Ll oil gas_2018_br

LATINLAWYERTHE BUSINESS LAW RESOURCE FOR LATIN AMERICA
Reference
Oil and Gas 2018
Brazil
David L Meiler, Barbara Bittencourt
and Luise Helena de Moura
Campos Mello Advogados (in Cooperation with DLA Piper)

2
Oil and Gas 2018 – Brazil Campos Mello Advogados (in Cooperation with DLA Piper)
Last verified on Friday 11th May 2018
Oil and Gas 2018
Brazil
David L Meiler, Barbara Bittencourt and Luise Helena de Moura
1 What is the legislation applicable to oil and gas activities in
your country? Is it federal or state legislation, or both?
Both federal and state legislation regulate oil and gas activities
in Brazil.
The 1988 Brazilian Federal Constitution grants to the
Federal Union ownership over mineral resources within the
Brazilian territory, which are deemed an independent asset from
the soil where they are located.
During the nineties, certain constitutional amendments were
introduced in order to create the basis for an open market policy
and minimum state intervention in Brazilian economy. In such
scenario, constitutional amendment EC No. 09/1995, which
modified article 177 of the Federal Constitution, authorised
the Federal Union to hire state-owned companies or private
companies to perform activities related to oil and gas explora-
tion and production. Up until then, only Petroleo Brasileiro SA
– Petrobras (Petrobras), the Brazilian national oil company, had
been entitled to conduct those activities.
Such EC No. 09/1995 was followed by the enactment
of Law No. 9.478/1997, also known as the Petroleum Law,
which changed the entire legal regime of the oil and gas sector
in Brazil.
The Petroleum Law introduced the concession regime for
the exploration and production of oil and gas in the country.
Per such new approach, the government authorised different
economic agents to explore and produce oil and gas under par-
ticular concession agreements, upon bid proceedings conducted
by the National Agency of Petroleum, Natural Gas and Biofuels
(ANP).
Later on, the discovery in 2007 of large oil and gas reserves
concentrated in the pre-salt layers encouraged the Brazilian
government to enact Law No. 12.351/2010 (the Pre-Salt Law),
which created a new regime for the pre-salt and strategic areas,
by imposing the Production Sharing Agreement (PSA) in lieu of
the concession agreement that is still applicable to other areas.
When it comes to activities related to natural gas, Law
No. 11.909/2009 (the Gas Law) regulates the transportation,
treatment, processing, storage, liquefaction, regasification and
commercialisation of natural gas, as well as the import and
export thereof.
As to the supply of piped gas, the Brazilian Federal
Constitution authorises the states to exploit either directly or
through concessions the services related thereto.Therefore, such
activity is regulated by the states and their respective agencies.
It shall be noted that a proposed change to the Brazilian
regulatory framework for natural gas commercialization and
transportation is current under analysis at the Brazilian Congress,
through the Bill of Law No. 6,102/2016 annexed to the Bill of
Law 6,407/20130, which, in turn, aims to promote the Brazilian
natural gas industry.
2 Are oil and gas activities carried out by the state or a state-
owned agency or national oil company?
Until 1995 Petrobras, the Brazilian national oil company, used
to have the operational monopoly over the activities of oil
and gas exploration and production. Upon the enactment of
constitutional amendment EC No. 09/1995, such monopoly was
broken, so as to allow the Federal Union to hire state-owned
or private companies for the performance of those activities.
Accordingly, from thereon, Petrobras carries out the activities
related to the oil and gas industry in free competition with
private companies.
It is important to note, however, that Law No. 13,365/2016
currently provides that Petrobras will have the preference to
be the operator in the pre-salt and strategic areas, holding a
minimum 30 per cent stake in any consortium formed with oil
companies that win the public bid proceedings for such areas,
upon the execution of a Production Sharing Agreement, with
the ANP.The above-mentioned preference was regulated by
Decree No. 9,041/2017, which provides the rules thereunder,
being those:
(i) Petrobras shall decide whether to participate as the opera-
tor of the offered areas, within 30 days counted from the
publication of a resolution from the National Energy Policy
Council (CNPE), establishing the technical and economic
parameters of the blocks offered under the production
sharing regime;
(ii) The aforementioned decision shall include the blocks and
the participation percentage intended by Petrobras, which
cannot be lower than 30 per cent;

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Campos Mello Advogados (in Cooperation with DLA Piper) Brazil – Oil and Gas 2018
(iii) The CNPE will then propose to the Brazilian President
which blocks shall be operated by Petrobras, indicating its
participation in the consortium to be formed, which may
range between 30 per cent and the percentage indicated by
the latter.
