Onerous Assignment – Sépia Block

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According to Law 12,276/2010, the onerous assignment is a regime of direct contracting of specific oil areas from the Union to Petróleo Brasileiro S.A – Petrobras. The Law granted Petrobras the right to extract up to five billion barrels of oil equivalent from unceded areas located in the pre-salt, as detailed in the Onerous Assignment Agreement, signed between the Union and Petrobras. Considering the legal limitation regarding the maximum volume to be extracted in the Onerous Transfer Agreement and the existence of volumes exceeding those contracted, the National Energy Policy Council (CNPE), through CNPE Resolution No. 06/2019, authorized the National Petroleum Agency , Natural Gas and Biofuels (ANP) to carry out the Bidding Round for the Transfer of Rights Surplus. Thus, the Bidding for Excess Volumes of the Transfer of Rights was qualified within the scope of the Investment Partnership Program – PPI, at the 9th meeting of the PPI Council and resulting from Resolution No. 53, of May 8, 2019, formalized through decree No. 9,973 , on August 14, 2019. At the time, four areas were offered: Búzios, Itapu, Sépia and Atapu. The Búzios and Itapu areas were sold in November 2019, generating a total collection of R$69.96 billion in signing bonuses. As set out in CNPE Resolution No. 5/2021, during the term of the Production Sharing contracts, considering the price of a barrel of Brent oil of US$50.00 (fifty US dollars) and the average daily production of 14,500 ( fourteen thousand and five hundred) barrels of oil per active producing well as a reference in the table “Percentage of oil surplus for the Union depending on supply”, which will appear in the Tender Notice, the minimum percentages of the Union's oil surplus (criterion of the auction) and the signing bonus values will be as follows: In the Sépia area: 15.02% surplus in oil and R$7.138 billion in signing bonuses; It is In the Atapu area: 5.89% oil surplus and R$4.002 billion in signing bonus. For this Second Round, important improvements were introduced to the bidding process compared to that carried out in 2019, highlighting: a) the prior definition of the shares of the Union, which will be tendered, and of the assignee (Petrobras), in recoverable volumes, in the Sépia and Atapu areas; b) the prior definition of the value of compensation before taxes to be paid by contractors to Petrobras for investments made in the Sépia and Atapu areas; It is c) the definition, in the bidding notice, of the co-participation agreement to be signed between Petrobras, contractors and Pré-Sal Petróleo S.A., bringing predictability to bidders. Such agreement will be signed simultaneously with the signing of the production sharing contract. This tender unlocks investments that could reach more than 200 billion reais over the duration of the contracts, according to estimates by the Ministry of Mines and Energy. Source: http://rodadas.anp.gov.br/pt/segunda-rodada-licitacoes-volumes-excedentes-cessao-onerosa In January 2020, MME Ordinance No. 23/2020 was published, which qualified Pré-Sal Petróleo S.A. as a Representative of the Union to negotiate the Participation Portions corresponding to the Onerous Assignment and the Production Sharing Contract for surplus volumes from the oil fields. Sépia and Atapu and submit them for evaluation and approval by the ANP. In December 2020, the shares agreed between Petrobras and PPSA were analyzed and approved by the ANP Board of Directors and forwarded to the MME. The participations, along with other parameters, were submitted to the CNPE. In February 2021, MME Ordinance No. 493/2021 established a Proposal Committee, composed of members from the Ministry itself, Petróleo S.A. (PPSA) and the Energy Research Company (EPE), with the objective of establishing technical, economic guidelines and legal guidelines for negotiating the parameters to be used in calculating compensation considering current market conditions. On April 9, 2021, the CNPE published CNPE Resolution No. 03/2021 in the Official Federal Gazette (DOU), which established the guidelines for holding the round. On April 22, CNPE Resolution No. 05/2021 was published, which established the technical and economic parameters of the Second Bidding Round for Excess Volumes from the Transfer of Rights in the Sépia and Atapu fields. Also in April 2021, MME Ordinance No. 08 was published, which amended MME Ordinance No. 213/2019, which established the guidelines for calculating the compensation owed to Petróleo Brasileiro S.A. for investments made in the Sépia and Atapu fields. On 04/19/2021, the Order of the Minister of Mines and Energy was published, based on MME Ordinance No. 23/2020 and MME Ordinance No. 493/2021, approving the Agreement signed by Pré-Sal Petróleo S.A. and Petróleo Brasileiro S.A. regarding the new parameters