The Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) established new procedures for the provision of financial guarantees or corporate commitments related to the decommissioning of installations. Existing agreements must comply by June 30, 2023.
Resolution n.º 854/2021 from the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) enacted new procedures for E&P company provision of financial guarantees or commitments to the decommissioning of installations at conceded oil and natural gas fields, i.e., the contract-bound discontinuation of production facilities and environmental recomposition by the end of a field’s economic lifecycle, after which the production is definitively terminated. The provision of guarantees is designed to ensure that the field operators carry out decommissioning activities since they entail costs when output is low (by the end of a field’s economic lifecycle).
According to the new resolution, field operators must present guarantees (financial guarantees or an established commitment) up to 180 days after production commences, according to articles 3 to 7. The guarantees are updated annually, according to specific criteria (articles 8 to 14), while the methodologies for estimating the required guarantees and its annual update are respectively provided in chapters “III” and “IV”.
Financial guarantee modalities are described in chapter “V”, while company commitment to decommission is provided in chapter “VI”. Existing financial guarantees or company commitments, determined according to each contract between field operators and ANP, must comply with the new resolution by June 30, 2023, except in specific conditions (article 66).
The new resolution was the subject of Public Consultation n.º 10/2020, whose results are available here.
