Amid the ongoing political and economic crisis in Brazil, highlighted by the fallout from Operation Car Wash and the resulting impact on Petrobras’ activities, the Federal Government has approved new measures aimed at stimulating the market and improving the investment environment in the oil and natural gas exploration and production sectors.

On April 11, 2017, the National Energy Policy Council (CNPE) approved the 3rd Production Sharing Round for bidding on blocks located in pre-salt areas. It is worth noting that, in 2016, the CNPE also approved, in an extraordinary meeting, the 4th Bidding Round for Marginal Accumulations, the 14th Bidding Round, and the 2nd Production Sharing Round, all of which are scheduled for this year.

According to Paulo Pedrosa, the executive secretary of the Ministry of Mines and Energy, these rounds are expected to generate tax revenue of at least R$ 8.5 billion, which will assist the government in meeting its fiscal target for the year.

However, the success of these bidding rounds largely depends on the renewal of REPETRO, a special customs regime for the import and export of goods in the oil and gas sector. Pedrosa has indicated that this decision is currently pending approval from the Ministry of Finance.

Regarding the recently approved 3rd Production Sharing Round, it has been decided that four areas in the Campos and Santos basins will be offered in the pre-salt polygon region. These areas include the prospects of Pau Brasil, Peroba, Alto de Cabo Frio-Oeste, and Alto de Cabo Frio-Central. However, the final decision of the CNPE is subject to the approval of the Presidency of the Republic and subsequent publication in the Official Gazette (DOU).

The 14th Bidding Round, approved in December 2016 at the 33rd CNPE meeting, will include 10 ultra-deep-water blocks located in the northern portion of the Campos Basin. In total, 291 exploratory blocks across nine sedimentary basins have been selected for bidding, in states such as Maranhão, Piauí, Rio Grande do Norte, Alagoas, Sergipe, Bahia, Espírito Santo, Rio de Janeiro, Mato Grosso do Sul, São Paulo, Paraná, Santa Catarina, and Rio Grande do Sul.

The 2nd Production Sharing Round, also approved in December 2016, is scheduled for the third quarter of 2017 and will include four areas with unitizable deposits in non-contracted pre-salt regions in the Campos and Santos basins. These areas correspond to the Gato do Mato and Carcará discoveries, as well as the Tartaruga Verde and Sapinhoá fields.

In addition to these rounds, the government has approved the 4th Bidding Round of Marginal Accumulations for 2017, which will grant concessions for oil and gas rehabilitation and production in nine areas with marginal accumulations. These areas—Araçás Leste, Garça Branca, Iraúna, Itaparica, Jacumirim, Northwest of Morro Rosado, Mariricu River, Urutau, and Quiricó Valley—are distributed across the Potiguar, Recôncavo, and Espírito Santo sedimentary basins.

Looking ahead, the following rounds are planned for the 2018-2019 biennium: (i) the 15th Block Bidding Round, the 4th Production Sharing Round, and the 5th Marginal Accumulation Round, all scheduled for the first half of 2018; and (ii) the 16th Block Bidding Round, the 5th Production Sharing Round, and the 6th Marginal Accumulation Bidding Round, to be held in the second half of 2019.

The government’s objective is to attract investment from multinational oil companies by offering several pre-salt areas, with the potential to raise up to R$ 18.6 billion, according to a study by the Brazilian Association of Petroleum Services Companies (ABESPetro). These measures aim to restore confidence in the Brazilian market and encourage companies to actively participate in the bidding rounds, fostering growth in this critical sector of the national economy.

However, in light of recent developments in the Operation Car Wash investigation—particularly the allegations of corruption involving President Michel Temer—it is important to note that the schedule established by the CNPE, and ultimately the Federal Government, could face significant changes, along with shifts in investor expectations and confidence.