Decree No. 9,041/2017 also provides that in case Petrobras exer-
cises its preferential rights, after the conclusion of the bidding
round’s judgment phase, it must join the winning consortium, as
the operator, if said winning consortium offered to the Brazilian
Union the minimum percentage of profit oil previously speci-
fied in the tender rules. On the other hand, Petrobras will just
have the option to join the winning consortium, in case such
winning consortium offers to the Brazilian Union a percentage
of profit oil superior to the one previously specified in the
tender rules. In the last case, the winning consortium must
indicate to ANP’s approval the operator and the percentages of
participation of each of its parties.
It shall be highlighted that, if Petrobras opts not to exercise
its preferential rights, it may than participate in the bid round,
but in equal conditions with the other participants, having the
option to do it as a party of a consortium or independently.
Finally, a stated-owned company, Empresa Brasileira de
Administracao de Petroleo e Gas Natural SA – Pre-Sal Petroleo
SA – PPSA (PPSA), was created with the task of managing
the PSAs.
3 Is oil and gas a regulated business that can only be
carried out by companies that are licensed or that receive
government concessions to operate?
Yes. See questions 2 and 6.
4 Identify the regulatory agencies charged with regulating oil
and gas activities in your country and describe the role each
agency plays in regulating such activities.
The regulatory agencies charged with regulating oil and gas
activities in Brazil are the following:
Ministry of Mines and Energy (MME)
The MME is the federal government body in charge of
formulating public policies for the oil and gas industry, as well as
for other sectors such as electric power, nuclear power, metal-
lurgy, etc.
National Council for Energy Policy (CNPE)
The CNPE was created by the Petroleum Law and it is headed
by the minister of the MME.The main duties of the CNPE are:
• to propose national policies and measures aiming to promote
the rational use of energy resources;
• to guarantee the energy supply in remote areas or areas of
difficult access;
• to periodically review the energy matrix that is applied to
different regions of the country;
• to establish guidelines for the import and export of oil and
its by-products;
• to define the areas to be offered in ANP’s bid proceedings
for exploration and production of oil and natural gas; and
• to define strategies and policies for the economic and
technologic development of the oil, natural gas, other
hydrocarbons and biofuels industry.
National Agency of Petroleum, Natural Gas and Biofuels
(ANP)
The ANP was created in 1997 by the Petroleum Law with the
purpose of being the government agency in charge of regulat-
ing, contracting and supervising the economic activities related
to the oil, natural gas and biofuels industry. Its main duties
encompass the following:
• to implement national policies related to oil, natural gas
and biofuels;
• to promote studies for the delimitation of the areas to be
offered in bid proceedings;
• to promote bid proceedings for the exploration, develop-
ment and production of oil and natural gas, executing the
relevant concession agreement or PSA;
• to authorise the activities of refining, liquefaction, regasifica-
tion, shipping, processing, treatment, transportation, storage
and packaging of natural gas;
• to regulate and authorise activities related to fuel supply; and
• to inspect the activities related to the oil, natural gas and
biofuels industry, imposing administrative sanctions and fines
when necessary.
5 Are all hydrocarbons in your country deemed to be originally
owned by the state? If so, when does ownership transfer to
the extractor or buyer of the hydrocarbons?
Yes.The Federal Constitution grants to the Federal Union title
to mineral resources located in the Brazilian territory, which
are deemed a distinct property from the land itself.The Federal
Union, in turn, may allow companies to explore and produce
such mineral resources, upon compensation.
Accordingly, any company organised under Brazilian law,
with headquarters and management in Brazil, may obtain an
authorisation or concession for the exploration and production
of mineral resources, subject to certain technical, financial and
legal conditions.
When it comes to oil and gas that are produced under a
concession agreement, the ownership thereof is transferred to
the concessionaire in the measurement point.
In the production sharing regime, the ownership is trans-
ferred at the share point, where the oil and gas so produced are
shared between the Federal Union and the contractors, accord-
ing to the provisions of the relevant PSA.
6 How are oil and gas exploration and production rights or
concessions granted? Is there more than one method for
granting such rights (ie, concession and joint exploration
agreements) or co-existing regimes applicable to different
exploration or production areas?
The Brazilian legal framework provides two different regimes
for the exploration and production of oil and natural gas, namely
the concession regime and the production sharing regime.
The concession regime
The concession regime, which was established by the Petroleum
Law, has been successfully used in Brazil since the opening of
the oil and gas market to private companies.
Under the Concession Agreement that is entered into by
and between ANP and the companies that win the bid proceed-
ings, the exploration and production activities are carried out at

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the sole risk of the oil companies, who will have ownership over
the oil and gas so produced.
The production sharing regime
The production sharing regime was established by the Pre-Salt
Law and it is currently applicable to pre-salt areas and strate-
gic areas.
According to the Pre-Salt Law, Petrobras, the Brazilian
national oil company, may hoose to be the operator and it hold
a minimum stake of 30 per cent in any consortium formed
with oil companies that win the public bid , according to the
proceeding outlined in question 2.
