The Oil and Gas Industry in Brazil

Transcription

1 The Oil and Gas Industry in Brazil Felipe Kury Director S t a v a n g e r - N o r w a y J a n u a r y, 9 th 2019

2 The ANP s institutional presentation is based on current and reliable information, but no representation or warranty is made as to its accurateness and completeness, and it should not be relied upon as such. Projections and estimated values are included without any guarantee as to their future realization. Forward-looking data, information, projections and opinions expressed during the presentation are subject to change without prior notice.

3 Agenda Outline 1 New Government and Oil & Gas Industry at Glance in Brazil O&G Brazil - Timeline of Events Petrobras Repositioning and Opportunities 2 3 O&G Investment Opportunities in Brazil Upstream - Current State & Opportunities Natural Gas Market Ongoing Initiatives Downstream Challenges and Opportunities Final Remarks Ongoing Energy Transition Brazil O&G Sector Transformation 3

4 New Government Structure & Priorities 4

5 Brazilian Elected Officials Inauguration Day Jan 1st President of Brazil Jair Messias Bolsonaro Vice - President of Brazil Gen. Hamilton Mourão 5

6 22 Ministries Mainly Concetrated in 4 Areas Pres. GABINET ECONOMY INSTITUTIONAL INFRAESTRUCTURE SOCIAL WELLFARE Onyx Lorenzoni CHIEF of STAFF Paulo Guedes ECONOMY Sérgio Moro JUSTICE Tarcísio Gomes INFRAESTRUCTURE Luiz Mandetta HEALTHCARE Gustavo Bebianno SECRETARIA GERAL Roberto Campos CENTRAL BANK Ernesto Araújo FOREIGN AFFAIRS Alm. Bento Lima ENERGY AND MINES Ricardo Vélez EDUCATION Gen. Augusto Heleno SECURITY & INTELLIGENCE Tereza Cristina AGRICULTURE Gen. Azevedo e Silva DEFENSE Marcos Pontes SCIENCE & TECHNOLOGY Omar Terra SOCIAL DEVELOPMENT Marcelo Álvaro GOVERNMENT RELATIONS Marcelo Álvaro TOURISM Wagner Rosário CGU Ricardo Salles ENVIRONMENT Damares Alves HUMAN RIGHTS André Mendonça AGU Gustavo Canuto REGIONAL DEVELOP. 6

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8 The O&G sector in Brazil - Timeline Upstream 1953 End of monopoly (Oil Act) Bidding Rounds (Concession contracts) New E&P policies Petrobras repositioning (focus on large offshore fields, mature fields divestment) Petrobras monopoly Risk Contracts: minimal impact 1997 New pre-salt law (Petrobras sole operator PSC) 2018 Downstream, Logistics and Natural Gas 1953 End of monopoly (Oil Act) Petrobras remains dominant 2009 Petrobras repositioning (in favor of an open and competitive market) Petrobras monopoly Repurchase of Repsol's stake in REFAP 8

9 Petrobras New Strategic Direction E&P: Concentrated Resources in the Pre-Salt Polygon (Deep or Ultra-Deep Water E&P) Natural Gas: Reduced Investments, and Divestments of Key Assets Downstream: Investments Decreased Substantially, Partial Divestments of Refineries Petrobras repositioning demands regulatory actions to attract new investments in refining, infrastructure and logistics. Market economy must prevail without monopoly and/or state intervention. 9

10 Unlocking Brazil s Oil and Gas Potential Brazil has a continental-size, however Less than 5% of the sedimentary areas are contracted 2 Basins without a single well Only ~ 30,000 wells were drilled in Brazil 10

11 Agenda Outline 1 New Government and Oil & Gas Industry at Glance in Brazil O&G Brazil - Timeline of Events Petrobras Repositioning and Opportunities 2 3 O&G Investment Opportunities in Brazil Upstream - Current State & Opportunities Natural Gas Market Ongoing Initiatives Downstream Challenges and Opportunities Final Remarks Ongoing Energy Transition Brazil O&G Sector Transformation 11

