Brazil Upstream Fiscal and Regulatory Guide

Brazil Upstream Fiscal and Regulatory Guide

Summary

Brazil offers regular licensing rounds as defined in the 2017-2021 bidding schedule. Each year a concession round and a production sharing agreement round are held, in addition to the open acreage round. In Q3 2019, Brazil will hold the Transfer of Rights Round in which four fields, initially assigned to Petrobras (under concession agreements), will be offered under production sharing agreements. Brazil’s Bolsonaro administration continues to try to get more international investment in both the Pre-Salt polygon and more mature areas. Given current financial problems linked to its high debt, in the coming years Petrobras will selectively choose the blocks that it wants to operate and will divest of its stakes in various mature fields, which are no longer essential to its business plan.

“Brazil Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Brazil’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Brazil’s upstream oil and gas investment climate.

Scope

Overview of current fiscal terms governing upstream oil and gas operations in Brazil
Assessment of the current fiscal regime’s state take and attractiveness to investors
Charts illustrating the regime structure, and legal and institutional frameworks
Detail on legal framework and governing bodies administering the industry
Levels of upfront payments and taxation applicable to oil and gas production
Information on application of fiscal and regulatory terms to specific licenses
Outlook on future of fiscal and regulatory terms in Brazil.

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to Brazil’s upstream oil and gas sector
Evaluate factors determining profit levels in the industry
Identify potential regulatory issues facing investors in the country’s upstream sector
Utilize considered insight on future trends to inform decision-making.

1 Table of Contents

1.1. List of Tables
1.2. List of Figures

2. Executive Summary

2.1. Regime Overview - Concession Agreements
2.2. Regime Overview - Production Sharing Agreements
2.3. Timeline

3. State Take Assessment

4. Key Fiscal Terms - Concession Agreement

4.1. Royalties, Bonuses and Fees
4.2. Direct Taxation
4.3. Indirect Taxation
4.4. Tax Incentives
4.5. Research, Development, and Innovation Expenditure
4.6. Rio de Janeiro State Environmental Levy (Suspended)
4.7. License Terms

5. Key Fiscal Terms - Production Sharing Agreement

5.1. Royalties, Bonuses, and Fees
5.2. Cost Recovery
5.3. Profit Sharing
5.4. Taxation
5.5. Research, Development, and Innovation Expenditure
5.6. Petrobras Participation
5.7. License Terms - Production Sharing Rounds

6. Regulation and Licensing

6.1. Legal Framework
6.2. Institutional Framework
6.3. Licensing Process
6.4. Local Content

7. Appendix

7.1. References
7.2. Contact Us
7.3. Disclaimer

List of Tables

Table 1: Regime Overview
Table 2: Brazil, Key Events Since Year 2000
Table 3: Brazil, Concession Agreements, 15th Round Winning Signature Bonus Bid (BRL), 2018
Table 4: Brazil, Concession Agreements, Average Winning Signature Bonus Bid (BRL) by Concession Round
Table 5: Brazil, Concession Agreement, 16th Concession Round, Royalty Rates (%)
Table 6: Brazil, Concession Agreement, Reduced Royalty Rates (%), Selected Fields
Table 7: Brazil, Concession Agreements, Special Participation Rate: Onshore Areas, Rivers, Lakes, Fluvial or Lake Islands
Table 8: Brazil, Concession Agreements, Special Participation Rate: Continental Shelf - Water Depth = 400m
Table 9: Brazil, Concession Agreements, Special Participation Rate: Continental Shelf - Water Depth > 400m
Table 10: Brazil, Production Sharing Agreement, PSA Rounds and Onerous Transfer, Signature Bonus Requirement (BRL)
Table 11: Brazil, PSA, 6th PSA and Transfer of Rights Rounds, Minimum Profit Oil Bid Percentage (%)
Table 12: Brazil, PSA, 2nd, 3rd, 4th, and 5th PSA Rounds, Minimum State Profit Share and Winning Share (%)
Table 13: Brazil, PSA, Government Share of Profit Oil, 1st PSA Round
Table 14: Brazil, PSA, Government Share of Profit Oil, 2nd , 3rd , 4th, and 5th PSA Rounds
Table 15: Brazil, Production Sharing Agreement, 2nd, 3rd, 4th, and 5th PSA Rounds, Petrobras Operatorship Election
Table 16: Brazil, Production Sharing Agreement, Exploration Period Duration (Years)
Table 17: Brazil, Production Sharing Agreement, Minimum Exploration Work Program
Table 18: Brazil, 16th Concession Round, Participation Fees (BRL)
Table 19: Brazil, 6th PSA Round, 2019, Participation Fee
Table 20: Brazil, Transfer of Rights Round, 2019, Capex, US$ Million
Table 21: Brazil, Transfer of Rights Round, 2019, Opex, US$ Million
Table 22: Brazil, Average Local Content (%), Rounds 1-7 and 9-15
Table 23: Brazil, 14th, 15th, and 16th Concession Rounds, Local Content Requirements (%)
Table 24: Brazil, Minimum and Maximum Overall Local Content (%), 7th-13th Concession Rounds
Table 25: Brazil, Minimum Local Content (%) of Items and Sub items, Offshore Blocks = 100m, Rounds 7, 8, 9, 11, and 13
Table 26: Brazil, Minimum Local Content (%) of Items and Sub-Items, Offshore Blocks < 100m, Rounds 7, 8, 9, 11, and 13
Table 27: Brazil, Minimum Local Content (%) of Items and Sub-Items, Onshore Blocks, Rounds 7, 8, 9, 11, and 13
Table 28: Brazil, Minimum Local Content (%), 5th and 6th Concession Rounds
Table 29: Brazil, Local Content, Uplift Factors to Increase Percentage Share of Local Content, 1st-4th Concession Rounds
Table 30: Brazil, 1st PSA Round, Local Content Requirement (%)
Table 31: Brazil, 2nd and 3rd PSA Round, Minimum Local Content Requirement (%)
Table 32: Brazil, 4th PSA Round, Local Content Requirement (%)
Table 33: Brazil, 5th PSA Round, Minimum Local Content Requirement (%)
Table 34: Brazil, 6th PSA Round, Minimum Local Content Requirement (%)
Table 35: Brazil Transfer of Rights PSA Round, 2019, Local Content Requirement for Buzios, Itapu and Sepia Fields (%)
Table 36: References

List of Figures

Figure 1: Regime Flow Chart - Concession Agreement
Figure 2: Regime Flow Chart - Production Sharing Agreement
Figure 3: Brazil, Indicative NPV10/boe, IRR, State Take Comparison, and Price and Cost 50% Increase/Decrease, Regional
Figure 4: Brazil, Legal Framework
Figure 5: Brazil, Institutional Framework

License	Format	Properties	Price
SINGLE USER LICENSE PDF	The product is a PDF.	This is a single user license, allowing one user access to the product.	€1490EUR$1,500USD£1,239GBP
SITE LICENSE PDF	The product is a PDF.	This is a site license, allowing all users within a given geographical location of your organization access to the product.	€2980EUR$3,000USD£2,478GBP
ENTERPRISE LICENSE PDF	The product is a PDF.	This is an enterprise license, allowing all employees within your organization access to the product.	€4471EUR$4,500USD£3,717GBP

Table of Contents

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