São Paulo | Rio de Janeiro | Brasília | Curitiba | Porto Alegre | Recife Belo Horizonte | Campo Grande London | Lisbon | Shanghai | Miami | Buenos Aires | Beijing | Johannesburg |New Delhi Opportunities in the Oil & Gas Market in Brazil Opportunities in the Oil & Gas Market in Brazil Some Legal Aspect Some Legal Aspect Vera Dantas Aberdeen 15 March 2012
No dia 15 de março de 2012 , Dra. Vera H. de Moraes Dantas, sócia do escritório da Noronha Advogados em Londres, apresentou o Seminário “Opportunities in the Oil & Gas Market In Brazil – Some Legal Aspects”, em Aberdeen, Escócia. O Seminário foi apresentado para mais de 100 pessoas e organizado por Noronha Advogados e HSBC, com o apoio da Petrobras. Todas as companhias tinham palestrantes no Seminário e responderam às perguntas dos participantes. On 15th March 2012, Vera Dantas, Noronha Advogados' partner in London, spoke at the Seminar “Opportunities in the Oil & Gas Market In Brasil – Some Legal Aspects”, in Aberdeen, Scotland. The Seminar was attended by more than 100 people and was organised by Noronha Advogados and HSBC, with the support of Petrobras. All three companies had speakers at the Seminar and answered questions from the audience.
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1. So Paulo | Rio de Janeiro | Braslia | Curitiba | Porto
Alegre | Recife Belo Horizonte | Campo Grande London | Lisbon |
Shanghai | Miami | Buenos Aires | Beijing | Johannesburg |New
DelhiOpportunities in the Oil & Gas Market in Brazil Some Legal
AspectVera Dantas Aberdeen 15 March 2012
2. Pre-Pre-salt area SOURCE: Revista Brasileira de Tecnologia e
Negcios de Petrleo, Gs, Petroqumica, Qumica Fina e Biocombustveis.
Ano X jul./ago 2008 n. 61. p. 30.
3. Its remarkable offshore oil bonanza could do Brazil a lot of
good. But getting the most out of it will not be easy. 5 Nov
2012
4. PRESENTATION TOPICS 1. Petrobras Investments 2. Oil &
Gas Sector in Brazil - Legal Framework 3. Local Content
Requirements 4. Establishing a presence in Brazil 5. Petrobras
5. 1. Petrobras Investments Petrobras Investment Plan, as
announced last December: Petrobras will invest circa of US$ 224.7
billion until 2015; Internal demand in ten years could reach 3.3
million of barrels per day; Target : 6 million barrels per day by
2020; 2012 budget : R$ 77.9 billion (approximately 27.5 billion) to
be invested in Brazil : Upstream: 65% for development of production
and 18% for exploration;
6. Petrobras Investments cont.Downstream:17% for
infra-structure refining, transport andcommercialization (including
four new refineries inPernambuco, Maranho, Cear and Rio Grande do
Norte). Source : Valor Econmico, 19 December 2011
7. Petrobras Investments cont.On 7 March 2012, 2:07 PM , O
Estado de So Paulo:Petrobras already has the funds for investments
in 2012 Graa guarantees. Objective is that the company invests US$
50billion this year, compared to US$ 40 bilhes last year.Impact of
such investments will be felt in the wholechain of suppliers of
equipment and services thatform the Oil Industry.
8. 2. Oil & Gas Sector in Brazil LegalFramework Petrobras
was created in 1953 as a State company and has maintained the
exclusive control of all oil industry activities until 1995, when
its monopoly came to an end - Constitutional Amendment number
9.
9. Oil & Gas Sector in Brazil LegalFramework - cont.
Ownership of natural resources has been retained by constitutional
provision; likewise, monopoly of Exploration & Production
remained of the State, but the Brazilian Oil and Gas Law (number
9478, of 6 August 1997) allowed private companies to exercise
exploration activities. With pre-salt discoveries, the legal
framework has changed again with Law 12351, of 22 December
2010.