Under the production sharing regime, oil companies shall
bear all the risks of the activity, even though the production is
the property of the federal government. In case of a commercial
discovery, oil companies will then recover the costs and invest-
ments made (cost oil) and they will be entitled to a certain per-
centage of the remainder of the production (profit oil), accord-
ing to the provisions of the Production Sharing Agreement
(PSA).
The parties to the PSA shall be the Federal Union, rep-
resented by the MME;ANP, as the regulatory and supervis-
ing agency; PPSA, the state-owned company that was cre-
ated to manage the PSAs; and Petrobras and other possible
oil companies.
Although the execution of the PSA is usually preceded by a
bid proceeding, Petrobras may also be directly hired, whenever
such measure is deemed relevant for preserving national interests
and the attainment of the energy policy’s goals.
7 Is there a public bidding or similar process for oil and gas
exploration and production licences? If so, is it open to
foreign companies and investors?
Yes.As mentioned under question 6, both the concession regime
and the production sharing regime for oil and gas exploration
and production shall be preceded by a public bid proceeding,
which is open to Brazilian and foreign companies. In case a
foreign company wins the bid proceeding, it shall set up a
company organised under Brazilian law, with headquarters and
management in Brazil.
In certain exceptional circumstances, however, the CNPE
may propose that Petrobras be directly contracted for the explo-
ration and production of oil and natural gas under the produc-
tion sharing regime, in order to secure the national interest and
the fulfillment of the country’s energy policy.
Moreover, when it comes to pre-salt areas or strategic areas,
the Pre-salt Law provides that Petrobras shall be able to choose
to be the operator and hold a minimum stake of 30 per cent in
any consortium that might be formed with other oil companies
for the public bid, according to the proceeding outlined in ques-
tion 2.
8 Are there any minimum local content requirements related to
international bidding processes?
Yes. Local content rules were introduced by ANP in the first
bidding round for exploration and production of oil and gas,
which was held in 1999 (Round 1). By that time, local content
was used as a criteria for assessment of bid offers.
Until Round 4, which was held in 2002, the bidders were
free to estipulate any local content percentage in their offers.
However, in Rounds 5 and 6, which were held, respectively, in
2003 and 2004,ANP established minimum percentages, which
would vary according to the location of the blocks (for instance,
whether onshore or offshore, in shallow or deep water, etc).
As for Round 7, which was held in 2005,ANP estab-
lished not only a minimum percentage, but also a maximum
global local content percentage.Additionally, the Concession
Agreements contained provisions establishing local content
requirements concerning a set of items used in the exploration
and production phases. Such rules were maintained in the last
bidding rounds.
In the first bidding round under the production sharing
regime, which was held in 2013 and was related to the Libra
pre-salt field, the bid invitation only provided for minimum
local content percentages, but established a similar set of items to
the one that is foreseen in the Concession Agreements.
Accordingly, during 2017, the Brazilian government
announced changes in local content rules for oil and gas activi-
ties applied for the bidding rounds occurred during this year
– ie, Round 14 and 2nd and 3rd Production Sharing Bidding
Rounds (Pre-Salt Fields), through the publication of CNPE
Resolution No. 07/2017.
There are now three local content macro-groups for the
phases of development and production, while in previous auc-
tions there were up to 70 items and subitems. Moreover, for
offshore areas (over 100 meters of water depth), local content
percentages were reduced by half, when compared to the ones
applicable for last bids (eg, for the exploration phase, the mini-
mum global local content percentage required is of 18 per cent).
Additionally, the calculations of fines for non-compliance with
minimum local content requirements were reduced.
Additionally, as an attempt to assist/ maximize the pro-
jects currently conducted in the country, a new resolution was
recently published – ANP Resolution No. 726/2018 – aiming
to modify local content rules applicable to concession/ produc-
tion sharing agreements entered during Rounds 7 to 13 and 1st
and 2nd Production Sharing Round, as well as for areas granted
to Petrobras under the Onerous Transfer agreements (entered
between 2005 and 2013).
According to such ANP Resolution No. 726/2018, the
new reduced local content percentage (applicable to the bid-
ding rounds occurred in 2017) could also be applicable to the
aforementioned agreements entered into between 2005 and
2013 (if agreed by the oil companies), in order to extend, in a
similar manner, the beneficial rules used under the last ANP
bidding rounds. In this sense, an oil company may choose to
amend its relevant agreements, so as to apply the new local
content rules, or to request for a waiver to the ANP for the local
content requirements, provided that (i) there is no local supplier
for the required service or equipment; (ii) local prices or terms
are too high, (iii) there are new technologies to be applied and
not available in the country. Such waiver requests shall also be
subject to public consultation, so that any interested party can
submit its manifestation regarding the theme.
9 Are there any minimum capital or technical requirements
related to international bidding processes?
When it comes to the granting of areas for exploration and
production of oil and natural gas, technical and economical
requirements are normally established by the ANP under

5
the rules applied to each bidding round, being mandatory its
observation to any interested party or operator.
