salvador, Bahia. Available at:
  28. Paduan R (2016) Petrobras: uma história de orgulho e vergonha. Editora Objetiva, Rio de JaneiroGoogle Scholar
  29. Parente MLL (2016) O engajamento do Brasil na regulação internacional dos investimentos estrangeiros: repercussões sobre o regime de partilha de produção para a exploração e produção de petróleo e gás natural. Dissertação de Mestrado em Direito. Universidade do Estado do Rio de JaneiroGoogle Scholar
  30. Petrobras. Last view: July 12, 2017
  31. Rosa AL (2011) As Joint Ventures na Indústria do Petróleo: Um Olhar Crítico Sobre a Intervenção do Estado na Autonomia Privada. LLM thesis, oriented by Professor Alexandre Ferreira de Assumpção AlvesGoogle Scholar
  32. Schüffner C (2017) Leilões de óleo e gás podem gerar R$ 83 bi até 2019, prevê ANP. In: Valor Econômico, 03/05/2017. Available at:
  33. Silva ALM (2002) Introdução ao Direito Econômico. Forense, Rio de JaneiroGoogle Scholar
  34. Smith E, Weaver J (1989) The voluntary unitization act. In: Smith EE (ed) Texas law of oil and gas, 2nd edn. Butterworth Legal Publisher, CarlabadGoogle Scholar
  35. Wald A (1994) Novos aspectos da concessão de obas e do seu financiamento. In: Revista de informação legislativa, Brasília, v. 31, n. 122, maio/junGoogle Scholar
  36. Zeitoune I (2016) Petróleo e gás no Brasil: regulação da exploração e da produção. Forense, Rio de JaneiroGoogle Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculdade de DireitoUniversidade do Estado do Rio de JaneiroRio de JaneiroBrazil

Personalised recommendations