brazil round 3brazilrounds.anp.gov.br/arquivos/round3/iasf2_ing.pdf>bidding 2nd qtr. 2001...

Brazil RoundBrazil Round 3 3

Ivan de Araújo Simões FilhoGeneral Manager Licensing Rounds

Process

Brazil Round 3

Agência Nacional do Petróleo



Brazil Round 3 Procedures

Brazil RoundBrazil Round 3 3General Information

• 53 Blocks> 12 basins

• Large Areas> 79,000 km2 offshore; 11,000 km2 onshore> 1,800 km2 average size (offshore) ~450,000 ac.> 1,100 km2 average size (onshore) ~270,000 ac.

• Variety of Opportunity> Mature Basins (8 Blocks)> Frontier Areas> 10 Blocks onshore> 12 Blocks in shallow water> 31 Blocks in deep water

Brazil RoundBrazil Round 3 3Round 3 Process

• Substantially same as Rounds 1 and 2• Two Stages> Qualification> Bidding

• Qualification Stage> Technical, Legal and Financial

• Bidding Stage> Sequential, competitive process

• Data and Information Packages> All data available on the Blocks


• Industry Presentations> Rio de Janeiro November 17, 2000> Perth November 24> Singapore November 27> London November 29> Calgary December 1> Houston December 5

• Procedures> Initial Tender Protocol December, 2000> Final Tender Protocol 2nd Qtr. 2001

• Participation Fees> Payable from January, 2001> Entry deadline 2nd Qtr. 2001

• Licensing> Bidding 2nd Qtr. 2001> Contract Signature 3rd Qtr. 2001

Schedule


Oct Nov Dec Jan Feb Mar Apr May Jun

Announcement

Presentations

ITP

Qualification

Participation Fees

Data Availability

FTP (Edital)

Bidding

General Process Steps

Brazil RoundBrazil Round 3 3Participation Requirements

• Technical Qualification• Legal Qualification• Financial Qualification• Payment of Participation

Fee


Qualification of Parent orControlling Company

• Qualification is of parent company> At discretion of ANP, very large

companies may qualify with significantoperating subsidiary

• Company must be capable ofdischarging all obligations underthe Concession Agreement

• Qualified company will providefinancial and performanceguarantees

Brazil RoundBrazil Round 3 3Technical Qualification

• Required to establish operatingcapabilities> Submissions required from all companies

• Operators will be classified> Class A - Unrestricted Operator> Class B - May operate 22 blocks

– Onshore or shallower water areas

> Class C - May operate 8 blocks– Onshore Blocks in mature areas


Criteria for TechnicalQualification

• Oil equivalent production levels• Exploration and Production

operations onshore, offshore andin deep/ultra-deep water

• Exploration and Productionoperations in hostile orenvironmentally sensitive areas

• Experience in internationaloperations

Brazil RoundBrazil Round 3 3Financial Qualification

• Minimum of R$ 20 million ofShareholder Equity to operate“A” and “B” Blocks

• Minimum of R$ 6 million ofShareholder Equity to operateindividually “C” Blocks

• Companies with ShareholderEquity in excess of R$ 1 millionmay participate in consortia


Documentation Required forTechnical Qualification

• Operator applicants> Description of the experience of the company

and/or its personnel in E&P activities• Non-Operators> Description of activities and business of

company• Supporting documentation> Prefer < 50 pages !> Portuguese or English> No formalization required

• Technical summary> 1-2 pages only> Portuguese or English> Requires formalization


Documentation Required forFinancial Qualification

• Last three years’ audited accounts• Credit rating(Moody’s, S&P or

equivalent)• Credit lines or other bank references• Other materials supporting the

financial capacity of the company• Documents may be in either

Portuguese or English• No formalization required except for

independent auditor's opinion letter


Documentation Required forLegal Qualification

• Constituent documents (By-Laws,Articles of Incorporation, etc)

• Names of Shareholders who own morethan 20% of shares or voting rights orin any other way exercise control

• Designation of properly empoweredLegal Representative

• Certificate(s) of good standing vis-à-vis Government Agencies

• Documents must be formalized


Fomalization

• In order to valid, certaindocuments must be formalized bymeans of:> Notarization> Consularization> Translation

• Details in ITP> Formal documents

– e.g. Articles of Incorporation> Documents from Brazil Round 3

– e.g. Confidentiality Agreement> Free Form documents

– e.g. Technical summary


FormalizationGeneral Rules

• All documents must be notarized(except where otherwise indicated)> Only Portuguese language documents

may be notarized in Brazil> Others must be notarized abroad

• Documents notarized abroad mustbe certified at local BrazilianConsulate

• If original is NOT in Portuguese,must also be translated by swornofficial translator in Brazil