10 Are there any restrictions on foreign participation in such
rights or concessions or in companies holding any such
rights?
See question 7.
11 Are there any restrictions on the participation in such rights
or concessions by state-owned entities or local national oil
companies?
No restrictions apply to state-owned entities and local oil
companies in relation to their participation in rights or conces-
sions for oil and gas exploration and production, as long as they
comply with certain requirements.
In spite of the above, as outlined in questions 2 and 7, the
Pre-Salt Law granted Petrobras certain preference privileges in
relation to the pre-salt areas and strategic areas.
12 Are companies or consortia that are awarded exploration and
production rights given priority to operate and exploit the
corresponding oil and gas fields? If so, how is such priority
structured and documented?
Yes. Both the Concession Agreement and the Production
Sharing Agreement contain provisions ensuring that the
company or consortium that is awarded with the exploration
and production rights will be entitled to operate and exploit the
relevant oil and gas fields.
13 What rights does the holder of an exploration and production
licence or concession have to the hydrocarbons discovered
during exploration and subsequently produced?
See question 5.
14 May a holder of an exploration and production licence or
concession transfer such right?
Yes.The assignment of rights and obligations under the
Concession Agreement may be authorised by ANP, as long as
the assignee fulfils the technical, financial and legal requirements
that were set forth in the relevant invitation to bid.The same
rule applies to the PSA, but in such case the approval shall be
granted by the MME, even though the ANP is also consulted.
In view of the Agreement for Technical Cooperation
that ANP entered into with the Administrative Council for
Economic Defence (CADE), any company interested in the
assignment of the Concession Agreement or the PSA shall
present (i) a technical opinion, issued by CADE, approving the
asset acquisition, or (ii) a statement that such transaction is not
encompassed in any of the hypothesis of article 88 of the Federal
Law No. 12.529/2011, which regulates the Brazilian System for
Competition Defence.
15 Who has title to assets imported to develop and produce
hydrocarbons, including any technology or expertise provided
by foreign participants in the local oil and gas sector?
Imports in Brazil are usually subject to heavy taxes, such as: (i)
import tax (II); (ii) excise tax (IPI); (iii) social contributions on
imports (PIS/COFINS Importacao); and (iv) the state value
added tax (ICMS).
In light of this, the special customs regime of Temporary
Admission represents an important tax benefit, as it allows the
permanence of foreign goods in the country, for a determined
period of time, with (i) total suspension of the federal taxes that
would levy; or with (ii) payment of 1 per cent of such federal
taxes per month of permanence in Brazil; as the case may be.
Accordingly, Normative Ruling No. 1,600/2015 (IN
1,600/2015) contain certain exceptions in their provisions to
authorise the total suspension of the federal taxes that would
levy in the temporary admission of specific goods, even if such
temporary admission has an economic purpose, being those: (i)
goods destined to activities of research and mining of oil and
natural gas, as provided by the relevant regulation, and (ii) equip-
ment destined to the activities of transportation, movement,
transference, storage or regasification of liquefied natural gas.
In this sense, until 31 December 2017, certain assets related
to the oil and gas industry could be imported with total suspen-
sion of the federal customs duties under the REPETRO regime,
regulated by RFB Normative Ruling No. 1415/2013, which is a
special customs regime applicable over export and import trans-
actions of the listed assets/goods destined to activities of research
and mining of oil and natural gas fields.
Recently, however, it was enacted Normative Ruling No.
1,743/2017 (IN 1,743/17), which (i) provided new regulations
concerning the regime for temporary admission for economic
use for goods used under activities of exploration, development
and production of oil and natural gas fields (REPETRO-SPED),
as well as (ii) modified certain provisions of IN 1,600/2015,
being it effective until the year 2040.
Although similar to the former REPETRO regime, which
is still in force, the REPETRO-SPED has its own set of rules,
allowing the importation of goods (i) temporarily and with
total suspension of the customs duties (assets listed in Annex II
of IN 1,743/2017, such as Drillships and FPSOs), (ii) perma-
nently, with suspension of the federal customs duties and further
conversion into exemption (Assets listed in Annex I of IN
1,743/2017), or (iii) temporarily with proportional payment of
the federal customs duties (assets listed in Annexes I and II of IN
1,743/2017).
16 How are federal, state and local governments recompensed
for granting companies rights or concessions to conduct oil
and gas exploration and production?
The government takes come mainly from taxation and the
payments that the operator of an oil and gas field is obliged to
make, normally consisting of (i) signature bonus, (ii) royalties,
(iii) special participation, and (iv) annual surface rentals.