10. Legal Framework before the pre-saltreserves discoveries:
concessionagreements Law 9478 of 6 August 1997 : Created the
NATIONAL COUNCIL OF ENERGY POLICY (CNPE) and the NATIONAL AGENCY OF
PETROLEUM, NATURAL GAS AND BIOFUELS (ANP*), the industrys regulator
and supervisor. Sets forth the applicable rules for the exploration
and production of oil. Private companies allowed to exercise
activities of exploration and production of oil through concession
agreements, preceded by invitations to bid. (*) renamed as such by
Law 11097/2005
11. Legal Framework before the pre-saltreserve discoveries :
concession agreements cont. ANP is responsible for issuing tenders
to grant concessions. Concessionaires are entitled to ownership of
all oil produced subject to taxes; government had signature bonus,
royalties (10% to 5% - the latter where extreme conditions
applied), etc. Bidders have to meet legal, technical and financial
requirements. Exploration blocks were defined by ANP.
12. After the Pre-Salt reserves discoveries: Law12351 of 22
December 2010 theProduction Sharing Agreement (PSA) New regulatory
structure : Exploration and production of oil : activity will be
exercised, through concession, authorization or under the
production sharing regime (Article 5 of Law 9478, as modified in
December 2010). Now the CNPE defines the blocks that will be
offered under the concession or the production sharing regime
(Article 2, VIII) before, it was the ANP. Likewise, it decides
which blocks will be contracted directly with Petrobras under a PSA
and which blocks will go to auctions, also under a PSA. The ANP
suggests, the Council decides.
13. New Rules Law 12351/2010 cont.Production Sharing Agreements
: between the State andPetrobras (no tender) or between the State,
Petrobras and theOil Company, preceded by tender (auction type).ANP
still responsible for issuing invitations to bid both for
theexploration and production of oil under a) PSAs (Article
11,III); and under b) concessions agreements (Article 8, IV
and36).ANP still supervises (directly or indirectly with Brazilian
Statesor other, as foreseen in Law 8078/1990) the oil
industryactivities (VII).
14. New Rules Law 12351/2010 cont.Petrobras is the
Operator.Where an oil company is allowed to bid for an
explorationblock and wins the bid: consortium agreement
betweenPetrobras, the bid winner and the Pre-Sal State company.If
hired directly, or if it wins the bid, Petrobras will enter into
aconsortium agreement with the Pre-Sal State company (Pr-Sal
Petrleo S.A. PPSA, controlled by the BrazilianGovernment).Foreign
company must undertake, when participating of theinvitation to bid,
that it will create a Brazilian company if itwins same rule, as
before (Article 17, IV).
15. 3. Local Content Requirements Its remarkable offshore oil
bonanza could do Brazil a lot of good. But getting the most out of
it will not be easy. But it is never too easy, is it ?
16. Local Content Requirements cont. The local content
requirement is present both in the concession and in the PSA
regimes as well as in the downstream contracts with Petrobras. It
is policy of the Brazilian Government. Concession system Local
Content is imposed in the concession agreement executed between ANP
and the concessionaire, who must observe a minimum percentage of
participation of Brazilian companies in the supply of equipment and
services under the agreement.
17. Local Content cont.This percentage is determined in the
invitation tobid and detailed in the concession agreement.The
clause in the agreement states that theconcessionaires must give
preference to Braziliansuppliers whenever their services or
productspresent conditions of price, term and qualitywhich are
equivalent to those of other suppliersinvited to quote.
18. Local Content cont. PSA system The CNPE will decide on the
applicable local content requirements (upon suggestions received
from the Ministry of Mines and Energy of Brazil Article 10, III, e)
from the new law). The minimum local content requirements will be
specified in the invitation to bid and in the model of agreement
attached to it (Article 15,VIII of Law 12351/2010).
19. Local Content cont.In the first rounds, the local content
percentagesoffered by the bidders were taken into considerationfor
the effects of punctuation of the offers foracquisition of the
blocks.As of the 5th bidding round, local content percentagehas
reached approximately 80% in the explorationphase and 85% in the
development phase.As of the Seventh Round, there were more
specificrequirements and a Booklet of Local Content
waspublished.
20. Local Content cont. In 2007 ANP created a system for the
certification of Local Content . The accredited entities measure
and inform ANP the local content of goods and services hired by the
concessionaires of the activities of Exploration & Production
(we had no company operating under a PSA at time of writing). ANP
has four Regulations that deal with the matter.