12 Upstream Current State and Opportunities Upstream Current Scenario and Opportunities 12

13 The most excitement at the moment is from the deepwater, Mr Brown* told the Financial Times, saying projects in Brazil, the Gulf of Mexico and West of Shetland in the North Sea were among the most attractive. * Andy Brown, Shell s head of exploration and production March Exxon Mobil and other oil companies opened their wallets at an offshore oil auction in Brazil on Thursday in a sign that the industry was stepping back into the deepwater drilling business. It was the third encouraging Brazilian offshore auction since September, and a vote of confidence for the country s energy reform program ( ) This fresh investment, notably in offshore pre-salt basins, follows the introduction of significant regulatory changes to the oil and gas sector within Brazil. 13

14 Three Main Strategic Objectives 01 Increasing the Exploratory Activities 02 Maximizing Production and Reservoirs Recovery Factors 03 Attracting the Right Player for each Environment 01 14

15 Main Regulatory Enhancements 6 Bidding Rounds (in 2017/2018) 2016 Petrobras No Longer Sole Operator at the Pre- Salt Polygon (Law 13,365/2016) 2017 Three Bidding Rounds PSA 2 & 3 / Round 14 New Simplified Contract Rules New Local Content Rules Bidding Rounds Scheduled 2018/2019 Exploratory Phase Extension (Rounds 11 and 12) REPETRO Extension of Tax Regime Exemption 2018 Three Bidding Rounds PSA 4 &5 / R15 Rules Local Content Waver (Round Zero up to Round 13) Open Acreage Offer of Entire Onshore Royalties Reduction to Mature Fields (enhance incremental production in mature fields) Collateral Burden Reduction (100% to 30% in marginal fields) New E&P Database (BDEP) (ANP/IBAMA joint Environmental Database) Enable Reserve Based Landing (RBL) Bidding Rounds Scheduled 2020/

16 Three Different E&P Environments Average oil production per well 16,691bpd 85 wells 1,702bpd Onshore Conventional Offshore Pre-Salt Mature Basins and New Frontier Basins (mostly gas prone). Potential for unconventional to be unleashed. All the East Margin besides the pre-salt region and Equatorial Margin, including new frontier areas and a significant number of large mature fields. One of the World s hottest oil play, home to the largest offshore oil discoveries in the last decade. 16bpd 627 wells 8% 37% 55% * September/2018 6,744 wells 16

17 Thousand bpd bpd 01/ / / / / / / / / / / / / / / /2018 Thousand bpd Increasing Exploration and Revitalizing Activities Development Wells Concluded 2015/ % Exploratory Wells Concluded / % Pre-salt Oil Production 1.600, 2012/ , 1.200, 729% 1.000, % Onshore Oil Production (September, 2018) 107,434 *Updated (10/30/18) 2012/2018, 2.000, 1.500, Pos-Salt Campos Basin Oil Production 2012/ % ,,, ,,,, Northeast Basins Offshore Oil Production 2014/2018 (SEAL) 62% SEAL RNCE 17

18 Maximizing Recovery Factor 14% 23% 21% 35% 1% addition in Campos Basin: 985Mboe New Reserves Campos Basin Campos Basin Brazil World 1% addition in Onshore: Current O&G Recovery Factor Final O&G Recovery Factor Final O&G Recovery Factor Average Final O&G Recovery Factor 200Mboe Source: ANP (December 2017) 18 New Reserves

19 The New Pre-Salt Exploratory Scenario YTD (includes 6 th pre-salt round) 19

20 Bidding Rounds Results Bidding Round Acquired Blocks 37 (24 onshore and 13 offshore) Signing Bonus (US$ billion) Registered Companies Winner Companies Premium ,556% % % % % % Total Great Competition with Fantastic Results! 20

21 Estimated Impact from Recent Bidding Rounds New Investments Tax Revenues Million bpd (added peak production) New Platforms Hundreds of Wells!

