ANP Launches Public Consultation For Decommissioning Oil And Gas Fields

ANP Estimates That the Amount Needed for the Decommissioning of All Oil and Gas Fields Currently in Development and Production Would Be Around R$ 158.58 Billion

ANP – The National Agency of Petroleum, Natural Gas and Biofuels began a public consultation last Monday (31/8), for a period of 60 days, regarding the resolution that will regulate procedures for presenting guarantees and instruments that ensure the decommissioning of production facilities in oil and natural gas fields. The 75th Biodiesel Auction by ANP Reached the Level of 6 Billion Reais

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According to ANP, the public hearing on the topic will take place on 24/11, via videoconference. This regulation, highly anticipated by the oil and gas market, gained momentum within Petrobras’ divestment plan and the regulatory agency’s transfer process for greater legal security and transparency for investors.

Oil and gas fields, when they reach the end of their productive life (that is, when production is no longer sufficient to sustain operating costs), need to be decommissioned, as per contractual obligation.

Therefore, decommissioning is the set of activities associated with the definitive interruption of operations of the facilities, permanent abandonment and sealing of wells, removal of installations, proper disposal of materials, waste and rejects, environmental rehabilitation of the area, and preservation of local navigation safety conditions.

These activities, which require expenditures, occur precisely at the moment when the oil fields no longer present a financial return. Therefore, contracts for the exploration and production of oil and natural gas contain clauses determining both the obligation to conduct the abandonment and the deactivation of the facilities according to applicable legislation and the requirement to present financial guarantees to ensure the resources needed for this purpose.

ANP estimates that the amount needed for the decommissioning of all oil and gas fields currently in development and production, until the termination of all contracts, would be around R$ 158.58 billion.

Additionally, ANP reinforced discussions with the market and put a draft resolution out for prior consultation in March 2020. From the application of the procedures outlined in the draft to concrete cases, the National Agency of Petroleum, Natural Gas made improvements to the proposal, resulting in the draft that will now undergo the process of public consultation and hearings.