21. Local Content Petrobras Presently, the Local Content
requirement is only regulated in the upstream sector, in the
concession agreements and PSAs (new law is clear about it) and in
the Local Content Certification System. However, Petrobras, in
spite of the lack of regulation of local content for the downstream
segment, has been asking for the clause. The majority of contracts
of construction of refinery for example include specific clauses of
minimum Local Content, to be reached by the Contracted
Parties.
22. 4. Establishing a presence in Brazil Preliminary
Considerations Setting up your own Company
23. Establishing a presence in BrazilPreliminary considerations
Memoranda of understanding are binding in Brazil Defaults of
obligations under a proposal will be subject to indemnification of
losses and damages under the general rules of the Civil Code, to
which one should add court fees and legal costs. Term Sheet must be
cautiously drafted by experienced lawyers, in order not to create a
binding obligation between them.
24. Setting up your own company; jointventuresWhich Type of
Company?Most frequently used company structures:"Sociedade Annima"
(S.A.) and"Sociedade Empresria Limitada" (Limitada)in both cases
the participants have limited liability.
25. Decision process of relevance if the investor is a minority
shareholder(a) in a Limitada the social contract and the 75% vote
rule Decisions must be taken by majority of votes, except for the
cases of alteration of the social contract or merger, consolidation
or winding up of the company, in which cases it must be taken by at
least 75% of the votes representing the social capital. Be careful
with quotaholders agreement!
26. Decision process of relevance if the investor is a minority
shareholder(b) in a S.A. Shareholders Agreement General rule
applying to S.A.s : decisions are taken by the majority of voting
shareholders. Obligations set forth in a Shareholders Agreement can
be subject to specific performance. Under its umbrella, important
matters can be decided : quorum for strategic decisions; management
mechanisms; board of directors may be integrated by foreign
individual; corporate governance policies; right of first refusal;
tag along; etc.
27. If despite Local Content requirementsthere is no local
presence... Services Agreement: Tax payable at remittance Services
25% income tax Royalties 25% (15% income tax + 10% CIDE) Agreement
to state clearly which party is to be responsible for that
payment.
28. Compared to taxation of a Braziliancompany Basic rate of
income tax on corporate profits (including capital gains), as
adjusted for tax purposes, is 15%, with an additional surtax of 10%
on taxable profits exceeding R$ 240,000 (approximately 84,000) per
annum. Social Contribution on profits is 9% of taxable profits. Top
tax rate on profits is therefore 34%. There is no withholding tax
on distribution of dividends.
29. 5. PETROBRASPetrobras is subject to the Simplified Bidding
Process(Procedimento Licitatrio Simplificado da
Petrobras)established by Decree number 2745, of 24
August1998.Electronic procurement is widely used :
Petronect.Bidders must be registered with the system in orderto
receive bidding notices.
30. PETROBRAS cont.Legal Representative in the country is
required (power ofattorney) by law.Commercial Representative is
normally required byPetrobras.Normally agreements are not
negotiable.In case of doubts or comments, these must be presentedin
writing before the bid takes place.Clauses in the agreement will
deal with issues of liability.
31. PETROBRAS cont.Product and service suppliers are liable,
independently offault, for damages caused to consumers by defect in
theproduct or in the rendering of services (Protection ofConsumers
Code).Civil Code :damages due to the creditor shall comprisewhat
the creditor has effectively lost and thereasonable lost profits
(Article 402); damages onlyinclude effective losses (actually
suffered) and lostprofits arising directly and immediately from
theinexecution of the obligation (Article 403).
32. PETROBRAS cont.Documents issued or signed out of Brazil
(such as POA orCommercial Representation Agreement required
byPetrobras) must follow the rules of notarization andlegalization
at the Brazilian Consulate.Instruments executed in a foreign
language must betranslated into Portuguese by sworn translators in
Brazilfor use in Brazil.
33. Thank you. NORONHA ADVOGADOS, London Vera Dantas Phone:
(20) 7581-5040 Facsimile: (20)
[email protected]