22 Bidding Rounds Schedule st 1 st Semester 3 rd Q To be defined: 22

23 Open Acreage 23

24 16 th Bidding Round at Glance 42 Blocks Total Area: ~30,000 km 2 Conventional Offshore Areas Pernambuco-Paraíba Jacuípe Camamu-Almada Campos & Santos Basins Sector Block on Offer R16 Sedimentary Basin Basement 24

25 Bonus: R$ 0.6 B Profit Oil: 36.98% VOIP: 0.42 B bbl 6th Pre-Salt Bidding Round 5 blocks Included Bonus: R$ 0.5 B Profit Oil: 26.09% VOIP: 1.9 B bbl Aram Sudoeste de Sagitario Bumerangue Cruzeiro do Sul Norte de Brava Bonus: R$ 5.05 B Profit Oil: 24.53% VOIP: 29.8 B bbl Bonus: R$ 0.55 B Profit Oil: 26.68% VOIP: 3.6 B bbl Bonus: R$ 1.15 B Profit Oil: 22.87% VOIP: 5.8 B bbl VGIP: 114 B m³ Unrisked oil in place volume (P50) ~ 42 billion barrels 25

26 Concession bidding rounds

27 Pre-Salt Bidding Rounds Areas Proposed by ANP to CNPE (National Council of Energy Policy) 1. Aram 2. Sudoeste de Sagitário 3. Bumerangue 4. Cruzeiro do Sul 5. Norte de Brava 1. Esmeralda 2. Agata 3. Água Marinha 1. Ametista 2. Tupinamba 3. Jade 4. Turmalina 27

28 Transfer of Rights Potential Upside 10 Fields 10.8 Billion boe ( GCA P50 recoverable volumes) 17 New Platforms USD 489B Tax Revenues Brent = US$ 70/bbl Exchange Rate = USD/BRL= 4,0 28

29 Attract Suitable Players Pre-Salt Conventional Offshore Onshore 01 Supermajors Major Operators 02 Major Operators Exploration Specialists Mature Field Players 03 Small and Mid - sized Companies Supported by Oilfield Service Companies, Suppliers and Financial Institutions 29!

30 Brazil E&P Potential M bpd New FPSOs Mature Fields/ Basins New Frontier Basins Forecast (next 10 years) Transfer Rights Upside ~ M bpd The Most Prominent deepwater environment Improve Recovery Factor 1% addition 2,2Bboe reserves US$18B investments We barely Know our Potential. Unconventional resources under discussion Contracted / In Progress Need to be unlocked 30

31 Natural Gas Market Ongoing Initiatives 31

32 The Natural Gas Market in Brazil August, 2018 SUPPLY 101 Million DEMAND 92 m³/d Million m³/d 92 Million m³/d Domestic Supply Imports from Bolivia LNG Imports 52% 26% 22% Consumption by Sector Industrial Power Generation Automotive 45% 36% 7% Cogeneration Others 32 3% 9%

33 Developing a Competitive NG Market PETROBRAS Sole Provider and Coordination Gathering Pipelines Production Processing 81% of NG Production Purchase almost 100% of all private NG production Regaseification 100% GNL Imports Diversified and Competitive Market Production Gathering Pipelines Processing Increase of # of agents Competition: Access to Essential Infraestructure (EFD) Regaseification transport Bolívia Imports 100% Bolivia Imports ANP approves transportation tariffs Unbundling transport Bolívia Imports & Storage Increase # of Agents City Gate LDCs* Shareholder in 19 of 25 LCDs * Local Dist. Company (LDC) Petrobras holds 100% of the Risks City Gate LDCs* Risk Sharing by Diversified Market Need to diversify demand: trading/sales 33

34 Potential to Greatly Improve NG Infrastructure Current NG infrastructure is very limited The NG Market is concentrated and relevance Fonte: Theodora,

35 Natural Gas Market Development (HUBs development) Indexes Derived for LT Contracts Future Indexes Curve Future Exchanges ~ 10 Years Non-Physical Players Enter OTC Trading Rules and Standardized Contracts Price Discovery and Dsiclosure (Transparency) Brasil Bi-Lateral Trades Third Party Access to Pipelines and Terminals Hubs development path to maturity, European Model fonte: H.Rogers (OIES) Access to 3rd party Infraestructure and LNG Terminals Increase and Diversified Number of Agents in the Market (Increase Liquidity) Standarized Contracts 35

