Brazil: E-Alert Regulatory - ANP Resolutions n. 815 and n. 816

Resolution n. 815/2020

Resolution n. 815/2020 allows the parties in E&P contracts to extend, for a nine-month period, the following contractual terms:

1. Expiration date of the current exploratory period for active agreements, for which deadlines are not suspended;
2. Expiration date of the current exploratory period for suspended agreements which shall return to full force until December 31, 2020;
3. Critical dates already established in Discovery Appraisal Plan (PAD) already approved by ANP, as long as the activities approved in the context of the PAD are kept unchanged;
4. Critical dates already established in suspended PAD which shall return to be in force by December 31, 2020, as long as the activities approved in the context of the PD are kept unchanged; and
5. Final date for the declaration of commerciality of a PAD, as long as the activities approved in the context of the PAD are kept unchanged.

It is worth highlighting that the extension of PAD deadlines are not applicable to the maximum duration for the performance of Long Term Tests (TLD) approved by ANP.

Resolution n. 816/2020

Resolution n.816/2020 provisions are valid until December 31, 2020, and among other measures, soften contractual obligations of Exploration and Production Phases Research, Development and Innovation (RD&I) investment and Local Content obligations, as detailed below.

General Guidelines and Communication

ANP may suspend obligations that would result in the demobilization of operational personnel.

The Resolution 816/2020 also suspended the deadlines applicable to the agents subject to sanctioning administrative proceedings, provided that the proceeding do not demand urgent assessment.

It also sets fort that regulated agents shall keep their operations running in order to ensure the necessary supplies and raw materials for the maintenance of national fuels supply, and any stoppage in the operations must be previously required by the regulated agent and authorized by ANP.

Operators shall also communicate about ANP about:

1. Suspected or confirmed cases of COVID-19 infection, per production unit;
2. Impacts on drilling and production activities;
3. Impacts on the safety of operation and the measures taken to prevent the spread of COVID-19;
4. Any alterations in the operational routine that may compromise the national supply of oil and natural gas;
5. The number of personnel embarked (POB) during COVID-19 outbreak and during ordinary course of business, whenever there is a modification in the minimum personnel necessary for a safe operation; and
6. The numbers of personnel dedicated to the emergency response structure (EOR) during COVID-19 outbreak and during ordinary course of business, wherever there is a modification in the minimum personnel necessary for a safe operation.

Technical Data

The following deadlines are suspended:

1. Deadlines of adhesion contracts for assessing data of ANP's Exploration and Production Database (Banco de Dados de Exploracao e Produucao - BDEP); and
2. Deadlines for making technical data required to BDEP available, as well as deadlines for the delivery of the data provided for under items IV, V and VI of article 19 of ANP Resolution n. 757/2018¹.

Agreements in Exploration Phase

The deadlines for delivering the Annual Work Program and Annual Work Budget (PAT/OAT) files for agreements executed in 2020 is extended to October 31, 2020.

4. Agreements in Production 

The following deadlines are suspended:

1. Deadlines for submitting revisions of Development Plans and to the PAT/OAT exception is made to the cases in which ANP expressly determines its presentation; and
2. The deadline to comply with the Initial Work Program (PTI) in case of marginal fields concessions agreements and for its declaration of commerciality.

The following deadlines are extended:

1. For sixty days: deadlines for concessionaires to reply to ANP's requests in regard to Monthly Production Reports²; and
2. January 1st, 2020: deadline for the full compliance with the rules provided for under ANP Resolution n. 806/2020, which regulates the flaring and loss of petroleum and natural gas proceedings.

The following procedures are authorized:

1. One year extension for the performance of the activities provided for under PAT for the year 2020;
2. Extraordinary flaring of natural gas, up the limit of 100 thousand m³ per day in small production fields³, and 
3. Deviation higher than fifteen percent of the volume produced in relation to the production level forseen for the respective month in the Annual Production Program, without justification. 

Production Measures

The following deadlines are suspended:

1. Collection of samples of petroleum and natural gas at fiscal measurement points, appropriation and custody transfer for performing physical-chemical analyses;
2. Calibration of secondary elements for measurement of temperature and pressure, as well as tape lines and thermometers associated with tanks;
3. Calibration of primary elements, provided that calibration cannot be performed at the facility itself;
4. Inspection of the components of the measurement systems;
5. Verification of flare gas flow meters;
6. Tests of wells exclusively located in onshore fields.