The signature bonus is paid on the day the contract is
signed and it corresponds to the amount offered in the bidding
proposal, considering the minimum amounts established in the
bid invitation.The royalties are paid on a monthly basis and may
vary from 5 per cent to 10 per cent of the oil and gas produc-
tion, depending on aspects such as the geological risks and

6
production expectations.The special participation shall be paid
in case of large volumes of production, respecting the conditions
established in the relevant contract and in the bid invitation.
Finally, companies shall pay for the area occupancy or retention
on an annual basis, the amount of which is established in the bid
invitation and in the corresponding agreement.
17 May companies or consortia that hold oil and gas exploration
and production rights compulsorily acquire property or rights
of way to carry out exploration or production activities? Are
these compulsory acquisitions governed by special judicial or
administrative proceedings?
Pursuant to the Petroleum Law and the Gas Law,ANP is in
charge of analysing the possibility to have certain locations
declared as public utility, so as to allow the expropriation or
the administrative easement thereof, whenever such areas are
necessary for the exploration, development and production of
oil and natural gas, as well as for the construction of refineries,
pipelines and terminals.
ANP Resolution No. 44/2011 sets forth the administra-
tive proceedings and conditions that the interested party shall
observe in order to request such expropriation or easement
of areas.
18 Are natural gas exploration and production activities
regulated separately or subject to the same regulation
applicable to oil exploration and production? Are there
different royalties or other government charges payable
by companies that conduct natural gas exploration and
production activities?
The exploration and production of oil and natural gas in Brazil
are subject to the same regulations, which are the Petroleum
Law and the Pre-Salt Law.Accordingly, there are no different
royalties nor other government charges applicable to companies
that carry out natural gas exploration and production activities.
19 Do foreign ownership restrictions apply to the oil and gas
sector in your country?
No.As mentioned under question 7, any company organised
under Brazilian law, with headquarters and management in
Brazil, may obtain an authorisation or concession for explora-
tion and production of oil and natural gas, subject to compliance
with certain prerequisites.
20 Are there any minimum domestic participation rules or any
labour law rules relating to domestic and foreign workers?
Yes.The Brazilian Labour Code provides, as a general rule,
that a company may employ foreign workers as long as (i)
Brazilian employees correspond to at least two-thirds of the
total workforce of said company; and (ii) the compensation paid
to Brazilian employees is equivalent to at least two-thirds of
its payroll.
Brazilian immigration authorities usually grant temporary
visas based on an employment relationship between the com-
pany and the foreign worker. Such temporary visa may be valid
for up to two years and it may be renewed for the same period
of time.
Notwithstanding that, in certain circumstances, a temporary
visa may be granted to a foreign worker that is not bound by a
labour contract with a Brazilian company.This is the case, for
instance, of expatriates who come to Brazil to work via technol-
ogy transfer, for technical assistance or in emergency situations.
With specific regard to maritime workers, it is worth men-
tioning Normative Resolution No. 06/2017 (RN 06/2017),
issued by the National Council for Immigration, which regu-
lates the granting of a residence authorisation to foreign crew
members working aboard foreign vessels or platforms that are
operating in Brazilian territorial waters, with no employment
relationship with a Brazilian company.
Such RN 06/2017 allows for the requirement of a mini-
mum two-thirds proportion of Brazilian employees to be waived
for a certain period, depending on whether it is related to (i)
supply vessels; (ii) vessels and platforms that are directly or
indirectly applied in the exploration and production of mineral
resources; or (iii) vessels used in coastal navigation.
Just as an example, the crew of a foreign drilling unit may be
formed by 100 per cent of foreign workers in the first 180 days
of operation in Brazil. Between the 181st day and the 360th day,
such crew shall have at least one-fifth of Brazilian manpower.
From the 360th day until the 720th day, such proportion of
Brazilian workers shall be increased to one-third.As of the 721st
day, the Brazilian company shall comply with the regular rule of
two-thirds of Brazilian employees.
Finally, residence authorisations are usually granted to for-
eign workers that will occupy positions of directors, officers and
managers of Brazilian companies. In order to grant such type
of visa, Brazilian government requires a minimum investment
in Brazil of 600,000 reais per permanent visa application. Such
investment may be reduced to 150,000 reais if the Brazilian
company commits to create at least 10 direct job positions
within a two-year period.
21 Are there any limitations on vertical integration in the oil and
gas industry in your country?
Yes.Although vertical integration in the Brazilian oil and gas
industry usually does not suffer restrictions, there are some
limitations to such a general rule.
This is the case, for instance, of fuel distribution and retail.
Pursuant to Resolution ANP 41/2013, the distributor of liquid
fuels is forbidden to act as a retailer or to have equity interest in
a retailing company.
Another exception is related to the activity of natural gas
shipping, which is regulated by ANP Resolution No. 51/2013.
According to such Resolution, a company or consortium that
has authorisation or concession for natural gas transportation
shall not perform activities of natural gas shipping.Additionally,
natural gas shipping shall not be executed through transportation
pipelines whose concessionaire is a parent company or an affili-
ate of the shipping company.
