Unitization of oil and gas fields in Brazil

ABSTRACT

Since the 1997 end of the monopoly on the exploration and production of oil and gas in Brazil, there has been an explosion of activity in this industry. This includes four instances of approved unitization involving Petrobras (owned by the Brazilian government) and another 12 unitization cases being evaluated by ANP, the Brazilian oil industry regulator. In most of these cases, a polarization between private oil/gas companies operating in Brazil and Petrobras was apparent. In addition, unitization is further complicated in this country because three distinct operating regimes are allowed: concession contracts, production sharing agreements, and onerous assignment. This paper evaluates these strategies according to game theory, makes policy recommendations, and also seeks to support the drafting of regulations, suggesting it would be better to aim at exploration/production to promote rapid convergence in unitization.

KEYWORDS:

• Common-pool
• concession contract
• regulation and development

Notes

¹ The name ‘pre-salt’ was given to explorations made below the salt layer on the Brazilian continental shelf and the region bounded by Law 12.351/2010.

² The concession regime covers about 98% of Brazilian sedimentary basins.

³ Situations in which the production field has low productivity