ANP taking first step December 31
In August of last year, the Brazilian government passed Law 9478, which opened the Brazilian oil industry to direct competition. This law included Article 7, which created the ANP to regulate the activity of the industry, and Article 8, granting the ANP the "authority to promote regulation of the market and regulate from the oil well to the gas station." According to S?rgio Possato, the Superintende de Gestao de Informa?ao e Dados T?cnicos (Superintendent of Information and Technical Data) for the ANP, "This article sets the ANP apart from other agencies that deal only with the upstream market."
In other words, Brazil has created a gov erning body similar to the US Department of the Interior's Minerals Management Service (MMS) to regulate the entire oil and gas industry.
State Secretary of Energy David Zylbersztajn has been appointed to head the ANP. Coincidentally, Zylbersztajn is also the brother-in-law of Brazil's newly re-elected President Henrique Cardoso.
Data packagesThe ANP has about six million sq km of acreage to offer in all of Brazil's basins. Petrobras has been prelimin arily granted 7% of the total basins. The agency is currently working on dividing the basins into blocks based on the data collected by Petrobras over the past 44 years and evaluating the blocks. This data will be put into packages that will be offered to the public at the end of this month. No amount has been set as of yet for the cost of the data.
To assist in this massive endeavor, the ANP has enlisted the help of US-based energy advisors Gaffney, Cline & Associates (GCA). Bill Cline, Chief Executive Officer of GCA's Americas Operations, said, "Our contract with the ANP provides for services ranging from advising on the specific areas to be awarded, preparation of data, management of industry participation, and the bidding and awards process."
First bidding roundThe ANP plans to hold the first bidding round in April of 1999. At that time approximately 20 areas will be open for licensing. These will include areas not granted to Petrobras. Ivan Simoes Filho, Superintendente de Promo?oes de Licita?ao (Superintendent of Promotion and Licensing), said, "The goal of the first licensing round is to gain the active participation of Brazilian and international oil companies and to establish a licensing procedure."
He also added that the first round will be governed by Articles 36-39 and the Tender Protocol of the Petroleum Law. The timetable set by this protocol includes a 4-6 month period to study the data, followed by a pre-qualification process. The pre-qualification process will evaluate a company's financial standing as well as technical and operational capability. The criteria are expected to be set when the data packages are released.
The next step will be the payment of fees (including the data access cost), evaluation of the companies, the bidding round, and finally the award and signing of concession contracts. Under the concession contract, the grantee will work under its own risk. Upon a discovery, the contract will turn into a production contract. This timetable will begin on December 31 with the first bidding to begin in April.
The areas that the ANP will offer have been divided into four categories: mature basins, new frontier basins, emerging basins, and special basins. Criteria for licenses will vary based on each of these categories.
Mature basins are defined as areas with advanced exploration and production infrastructure. These will require specific investors and modest bonuses (what will be paid up front for licensing). New frontier basins are onshore areas. These are areas with insufficient data and are in remote locations with difficult access. These are high risk areas and will require higher bonuses.
The emerging basins have reasonable geologic inform ation, include marginal fields with small reserves, and lack some infrastructure. Moderate bonuses will be required for these areas.
The last category is the special basins, specifically the Campos Basin, the location of 75% of Brazil's production. No bonus amounts have been set for these areas as of yet.
The ANP will have the final word on all activities in the Brazilian oil and gas industry. With the proven potential of the Brazilian industry, the ANP has the chance to become one of the most powerful regulatory agencies in the world. But, along with this comes a great responsi bility. Whether or not the ANP will be able to own up to this responsibility, will begin to be determined in April of next year.
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