The Bidding Rounds for Exploration and Production of Oil and Natural Gas
The Bidding Rounds are auctions through which the Federal Union grants the right to explore and produce oil and natural gas in Brazil. Since 1999, multiple bidding rounds have been carried out: 13 of exploratory blocks and four of mature fields under the concession regime, and one in the pre-salt area, under the production sharing agreement.
More than 100 companies, national and foreign, of different sizes, have participated in the auctions. Currently, most of the Brazilian production comes from blocks offered in the bidding rounds.
Nine bidding rounds are planned to take place from 2017 to 2019, offering areas that contains billions of barrels of oil and creating opportunities for all types of exploration and production companies.
How the ANP conducts the bidding rounds
The biddings rounds are arranged by the ANP according to the guidelines of the National Energy Policy Council (CNPE). Based on these orientations, the ANP performs the studies and indicates the areas with the characteristics determined by the CNPE, which, after approving them, authorizes the Agency to carry out the rounds.
After the publication of the CNPE’s Resolution that authorizes the bidding round, the ANP publishes the draft of the tender protocol and the draft of concession agreement, which are subject to consultation and public hearing. The draft of the tender protocol comprehend the schedule of mandatory events and publications, which includes technical, legal, fiscal and environmental seminars; announcement of the areas of the blocks, among others. At this stage, the companies must submit documents to express the interest in participating in the round. Such requests are analyzed by the Special Bidding Commission, which approves or not the companies' registration. All this process is widely publicized and involves the society and agents regulated by the ANP.
In general, the public session for submission of bids takes in a single day, in an event open to the public that counts with the presence of authorities, companies and the press. The qualified companies (alone or in a consortium) present their put their offers, inside a sealed envelope, in a transparent urn. The offers must include the signature bonus and the Minimum Exploratory Program (PEM), in the case of bidding rounds under the concession regime, or the exceeding oil portion, in the case of bidding rounds under the production sharing agreement. The offers are judged immediately, according to the norms of the tender protocol, and the winner is then announced.