In addition to the above, it is worth noting that the players of
the oil and gas industry are subject to the rules of the Brazilian
competition legislation. In this sense, Law No. 12.529/2011
provides an objective list of transactions that require CADE’s
approval, which are: typical merger and acquisition transactions
(acquisition of companies or part of companies, shares – even
acquisition of minority shares is reportable – stock and assets);
and associative agreements, consortia and joint ventures, except
those formed for the purposes of participation in public bids.

7
However, in view of the Agreement for Technical Cooperation
between ANP and CADE, such exception may not apply to
ANP bidding rounds.
The aforementioned Law No. 12.529/2011 establishes a pre-
merger notification rule, which requires the parties to obtain
prior approval from the Brazilian antitrust authorities to close a
transaction.Thus, transactions cannot be implemented without
clearance from the Brazilian authorities.As per said regulations,
the parties will have to keep the physical structure and the com-
petitive conditions in the markets unchanged until such final
approval is granted, and any transfer of assets or any influence of
one party over the other, as well as any exchange of competitive
relevant information is prohibited, unless strictly necessary for
the execution of the agreements related to the transaction. Non-
compliance with such rules may give rise to the application of
high pecuniary fines.
22 Are oil and gas activities carried out through incorporated
entities with limited liability or by consortia or other types
of unincorporated joint ventures? Are joint venture partners
jointly and severally liable for the obligations undertaken in
connection with such activities?
Pursuant to the Petroleum Law, companies may carry out oil
and gas exploration and production activities either individu-
ally or through a consortium with other companies. Under a
consortium agreement, a leader company shall be appointed to
be responsible for the operations, being the other members joint
and severally liable for the obligations undertaken under the
relevant agreement.
Each of the consortium members shall submit to ANP
documentary evidence of its economic and technical capacity,
as well as the registered version of the instrument that sets up
the consortium.
In addition, the parties under a consortium normally enter
into a joint operating agreement (JOA), which regulates their
commercial relationship, allocating control, risk and reward
among them.As a private instrument, the JOA is not subject to
ANP’s analysis and approval.
The Pre-Salt Law provides that any consortium that aims
to explore and produces oil and natural gas under the produc-
tion sharing regime shall be formed by the bidding winners,
Petrobras (mandatorily if it exercises its preference rights) and
PPSA.
23 May oil and gas reserves be pledged or encumbered to secure
the repayment of debt? How?
Yes. Both the Concession Agreement and the PSA contain
provisions authorising the pledge of oil and gas production.
Such pledge shall be preceded by ANP’s authorisation, as well as
be formalised in accordance with a model document set forth in
the Concession Agreement or in the PSA, as the case may be.
24 Can oil and gas rights that are subject to a lien be sold or
transferred freely by the secured creditor? What issues, if
any, do secured creditors face in enforcing liens on oil and
gas rights?
The sale and transfer of oil and natural gas rights by the secured
creditor are allowed, but subject to previous authorisation from
ANP, as outlined in question 13.
25 Is oil and gas output freely exportable in your country?
Are there any limits or quotas applicable to oil and gas
production? Is there access to export pipelines? What
licences are required for oil and gas exports? Are duties or
tariffs applicable?
In Brazil, oil and gas output is freely exportable, being such
production subject to no limits or quotas.
Both the Petroleum Law and the Gas Law provide that
any company or consortium of companies incorporated under
Brazilian law, with headquarters and management in the country,
is eligible to receive authorisation to import and export oil
and natural gas.Accordingly,ANP Rule No. 07/1999 sets forth
the requirements for such authorisation to be granted, includ-
ing the documents and pieces of information that the exporter
shall submit.
26 Are prices for oil and gas set or fixed by the government?
No. Prices for oil and gas are not fixed by the Brazilian govern-
ment. Instead, it is freely negotiated and stipulated by the parties,
based on market practice/prices.
Nonetheless,ANP may establish a minimum price for pur-
poses of calculation of government takes and of the cost oil in
the production sharing regime.
27 Are oil and gas exports taxed under the general income tax
regime or is there specific hydrocarbons tax legislation?
There is no specific legislation ruling income tax applicable
to oil and gas exports, being such operation governed by the
general income tax regime.
28 Do special environmental rules apply to oil and gas
exploration and production?
Yes.The relevance of environmental protection is highlighted
not only in the Brazilian Federal Constitution, but also in
several pieces of federal, state and municipal legislation. Besides
the general rules, there are specific provisions that address the
activities of oil and gas exploration and production.
For instance, the Federal Constitution provides that those
that exploit mineral resources shall be obliged to recover the
environment from any degradation, as required by the relevant
governmental body.
Also, Federal Law No. 9.966/2000 deals with the preserva-
tion, control and supervision of pollution caused by oil and
other harmful or dangerous substances in Brazilian territo-
rial waters.
