Popular Action In São Paulo May Prevent The Auction Of Excesses From The Onerous Assignment

Popular Action in Federal Court of São Paulo Requests Suspension of Auction by Contesting the Agreement of Co-participation of the Winners with Petrobras

The Mega Auction of Excess Surpluses from the onerous assignment, scheduled for next Wednesday (11/06), is threatened by a popular action in the federal court of São Paulo. BP and Total Withdraw from Participating in the Excess Surplus Auction, See Here!
Filed by the law firm Garcez, the action is a precautionary measure requesting the suspension of the auction due to the illegality of the agreement governing the co-participation between the new operators and Petrobras regarding the excess oil from the onerous assignment, with the state-owned company remaining as the operator of the original volumes.

The situation will apply to the fields of Atapu and Sépia, as Petrobras will only make offers for the fields of Itapu and Búzios and will operate the excesses, with at least 30% of the new contracts.

The auction is being called a mega auction and will offer reserves in four offshore pre-salt fields in the Santos Basin (Atapu, Sépia, Itapu, and Búzios) on Wednesday (11/06) and could raise more than R$ 106 billion in signing bonuses paid by the winners.

The action also contests the discounts in the calculation of revenue based on federal tax assessments (IRPJ and CSLL) under the sharing regime, regulated by MP 795 of 2017, issued during the Temer government, claiming it would harm public finances.

In the government’s opinion, the injunction should not be granted since the auction regulations were extensively debated in a public consultation and approved by the TCU.

This is not the only attempt to prevent the auction; Ildo Sauer and Guilherme Estrella drafted a technical note, through the Institute of Energy and Environment of the University of São Paulo (IEE USP), against holding the auction.
Both believe that the entry of private or foreign companies into the pre-salt threatens Brazil’s energy sovereignty and argue that the best contracting model would be through Petrobras, controlled by PPSA and ANP. (See the Full Technical Note Here).

Ildo Sauer served as Director of Gas and Energy at Petrobras from 2003 to 2007 and is a full professor at IEE USP, while Guilherme Estrella was Director of Exploration and Production from 2003 to 2011, precisely the time when the first discoveries in the pre-salt were confirmed.

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