Updated information was published today (5/27) on individualizations and annexations with a request for amendment of the Local Content Clause within the scope of ANP Resolution No. 833/2020, which regulates the local content criteria to be adopted in the agreement and commitment individualization of production and the annexation of areas in contracts for exploration and production of oil and natural gas.

The ANP received 18 requests, which resulted in the amendment of 7 production individualization agreements and 2 annexations of areas, with 4 requests rejected for not meeting the Resolution, in addition to 5 withdrawals. The published file presents information on the status of the amendment request and its details, in relation to the contracts involved and which contract was chosen.

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Local content commitments are those assumed by oil and natural gas exploration and production companies to contract a minimum percentage of national goods and services. ANP Resolution No. 833/2020 allowed the signatories of an agreement or commitment to individualize production or annexation of current areas the possibility of adding their respective local content clause, choosing the clause of one of the contracts involved. The deadline for interested companies to request amendments to these instruments ended on May 24, 2021.

The individualization of production is a procedure that aims to divide the production result and rational use of oil and/or natural gas, when a deposit extends beyond the block granted or contracted under the production sharing regime. If all the blocks covered by the deposit belong to the same company or consortium, the commitment to individualize production (CIP) is made; and if they are from different companies or one is not hired (belonging to the Union), the production individualization agreement (AIP) takes place.

The annexation of areas, on the other hand, consists of the incorporation of a certain commercial discovery to a producing or potentially producing field, expanding its limits with a view to the joint exploitation of oil resources. In this case, both must also belong to the same company or consortium and be required by the operator. It is a solution for cases of dependent reservoirs that need to be incorporated into others to become commercially viable.