Small Independents

• Round 3 presents severalopportunities for small independentcompanies> Brazilian and international

• "C" category operatorship shouldallow opportunities in 8 Blockseven for very small companies> Onshore Blocks in mature basins> Minimum equity of R$ 1 million> Reduced Participation Fees> Reduced Bid Bond requirements


Submission of QualificationDocumentation

• Submissions from December 2000> Notification from early January 2001

• Documentation must be submittedno later than 15 days after thepublication of the Final TenderProtocol (published at least 45days prior to Bidding)

• Notification as soon as possible


Participants from Prior Rounds

• Companies who qualified in Rounds1 or 2 need only make simplifiedsubmissions> Letter expressing interest> Confidentiality Agreement and Power of

Attorney> Supplementary information

– Most recent accounts– Declaration of validity of documentation

previously submitted– Advise any material modification in material

previously submitted

Brazil RoundBrazil Round 3 3Participation Fees

• Payable by each Companyparticipating in Brazil Round 3

• Entitles Company to> Receive Information Package> Subject to qualification, to bid on appropriate

Blocks• Information Packages may be

obtained after> Payment of the relevant Participation Fee> Submission of Power of Attorney> Submission of Confidentiality Agreement

Brazil RoundBrazil Round 3 3Participation Fees

l US$ 350,000 for all 12 basinsl US$ 50,000 for all 8 "C" blocks

l By basin:l Campos US$ 150,000l Santos US$ 150,000l Espírito Santo US$ 120,000 (20,000)l Camamu-Almada US$ 25,000l Ceará US$ 25,000l Pará-Maranhão US$ 25,000l Paraná US$ 25,000l Sergipe-Alagoas US$ 25,000l Barreirinhas US$ 20,000l Jequitinhonha US$ 20,000l Potiguar US$ 20,000l Recôncavo US$ 20,000

l Late payment supplement of 25% after March 31, 2001

Brazil RoundBrazil Round 3 3Consortia

• Companies free to form consortiaup to point of bidding

• Only considerations that apply are:> Must have qualified Operator> Operator must hold at least 30%> No partner less than 5%> Companies may only bid in one

consortium on any one Block–But could be in a different consortia on all 53

Blocks–Affiliated Companies have similar restrictions

Brazil RoundBrazil Round 3 3Final Tender Protocol (FTP)

• Definitive process document for BrazilRound 3 - "Edital"

• Publication expected during 2ndQuarter 2001

• Substantially the same as ITP withadditional detail on> Bidding process> Bidding timetable> Form of Guarantees

• Will be issued a minimum of 45 daysbefore Bidding

Brazil RoundBrazil Round 3 3Bidding Process

• Transparent, public process> Blocks to be offered sequentially

• Results from one bid will be knownbefore next due

• Minimum bids, in Reais, to bepublished in the Edital

• Bid Bond required, by consortium> May be reused if bid unsuccessful> Reduced requirement for "C" Blocks

Brazil RoundBrazil Round 3 3Bid Evaluation

• 85 points for biggest Signature Bonus> P1 = 85 x SB/SBmax

• 12 points for biggest local contentcommitment in Development Stage> P2 = 12 x LCd/LCdmax

• 3 points for biggest local contentcommitment in Exploration Phase> P3 = 3 x LCe/LCemax

• Total points = P1 + P2 + P3

Brazil RoundBrazil Round 3 3Contract Signature

• May be signed up to 90 days afterbidding

• Requires Brazilian company• May also be signed by affiliate of

qualified company, if desired> Additional documentation required

• Qualified company still providesgeneral performance guarantee

Brazil RoundBrazil Round 3 3Explanation of Information

• Telephone> Simple queries only

• Fax, e-mail> Simple queries - dealt with directly> More complex queries - may be posted on

website

• Legal and technical workshop> Only for companies who have paid

Participation Fees> Date to be determined

• Contact Round 3 Office


Websitewww.Brazil-Round3.com

• All information pertinent to Round• Regularly updated, containing> Initial and Final Tender Protocols> Basic Round 3 Information / Schedule> Relevant legislation> FAQs> Press Releases

• Point of contact for Round 3 Office• Websites for previous Rounds still

available

Brazil RoundBrazil Round 3 3Why Brazil Round 3 ?

• Round 1> Laid platform for participation by large multinational

players> Established Concession Agreement and process

• Round 2> Provided easier participation for smaller companies> Broader range of opportunity

• Round 3> Blocks reflect significant input and nominations from

industry> Large amounts of data available from “Spec” surveys> Larger offering with wide range of opportunities

Brazil RoundBrazil Round 3 3In Summary...

• A huge and growing market• Outstanding early results from

exploration activities by newentrants

• Fair contractual and fiscalconditions

• Encouragement to companiesof all shapes and sizes