Furthermore,ANP issued several administrative rules dealing
with environmental aspects of the oil and gas industry, which
cover matters like contamination caused by accident in opera-
tions, recovery of damaged areas, final destination of solid wastes,
recycling of lubricant oil, etc.
When it comes to environmental licences, the National
Council for Environment (CONAMA) issued Resolution No.
23/1994, which sets forth specific rules for the activities of
exploration and production of oil and natural gas.

8
29 Are environmental regulations in your country consistent with
any international standards?
Yes. Such consistency with international standards is evidenced
not only in the licensing requirement, but also in the environ-
mental provisions that are foreseen both in the invitation to bid
and in the Concession Agreement or PSA.
Such requirements exist since the first bidding round, in
1999, and are constantly updated in accordance with new legis-
lation and with the observation of the industry’s best practices.
For instance, as of Round 8, which was held in 2006, objec-
tive criteria have been adopted to score points for the techni-
cal qualification of the bidding participants. In Round 9, the
environmental criteria included previous experience in dealing
with social and environmental issues according to the operation
area (ie, onshore, shallow water or deep water, etc), certifica-
tion of an Integrated Management System for Health, Safety
and Environment (HSE) and evidences that the bidder imposes
specific HSE requirements when contracting suppliers.
30 Do special health and safety rules apply to oil and gas
exploration and production?
There are several provisions dealing with occupational health
and safety in the Federal Constitution, the Labour Code, the
Ministry of Labour rules and many other pieces of legislation.
In addition to these general provisions, the ANP has also issued
regulations that are specific to the oil and gas sector.
For example, with regard to upstream activities,ANP
Resolution 43/2007 introduced the Management System for
Operational Safety (SGSO) for drilling and production offshore
installations.The agency must approve the operation and inspect
installation/ equipment used for the exploration and production
of oil and gas, both onshore and offshore (drilling rigs, FPSOs,
FSOs and onshore fields), being verified the application of
SGSO.Additionally,ANP inspects and authorises the operation
of equipment and procedures used for treatment, storage and
processing of gas, as well as movement of oil and natural gas.
As regards midstream activities – more specifically, oil
refineries – ANP Resolution 05/2009 approved the Technical
Regulation for Health and Safety of Oil Refineries.
31 Must companies that participate in the oil and gas industry
obtain special environmental or other government permits
(other than licences or concessions to carry out oil and gas
exploration and production) to operate in your country?
Yes.As per Resolution No. 23/1994 of CONAMA, four
environmental licences apply to the activities of oil and natural
gas exploration and production, namely: Previous Licence for
Drilling, Previous Licence for Research Production, Installation
Licence and Operation Licence.
In addition to the above, Resolution CONAMA No.
350/2004 sets forth the rules for the obtainment of a spe-
cific licence for the activity of acquisition of seismic data in
maritime waters and in transition zones, called a Licence for
Seismic Research.
32 Does the government (including any development banks
or agency) provide financing, subsidy or other support to
companies undertaking oil and gas exploration or production?
Yes.The three largest Brazilian federal banks, namely, the
Brazilian Development Bank (BNDES), Banco do Brasil and
Caixa Economica Federal, provide financing to companies
engaged in activities related to oil and gas exploration
and production.
Also, it is worth mentioning the National Programme for
the Mobilization of the Oil and Gas Sector (PROMINP),
coordinated by the MME, which has the scope to support and
stimulate the participation of local companies in the oil and
gas industry.
Finally, there are certain oil and gas institutes and associations
such as the Brazilian Institute of Petroleum, Gas and Biofuels
(IBP) and the Brazilian Association of Oil Services Companies
(ABESPETRO) that promote relevant debates and trainings for
the industry’s players.
33 Are there any tax stability or similar regimes available to
foreign investors undertaking investment in the oil and gas
industry in your country?
There is no tax stability or similar regimes available in Brazil to
foreign investors with regard to the oil and gas industry.
34 Are oil and gas activities generally protected under bilateral
investment treaties entered into by your country?
Currently, the oil and gas activities in Brazil are not protected or
affected by bilateral investment treaties or conventions.
35 Are there any dispute resolution systems specific to the
oil and gas industry? Does state immunity apply in such
disputes?
No, there is no specific dispute resolution system for the oil and
gas industry.
The Petroleum Law establishes that one of the essential
clauses of a Concession Agreement shall the election of concili-
ation and arbitration as dispute resolution methods.Accordingly,
the Concession Agreement provides that any dispute or contro-
versy that is not amicably solved by conciliation shall be submit-
ted to arbitration ad hoc, which will apply the Regulation of
Arbitration of the United Nations Commission on International
Trade Law – UNCITRAL.
The Pre-Salt Law, however, provides that the PSA may set
forth the use of conciliation and arbitration as dispute resolution
method. It is noteworthy that the PSA related to the 1st bidding
round of the pre-salt areas, which was held in 2013, contains
an arbitration clause similar to that one of the Concession
Agreement.