36 Key Initiatives to Develop the NG in Brazil Need to prioritize domestic gas instead of imported gas Increase consumption in power generation/ Need to search for new uses Increase in the domestic supply (pre-salt associated gas) A number of opportunities to invest in infrastructure (terminals, gas processing plants, pipelines) LDCs directly contracting Bolivian natural gas (2019) Petrobras repositioning 01 An OPEN, DIVERSE and COMPETITIVE Market 07 New policies (Gas to Grow Bill) 36

37 Measures to Increase Competitiveness in the NG market Ongoing Initiatives and Regulation Open-season for Bolívia- Brasil Pipeline Capacity Offering (entry-exit regime) Gas release periodic auctions Public consultation with EPE (public energy company) to define contract clauses for the replacement of LNG by domestic gas (regional energy auctions with NG in the base) Open access to essential infrastructures National pact between the Federal Government and the States to harmonize the rules Transparency of commercial transactions between related parties Unbundling 37

38 Downstream Ongoing Initiatives 38

39 Downstream Overview in Numbers 2018 Average (until July) Solid and Growing Participation of Biofuels National Sales of Oil Products ~2.3 Million bpd Imports (ethanol, naphtha, QAV, LPG, Gasoline e Diesel) 454 Thousand bpd National Sales of Biofuels 622 Thousand bpd 17 Refineries 80% Refinery Utilization factor in July/2018 Monopoly De Facto 98% of the installed refining capacity is owned by Petrobras 378 Ethanol Mills 51 Biodiesel Plants 39

40 Downstream Midstream and Overview Downstream in Numers # of Agents Fuel and Biofuel Facilities - 18 Refinaries Ethanol Producers Import &Export trading Companies of Oil Products - 98 Lubricants Producers Lubricants Importers - 12 Re-Refinaries on 17 Lubbricants - 51 refineries Biodiesel Producers Distributors Distributors of Fuel and Biofuels - 18 Distributors of Solvents - 20 Distributors LGP - 27 Distributors of Asphalt - 7 Jet Fuel Distributors 80% Refinery utilization factor in July/2018 Fuel/Biofuel Resellers and Transportation -375 TRR Fuel and Biofuel Resellers Resellers LGP Resellers of Jet Fuel -21 Lubricant Collectors - 21 TRR-NI Monopoly De Facto 98% of the installed refining capacity is owned by Petrobras Industrial and Large Comercial Consumers Large Comercial Consumers - 50 Industrial Consumers of Solvent 130,058 Agents 40

41 Fuels and Biofuels Profile by Volumes * Dados declaratórios informados pelos agentes à ANP pelo Sistema SIMP. ** Fonte Dados de GNV: ABEGÁS 41

42 Vehicles Matrix Ano Ano Gasolina A 31,8% Gasolina A 32,4% Etanol Total 18,0% GNV 2,1% Etanol Hidratado 9,8% Etanol Anidro 8,2% Biodiesel 3,3% Óleo Diesel A 44,8% Etanol Total 17,4% GNV 2,0% Etanol Hidratado 9,1% Etanol Anidro 8,3% Biodiesel 3,7% Óleo Diesel A 44,5% Fonte: Sistema SIMP/ANP. Dados declaratórios informados pelos agentes à ANP. ** Valores expressos em TEP (equivalência calorífica). 42

