Pre-Salt # From the U.S. to Brazil: Contrasts in Offshore Energy Legal Frameworks

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From the U.S. to Brazil: Contrasts in Offshore Energy Legal Frameworks

Lecture in Lone Star Corporate College held in April, 2012.

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Pre-Salt # From the U.S. to Brazil: Contrasts in Offshore Energy Legal Frameworks

  1. 1. From the U.S. to Brazil:Contrasts in Offshore Energy Legal Frameworks Lone Star Corporate College –Woodlands, TX – April 27th., 2012 Claudio A. Pinho
  2. 2. Changing US Geopolitics Claudio A. Pinho
  3. 3. Oil & Gas cultural differences US/Brazil• The oil&gas history was created in common law countries which the contract is the key instrument• In civil law countries you should look to the legal provisions before, over and beyond any contracts• When you sign a contract in Brazil is a key issue to check which laws will apply to the contract• If you signed with Petrobras will be an adhesion contract with no negotiation• How the US insurance company will analyze a liability clause on adhesion contracts under Brazilian law• Brazilian FTC (CADE) does not really enforce antitrust law in oil&gas market Claudio A. Pinho
  4. 4. 1988 Constitution and its ProvisionsThe natural resources all belong to the Federal Government the continental shelf the exclusive economic zone the territorial sea the mineral resources includingthose of the subsoilThe economic order establishes the principle of freecompetition. Claudio A. Pinho
  5. 5. Oil & Gas Legal Basis before Pre-SaltAmendment # 6 (Aug. 1995) – Revoked article 171which gives the Brazilian Companies some privileges.Amendment # 9 (Nov. 1995) – Changed the article 177to break the Petrobras monopoly and allow competition.Law # 9.478/97 [Brazilian Oil Law] (1997) – CreatedANP (National Petroleum Agency) and the rules for bidand contracting (concession model)Direct Action of Unconstitutionality (ADIN #3.273) (2011) – Brazilian Supreme Court declaresBrazilian Oil Law constitutional, and declares that oil & gasexploration can only happen in a competitive marketplace. Claudio A. Pinho
  6. 6. Pre-Salt BillsFederal Government sends 3 bills toBrazilian Congress to create the Pre-salt legal framework:1) Regulatory pre-salt law (changingthe contracts to Production ShareAgreement – PSA and defines thepre-salt area);2) A bill to create a state company called PPSA (Pré-SalPetróleo S/A) to work as the National Oil Company – NOCin pre-salt contracts;3) Capitalization of Petrobras and onerous transfer of rights. Claudio A. Pinho
  7. 7. Production Sharing Agreement of Pre-Salt NOC FOC COSTS 60% 40% Claudio A. Pinho
  8. 8. Production Sharing Agreement of Pre-Salt 30% Petrobras 70% Consortium NOC FOC COSTS 60% 40% 1st bill => Law # 12.351/10 Claudio A. Pinho
  9. 9. Production Sharing Agreement of Pre-Salt 30% Petrobras 70% Consortium PPSA FOC COSTS 60% 40% 2nd bill => Law # 12.276/10 Claudio A. Pinho
  10. 10. Production Sharing Agreement of Pre-Salt 30% Petrobras 70% Consortium PPSA FOC e ls a rr n B i llio COSTS 5 B 60% 40% 3rd bill => Law # 12.304/10 Claudio A. Pinho
  11. 11. Pre-salt Perimeter • Does the onerous transfers of rights is a regulatory framework itself? • Petrobras answers “yes” and the industry accepted that idea. Claudio A. Pinho
  12. 12. Risks and Opportunities • With the new Director, Magda Chambriard, ANP could return to its regulatory role • The Civil Office does not agree with the Petrobras approach but only and amendment in the law could save the pre-salt legal framework• A bill of National Contingency Plan is almost ready to be filed (PNC – Plano National de Contingência) with new liability standards• Brazil could lost advantage over African countries e the new discoveries regarding African pre-salt Claudio A. Pinho
  13. 13. Energy Tribune December 1st, 2011 Claudio A. Pinho
  14. 14. McClatchy – March 8, , 2012 McClatchy March 8thth 2012 Claudio A. Pinho
  15. 15. Other pre-salt referencesPre-Salt - The new Oil Regulation in Brazil -Manhattan Connection Pre-Salt - Part. 1-3 - Claudio A. Pinho Claudio A. Pinho
  16. 16. Thank you! @ClaudioAPinhoThis presentation is posted at www.slideshare.net/capinho Claudio A. Pinho

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