36 Do anti-corruption rules apply to the oil and gas industry?
Yes, anti-corruption rules apply to the oil and gas industry
in Brazil. Currently, the Brazilian anti-corruption pieces of
legislation are the following:
• Decree No. 8.420/ 2015 (which regulates the Brazilian
Anti-Corruption Law);
• Law No. 12.846/2013 (the Brazilian Anti-Corruption Law);

9
• Law No. 8.429/1992 (the Brazilian Misconduct Law);
• Law No. 8.666/1993 (the Brazilian Procurement Law);
• Law No. 12.579/2012 (the Brazilian Antitrust Law);
• Federal Decree No. 1.171/1994 (the “Code of Professional
Ethics For Public Officials of The Federal Government); and
• Federal Decree No. 4.081/2002 (the Code of Ethical
Conduct for Government Officials in the Presidency
and Vice Presidency).
37 Has your jurisdiction adopted any legislation or regulations
governing the exploitation of shale gas (fracking)? Are any
special licences or environmental permits required for such
activities?
Yes.After several discussions with the industry,ANP issued
Resolution No. 21/2014 on 10 April 2014, aiming to regulate
the operations of hydraulic fracking in non-conventional gas
fields.The enactment of such Resolution was mainly motivated
by the fact that the 12th bidding round, which was held in 2013,
encompassed potential areas of non-conventional gas.
Among other provisions, Resolution No. 21/2014 imposes
the obligation for operators to adopt an environmental man-
agement system and to perform previous technical studies, in
order to obtain approval for the operations.Accordingly, the
environmental licences are required prior to ANP’s authorisation
for the hydraulic fracking activities.
38 Has your jurisdiction adopted any legislation or regulations
governing ultra-deep-water exploration or drilling activities?
Are any special licences or environmental permits required
for such activities?
Brazilian legislation and regulations do not provide specific rules
for exploration or drilling activities in ultra-deep-water.That is
to say, oil and gas activities in such areas are subject to the same
rules that are applicable to other areas.
39 Have there been any recent material amendments to the
laws, rules or regulations governing hydrocarbon exploration
and exploitation? Have any new laws, rules or regulations
governing hydrocarbons exploration and exploitation been
passed in your jurisdiction?
The most relevant alterations in regulations involving the
Brazilian oil and gas industry are related to local content rules
and the temporary admission regime for import of goods, as
addressed on topics 8 and 15 of this document.

10
Practice areas: Energy, oil and gas, tax/customs, litigation.
Professional membership: Brazilian Bar Association (OAB)
Rio de Janeiro, Sao Paulo and Parana Chapters);American
Chamber of Commerce; Brazilian Institute of Petroleum, Gas
and Biofuels (IBP).
Career: Partner of Campos Mello Advogados (in cooperation
with DLA Piper) since 2013. Previously a partner at Felsberg e
Associados and an associate at Steel Hector & Davis LLC.
Personal: Licensed professor at IBMEC-RJ in International
Business Transactions (IBT); LLM cum laude and Semester
Honours, University of Pittsburgh, 2001;Tuition Fellowship
Recipient from the Center of Latin American Studies –
University of Pittsburgh, 2001; BA in Law, Universidade Federal
do Parana, 1995.
David L Meiler
Campos Mello Advogados
(in Cooperation with DLA Piper)
Practice areas: Oil and gas.
Rio de Janeiro and Minas Gerais Chapters), and the Brazilian
Institute of Petroleum, Gas and Biofuels (IBP).
Career: Senior associate of Campos Mello Advogados (in
cooperation with DLA Piper) since 2013. Previously an associate
at Felsberg e Associados, and also atVieira Rezende Advogados.
Personal: LLM in Oil and Gas Law, University of Aberdeen,
2012; BA in Law, Faculdade de Direito Milton Campos, 2007.
Barbara Bittencourt
David L Meiler
david.meiler@cmalaw.com
Barbara Bittencourt
barbara.bittencourt@cmalaw.com
Luise de Moura
luise.moura@cmalaw.com
Rua Lauro Muller, 116
25th Floor, Botafogo
Rio de Janeiro, RJ
Brazil
Tel: +55 21 3262 3000
www.camposmello.adv.br
Practice areas: Oil and gas.
Rio de Janeiro.
Career:Associate atCampos Mello Advogados (in coop-
eration with DLA Piper) since 2018. Previously an associate
at Albuquerque Melo Advogados, and also as legal intern at
Felsberg e Associados and LafargeHolcim SA.
Personal:Attending LLM in corporate and capital markets,
Fundação GetúlioVargas, 2018; BA in law, Universidade Federal
do Estado do Rio de Janeiro - UNIRIO, 2014.
Luise de Moura

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