and the value of Compensation to be paid to Petrobras for the investments made in the Sépia and Atapu Fields, as a result of bidding, under the Production Sharing regime, of the excess volumes of the Transfer of Rights of these Fields. According to the Notice to the Market published by Petrobras, in relation to the Atapu Area, the Firm Compensation to be paid by the new contractor to Petrobras is US$3.253 billion, which will have a 60.5% share in the production sharing. For the Sépia Area, the compensation to be paid by the new contractor is US$3.200 billion, with a 68.7% share in production sharing. This Announcement also states that the values of firm net compensation will be increased by a supplement (earn out), due between 2022 and 2032, which will be due from the last business day of January of the year following that in which the price of oil Brent type reaches an annual average above US$40/bbl, limited to US$70/bbl (the earn out tables will be published by the Ministry of Mines and Energy, after approval of the agreement by the Minister). Such supplements have a grace period of 1 year to pay the 1st installment of the earn out, from 2023 to 2024, adjusted at the rate of 8.99% per year. Also according to the Notice to the Market published by Petrobras, “the value of firm net compensation will be added to the tax effects relating to Corporate Income Tax and Social Contribution on Net Profit caused by the transfer of ownership of Petrobras assets to those contracted under the Production Sharing regime, whose economic burden will be on the winner of the bid. In the case of the compensation supplement (earn out), tax effects will already be included. The expected conditions will be reflected in a Co-participation Agreement that will bind Petrobras and the new contractor for the area(s). The Co-participation Agreement will only be effective with the signing of the Production Sharing Agreement and the payment of compensation to Petrobras, when the contractors will have access to their participation in the production from the Sépia and Atapu fields. On April 28, 2021, Petrobras expressed interest in exercising the right of preference in the Atapu and Sépia areas, with a percentage of 30%, considering the parameters disclosed in CNPE Resolution No. 05/2021 and MME Ordinance No. 08/2021. On May 3, 2021, CNPE Resolution No. 09/2021 was published, which establishes that the Notice of the Second Bidding Round for Excess Volumes of the Transfer of Rights under the production sharing regime must indicate that the mandatory participation of Petrobras, as operator , will occur with 30% in each of the Sépia and Atapu areas. On May 27, 2021, the ANP Board of Directors approved the forwarding of the draft notice and production sharing contracts for the Atapu and Sépia areas to the MME, with a view to making the schedule of the 2nd Bidding Round for Excess Volumes viable. of the Onerous Assignment, whose public session is scheduled to take place in December 2021. On June 2, 2021, the ANP published the preliminary notice and the drafts of the production sharing contract, starting the Public Consultation stage of the event. On October 13, the process was considered in the reserved Telepresence Session of the TCU Plenary, through Ruling 2480/2021-PL. The ANP published the Notice in the Official Gazette of the Union on 10/15/2021, as provided for in the schedule. All information is available at this link: https://www.gov.br/anp/pt-br/rodadas-anp/rodadas-andamento/segunda-rodada-licitacoes-volumes-excedentes-cessao-onerosa >The Second Round of Bidding for Excess Volumes of the Transfer of Rights was held on 12/17 as planned and the results were impressive: The Sépia area was purchased by the Consortium formed by Total Energies EP Brasil Ltda, Petronas Petróleo Brasil Ltda and QP Brasil Ltda, which offered 37.3% of surplus oil. This offer represents a premium of 149% in relation to the minimum defined by the CNPE. Petrobras offered its bid of 30.30% without forming a consortium. Given the result, Petrobras expressed interest in participating in the winning consortium with the other three companies mentioned, as per legal provision. The fixed bonus in this area is equivalent to R$7.138 billion. The Atapu area received the only offer from the consortium formed by Petrobras, Shell Brasil Petróleo SA and Total Energies EP Brasil Ltda. The surplus in oil offered was 31.68%, representing 437.86% of premium. The bonus in this area is equivalent to R$4,002 billion. This tender, which raised a total of R$11.140 billion. The initial schedule is maintained with the deadline for payment of the signing bonus on 02/18/2022 and the signing of production sharing contracts by 04/29/2022. On 04/27/2022, production sharing contracts for Atapu and Sépia were signed, which were won in the Second Bidding Round for Excess Volumes from the Transfer of Rights, held on 12/17/2021.