43 Biofuels Blends Greatly Contribute to Meet COP21 Targets Main Assumptions - PDE GDP Growth ~2,5% yr until 2026 Transportation Public Transportaion Growth : 4% yr. Transportation of Goods and Fuel/Biofuel: 3.5% yr. Ethanol Blend to 27% (E27) Biodiesel 15% em 2025 (B15) Projections consider biofuels volumes to increase in order to meet COP-21 Targets (~26% ) Expeced Demand Otto Cycle and Diesel Should reach ~ 180 Bi liters by Growth Rate Projections : Ciclo Otto: + 11,2 % Diesel B: + 35,1% Growth (%) 68 % 28 % 267% 56% Etanol (A+H) Gosolina A Biodiesel Diesel A Demand for Fossil Fuels/Biofuels expected to reach ~180 Bi liters in 2030 Higher growth rates required for Biofuels to meet COP-21 targets. 43

44 Creating an Open and Competitive Market Monopoly Prices disconnected from the international market Required New Investment Dependency on Imports De facto Monopoly Import Parity Risk of new price controls Adoption of anticompetitive practices Required New Investment Dependency of Imports An Open, Diversified and Competitive Market with Multiple Players Market Efficiency More Transparent Prices Formation New Investments Increase Less Dependency on Imports PAST PRESENT EXPECTED FUTURE 44

45 Refining: history of fuel pricing policy 1953 Start of practicing International Prices (import parity) 2002 Petrobras s new pricing policy (October): monthly adjustments for diesel and gasoline prices 2016 Truckers Strike (may) 2018 A new ordinance to bring transparency to the price formation Interference in fuel prices Government s subsidies (R0,46/l) End of monopoly (Oil Act) Remains Petrobras dominant Increase in exchange rate and oil price Petrobras s new pricing policy (July): daily adjustments for diesel and gasoline prices Increase in exchange rate and oil price 45

46 Opportunities in the refining sector 60% 60% PETROBRAS DIVESTMENT PLAN INTERNATIONAL PRICES DEMAND GROWTH LOGISTICS INEFFICIENCY Gasoline/Diesel Imports: ~ 4 to 6 US$/bbl Oil Exports: ~ 2 to 4 US$/bbl Total potential by barrel of oil product: ~ 6 to 10 US$ INCREASE IN OIL EXPORTS Source: Petrobras Opportunities for investments in refining highly dependent on the demand growth and Petrobras divestment plan. It depends on market prices and can benefit from the cost of the logistical tour 46

47 Fuel Prices History 47

48 Observations on the History of Fuel Prices Fuel prices misaligned from international market during economic recessions since 2002, particularly (2008/2009, 2011/2014, and 2014/2016) Misaligned prices to the international parity is under econometric analyzes. Important to understand impact on both production and distribution of fuel/ biofuels as whole Petrobras pricing methodology seems to create a barrier to competition and difficult market dynamics of price formation. It is important to create a more transparent pricing methodology to all import parity and delivery destinations 48

49 Fuel Prices Formation Implications Prices misalignment makes it difficult to attract new investments by the local fuel industry and impacts the external competitiveness of local industry. Local Industry is exposed to significant cost variations disconnected from the international market Fuel prices alignment to international markets is fundamental for the success of the Brazilian Oil and Biofuels industry. It is critical for both to attract new investments and to reduce imports 'dependence Transparent price formation has social legitimacy which enables the development of a Free, Open and Competitive Market 49

50 Measures to increase competitiveness in downstream sector Ongoing Initiatives Improving price formation transparency helps develop market efficiency and increases competition. New ordinance to bring transparency in price formation and disclosure CADE's (antitrust body) analysis on the concentration in the refining market and CADE / ANP joint studies Public Consultation: regulatory protection of brand loyalty Public Consultation: verticalization of the fuel distribution chain Public Consultation: LPG fractionated filling and LPG commercialization in containers of other brands Ongoing Studies Elimination of LPG price differentiation and restrictions on use to incentive competitiveness in the LPG market Evaluation of ANP s role in combating tax fraud Adoption of measures to inhibit tampering and tax evasion 50

51 Agenda Outline 1 New Government and Oil & Gas Industry at Glance in Brazil O&G Brazil - Timeline of Events Petrobras Repositioning and Opportunities 2 3 O&G Investment Opportunities in Brazil Upstream - Current State & Opportunities Natural Gas Market Ongoing Initiatives Downstream Challenges and Opportunities Final Remarks Ongoing Energy Transition Brazil O&G Sector Transformation 51

