From the U.S. to Brazil: Contrasts in Offshore Energy Legal Frameworks Lecture in Lone Star Corporate College held in April, 2012.

1. From the U.S. to Brazil:
Contrasts in Offshore Energy
Legal Frameworks
Lone Star Corporate College –Woodlands, TX – April 27th., 2012
Claudio A. Pinho

2. Changing US Geopolitics
Claudio A. Pinho

3. Oil & Gas cultural differences US/Brazil
• The oil&gas history was created in common law
countries which the contract is the key instrument
• In civil law countries you should look to the legal
provisions before, over and beyond any contracts
• When you sign a contract in Brazil is a key issue to
check which laws will apply to the contract
• If you signed with Petrobras will be an adhesion
contract with no negotiation
• How the US insurance company will analyze a liability
clause on adhesion contracts under Brazilian law
• Brazilian FTC (CADE) does not really enforce antitrust law
in oil&gas market
Claudio A. Pinho

4. 1988 Constitution and its Provisions
The natural resources all belong
to the Federal Government
 the continental shelf
 the exclusive economic zone
 the territorial sea
 the mineral resources including
those of the subsoil
The economic order establishes the principle of free
competition.
Claudio A. Pinho

5. Oil & Gas Legal Basis before Pre-Salt
Amendment # 6 (Aug. 1995) – Revoked article 171
which gives the Brazilian Companies some privileges.
Amendment # 9 (Nov. 1995) – Changed the article 177
to break the Petrobras monopoly and allow competition.
Law # 9.478/97 [Brazilian Oil Law] (1997) – Created
ANP (National Petroleum Agency) and the rules for bid
and contracting (concession model)
Direct Action of Unconstitutionality (ADIN #
3.273) (2011) – Brazilian Supreme Court declares
Brazilian Oil Law constitutional, and declares that oil & gas
exploration can only happen in a competitive marketplace.
Claudio A. Pinho

6. Pre-Salt Bills
Federal Government sends 3 bills to
Brazilian Congress to create the Pre-
salt legal framework:
1) Regulatory pre-salt law (changing
the contracts to Production Share
Agreement – PSA and defines the
pre-salt area);
2) A bill to create a state company called PPSA (Pré-Sal
Petróleo S/A) to work as the National Oil Company – NOC
in pre-salt contracts;
3) Capitalization of Petrobras and onerous transfer of rights.
Claudio A. Pinho

7. Production Sharing Agreement of Pre-Salt
NOC FOC
COSTS
60% 40%
Claudio A. Pinho

8. Production Sharing Agreement of Pre-Salt
30% Petrobras 70% Consortium
NOC FOC
COSTS
60% 40%
1st bill => Law # 12.351/10
Claudio A. Pinho

9. Production Sharing Agreement of Pre-Salt
30% Petrobras 70% Consortium
PPSA FOC
COSTS
60% 40%
2nd bill => Law # 12.276/10
Claudio A. Pinho

10. Production Sharing Agreement of Pre-Salt
30% Petrobras 70% Consortium
PPSA FOC
e ls
a rr
n B
i llio COSTS
5 B
60% 40%
3rd bill => Law # 12.304/10
Claudio A. Pinho

11. Pre-salt Perimeter
• Does the
onerous transfers
of rights is a
regulatory
framework itself?
• Petrobras
answers “yes”
and the industry
accepted that
idea.
Claudio A. Pinho

12. Risks and Opportunities
• With the new Director, Magda Chambriard,
ANP could return to its regulatory role
• The Civil Office does not agree with
the Petrobras approach but only and
amendment in the law could save
the pre-salt legal framework
• A bill of National Contingency Plan is
almost ready to be filed (PNC – Plano
National de Contingência) with new liability
standards
• Brazil could lost advantage over African
countries e the new discoveries regarding
African pre-salt
Claudio A. Pinho

13. Energy Tribune December 1st, 2011
Claudio A. Pinho

14. McClatchy – March 8, , 2012
McClatchy March 8thth 2012
Claudio A. Pinho

15. Other pre-salt references
Pre-Salt - The new Oil
Regulation in Brazil -
Manhattan Connection
Pre-Salt - Part. 1-3 - Claudio A. Pinho
Claudio A. Pinho

16. Thank you!
@ClaudioAPinho
This presentation is posted at
www.slideshare.net/capinho
Claudio A. Pinho