Furthermore, the prior inspection requirement by ANP to authorize the operation of measurement points is also suspended. 

Operational Safety and Environment

6.1 Audits and clearance of non-conformities

ANP authorized the extension of the deadlines for the cycle of internal audits of each installation in respect to the operational safety technical regulations listed below:

1. Wells Integrity Management System (SGIP), established by ANP Resolution 46/016;
2. Subsea Operational Safety Management System (SGSS), established by ANP Resolution No. 41/2015;
3. Technical Regulation on Onshore Pipelines (RTDT), established by ANP Resolution No. 6/2011;
4. Structural Integrity Management System (SGI), established by ANP Resolution 2/2010; and
5. Operational Safety Management System (SGSO), established by ANP Resolution 43/2007.

Also, the deadlines to submit evidences that non-conformities had been remedied, as provided for in Article 7 of ANP Resolution No. 3/2015 are suspended. 

6.2 Operational safety risk analysis

The five-year risk analyses terminating in 2020 and 2021 are extended as well as the risk analyses required after two years from the beginning of operations, terminating in 2020, may be extended at the discretion of the ANP, upon express request of the operator. 

6.3 Facilities with approved Operational Safety Documentation

The submission of approved Operational Security Documentation (DSO) updates which may change during the term of the ANP Resolution 816/2020 are waived. 

6.4 Facilities without approved Operational Safety Documentation or before the commencement or restart of operations 

The authorization to start the operation of the facility will not be subject to prior audit; however will be subject to the submission of the following documents:

• Operational Security Documentation - DSO;
• Identification of the hazards and evaluation of the respective risks related to the operational situation in the COVID-19 pandemic scenario, and response plan to emergencies in the facilities.

6.5 Operational Security Data Charges

During the term of this Resolution 816/2020, the obligation to send routine data through ANP electronic system is suspended, except for those considered essential for monitoring the exploration and production operations.

Government Tasks

The deadline for delivering the composition analysis of natural gas defined for the purpose of assessing the reference price of natural gas (PRGN) is extended to thirty days after the term of ANP Resolution No. 816.2020.

RD&I

The following deadlines are extended:

1. To September 30,  2020:
   1. the deadline for making investments in RD&I required to comply with the obligations generated by the oil companies in 2019; and
   2. investments of the Non-Invested Resources (SRN) ascertained on June 30, 2019
2. To December 30, 2020: delivery date of the Annual Consolidated Report (RCA) for the reference year of 2019.

Local Content

The following deadlines are extended:

1. To the first business day of July 2020: the submission deadlines of Local Content Reports which original delivery date is between March 1st, 2020 and June 30th, 2020;
2. To the fifteenth working day of August 2020: the deadlines for submission of the Quarterly Expense Reports, whose calculation period corresponds to the expenses made in first quarter of 2020; and
3. To the fifteenth business day of July 2020: the deadlines for submission of the Quarterly Certification Reports, which calculation period corresponds to the first quarter of 2020.

To access the full content of the ANP Resolutions, access the links below:
 
ANP Resolution No. 815, of April 20, 2020.
 
ANP Resolution No. 816, of April 20, 2020.
 

[1]It is worth highlighting that only technical data intended for the reduction of the Minimum Exploratory Program (PEM) shall be received by ANP. Moreover, ANP shall promote the assessment of the raw seismic data by means of expeditious and sampling assessment, which may have its integrity, completeness and geographical position validated, that leads to the issuance of an Appraisal Report restricted to the rebate of PEM.  Its definitive approval is not constituted in relation to the formatting associated to ANP's 1B pattern.
[2] The deadlines for submitting the monthly reports remains unchanged.
[3] ANP shall monitor the burning levels and may revoke such authorization at its sole discretion.
[4] ANP shall (i) require proof of the technical and legal requirements applicable by means which allow the respective assessment without the necessity of on-site inspection; and (ii) condition the authorization to the previous inspection of the facility in case the assessment of the applicable technical and legal requirements require on-site inspection of the measurement systems.

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In cooperation with Trench Rossi Watanabe, a Brazilian law firm.