52 Final Remarks 52

53 Future: Energy Transition Future: a high speed of transition and an increase of competition Competitive pressures within global energy markets will intensify The global energy mix will the most diverse the world has ever seen by 2040, with oil, gas, coal and non-fossil fuels each contributing around 25% Demand for oil grows before plateauing in the late 2030s Renewables are by far the fastest-growing fuel source, increasing five-fold and providing around 14% of primary energy Source: BP Energy Outlook 2018 The transition to a low carbon economy has already begun Choice of society and governments Technologies can accelerate Change in mobility (EV, autonomous, apps) Pick demand until 2040 Brazil has to accelerate O&G activities to generate value from its reserves seize the opportunity 53

54 O&G Sector in Brazil Expected Outcome Unique E&P opportunity: immediate reserves certification; fast production development; reserves and production growth First ever effective opening in the natural gas market Creation of a competitive, open, diverse and internationally recognized refining and fuels markets Development of a diverse and competitive supply chain and services market The greatest transformation in the Brazilian E&P sector which started back in

55 Potential Investments in the O&G Industry Sector Investments (US$ billion) E&P 568 How much investments in the Oil, Gas & Biofuels Industry would be necessary to develop all the Brazilian potential in the next 10 years? Refining, Processing and Petrochemical Plants 58 Biofuels 28 Investments far above the capacity of one company Pipelines 10 Logistics Supply 8 Total 672 Need to attract many companies to invest in the country 55

56 ANP- National Agency of Petroleum, Natural Gas and Biofuels Av. Rio Branco, 65, 21 st floor Rio de Janeiro Brazil Phone: +55 (21)

57 Appendix 57

58 Local Content Clause in Exploration and Production 58

59 Improvements in LC rules: contracts signed until 2015 Potential results 59

60 Evolution of models Free offer from LC Global Only Incentives Declaration of 1 st Part Concession: Limited offers (min-max) Sharing and CO: fixed commitments Global + Items and Sub-items 3rd party certification Fixed Commitments Global / Macro groups 3rd party certification R 1 R 3 R 5 R 7 R 9 Partilha 1 R 12 R 11 Partilha 3 Partilha 2 R R 2 R 4 R 6 R 10 R 13 R 15 Partilha 4 e 5 Limited Offers - Minimal Global + areas of activity Declaration of 1st part 60

61 Current Regulatory Arrangement Concession contract - LC Commitments - Milestones for measuring - Penalty Resolução ANP n 19/ Certification Methodology - Scope of Certification Resolução ANP n 25/ Requirements for Certification Agency Accreditation and Maintenance Portaria ANP n 180/ Investment Report R1 - R6 - Scope of commitments Resolução ANP n 27/ Expenditure Report R7+ - Scope of Certification Resolução ANP n 726/ Waiver of hiring commitments Resolução ANP n 20/ Neutralization of global commitments 61

62 Current contracts Concessionaire's Commitment to Local Content (1/2) (i) Onshore Exploration Phase: 50% Development stage: 50% (ii) Offshore Exploration Phase : 18% Development Stage / Module: Well Construction: 25% Collection and Disposal System: 40% Production Unit: 25% 62

63 Current contracts Concessionaire's Commitment to Local Content (2/2) Contracting procedures must include participation of Brazilian suppliers among companies invited to tender; Guarantee of preference to the contracting of domestic suppliers with conditions of price, term and quality better or equivalent to those of foreign suppliers; Obligation to submit Local Content Reports in accordance with applicable legislation. 63

64 Current contracts Local Content Measurement Certified by LC Certificates Milestones for measuring local content: Completion of the Exploration Phase;; Closing of each Development Module; and Completion of the Field Development Stage without Modular Development. For purposes of measurement, Development Stage begins with the Declaration of Commerciality and ends, for each Development Module, with the first of the following occurrences: 10 (ten) years after the First Oil Extraction; Termination by the Concessionaire of the Development Module Development; or Realization of investments foreseen in the Development Plan, except those related to the abandonment of the field. UEP: the expenses related to the unit operating rate should not be accounted for for purposes of calculating the Local Content. 64

