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Brazil could consider converting production-sharing contracts already signed for oil and gas areas into concession agreements, with the aim of guaranteeing investments in the blocks awarded amid the current depressed price scenario.
“Brazil needs to consider how to guarantee that the investments promised in the contracts that were signed in the tenders held in 2017-19 can actually take place. I had said many times that the contracts awarded in recent years would be enough to guarantee more activity, but were now living through an unexpected situation and it will be harder to approve new projects after the coronavirus pandemic, even good projects,” former director of oil and gas regulator ANP, Décio Oddone, said during an online event organized by industry fair Rio Oil and Gas.
Production-sharing contracts are considered costly and riskier for investors, since every investment decision needs to be approved by state-run PPSA, which represents the federal government in the consortiums. According to consultant Jorge Camargo, the country could convert the contracts into concession deals by anticipating taxes and establishing compensation payments to the government |
