The Chamber of Deputies approved this past Wednesday, October 5, 2016, the base wording of Bill n. 4,567/16, proposed by the Federal Senate, which brings changes to Law n. 12,351, issued on December 22, 2010. The changes brought by the Bill will allow Petrobras the right of first refusal for operating rights and a minimum participation of 30% in all consortiums made for exploration of blocks bidded on in the production sharing regime. There were292 votes in favor and 101 against the approval of the Bill. The Plenary of the Chamber has yet to analyze the proposed amendments to the base wording made by deputies. A plenary session to discuss the matter has yet to be scheduled.

The alteration in the law establishes that, in the event of bids for exploration and production of oil, natural gas and other fluid hydrocarbons in a production sharing regime, the National Energy Policy Council (Conselho Nacional de Política Energética - CNPE) must give the right of first refusal to Petrobras, who must inform CNPE within 30 days whether or not it wishes to be the operator of the blocks to be contracted under the PSA regime.

In the event that Petrobras has the intention to operate within the areas, its participation in the consortiums cannot be lower than 30%.

The Bill and its current approval status can be verified on the Chamber of Deputies website.

As soon as we have new information regarding the final approval of the Bill and of its potential amendments, disclosure will be made by our Legal Updates.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados and are not intended to provide legal advice. Any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.