65 Current contracts Local Content Surplus Permitted transfer between Exploration Phase and Subsequent Development Stage or Module, at the discretion of the concessionaire Exceedances verified in Development Stage Modules may be transferred to the subsequent module, only among the same Macrogroups. Request for transfer of surplus shall be submitted to the ANP upon receipt by the Operator of the Local Content Inspection Report of the Production Development Stage or subsequent modules in the case of Modular Development. 65

66 Current contracts Fine for Non-compliance of Local Content Proportional to LC Not Performed (NP): % NP <65% of Minimum Local Content: fine will be 40% on the value of Local Content Not Performed. NP 65%: increasing fine from 40%, reaching 75% of the Minimum Local Content value, in the case of 100% Unrealized Local Content. If there is a simultaneous noncompliance with more than one commitment for Macro-groups of the Development Stage, the amount of the fine will correspond to the sum of the fines for each Macro Group. 66

67 Current contracts Certification - How does it work? Suppliers Operators ANP Certification Quarterly Reports Certified products Acquisition and reporting for ANP Local Content Reports Non-certified products 67

68 Resolução ANP nº 726/2018 (Waiver) Scope of Exemption mechanisms, Adjustment and Transfer Concession Contracts from the Seventh to the Thirteenth Round, Onerous Assignment and the First Round of Production Sharing Exemption Applicable to specific hiring within the commitment lines Exemption Authorization Waiver Non-existence of Brazilian supplier Excessive prices Excessive time limits New technology, not existing in the country 68

69 Resolução ANP nº 726/2018 (Waiver) Contractual Addendum Subject to all active contracts; Proposal: new clause mirrors more recent contracts, with the exception of the minimum commitment of the UEP group, divided into three segments Onshore Offshore Exploration 50% Development stage 50% Exploration 18% Well Construction 25% Collection and Disposal System 40% Engineering 40% Development stage Machines and 40% Production Unit Equipment Construction, Intergration and 40% Assembly 69

70 Resolução ANP nº 726/2018 Effects of Contract Amendment Effects on Phases in progress Contracts in the Exploration Phase: new rules applicable to the Exploration Phase and to the Production Development Stage. Contracts in the Production Phase: new rules applicable only to the Production Development Stage, respecting the periods for determining the obligation related to the Local Content. Counterpart of the Amendment End of the possibility of requesting Exemption and Adjustment (automatic extinction and filing of formulated requests); Renunciation of the Concessionaire to any claim that may have against the ANP due to fines already paid for noncompliance with the Local Content obligation. 70

71 Resolução ANP nº 726/2018 Main Characteristics of the Contract Addendum: Replicates the clause of the most recent contracts, with the exception of the minimum commitment for the UEP; Requirement for certification of contracting as of the signature of the Addendum (in the case of contracts prior to Round 7, in which there was no certification requirement); Temporal benchmarks aligned with those of recent roundsmarcos temporais de aferição alinhados aos das rodadas recentes; Methodology of fine calculation also follows more recent contracts; Conclusion of the addendum shall not lead to review of administrative decisions that are final and unappealable in sanctioning procedures; Waiver of any suit that may have against the ANP due to fines already paid for noncompliance with the Local Content obligation; Extinction of the possibility of request of Waiver and Adjustment. 71

72 Resolução ANP nº 726/2018 Clarifications on the effects of the Contractual Amendment If the Amendment has effect only for the Development Phase, the waiver request made by the Operator for the Exploration Phase shall be analyzed under the terms of the original clause; Once the Contractual Amendment has effect for an Unfinished Phase, the new index for the entire Phase will be observed, and not only as of the date of signature of the Addendum. Documentation required for the request to add the contract: Submission of the number of required channels of the Contract Addendum, in accordance with the model of ANP Resolution n. 726/2018, signed by the legal representatives, with the blank date; Sending of power of attorney with the necessary powers to sign the Addendum; 72