Sale of the Union’s share of oil-sharing contracts is criticized

Liberal bet by the new Minister of Mines and Energy, Adolfo Sachsida, the sale of the Union’s share in the current oil sharing contracts managed by the state-owned PPSA (Pré-Sal Petróleo SA) is considered by experts a complex, risky and difficult to execute operation. .

A bill to authorize the sale of the company’s contracts, which sells the share of oil to which the Union is entitled in the pre-salt layer, was presented by the federal government last Thursday (9th). In the explanatory statement, the Ministries of Mines and Energy and the Economy estimated a potential collection of R$ 398.4 billion with the transfer of public rights over oil.

Experts, however, question the calculation because of the risks involved and because there are doubts about the willingness of investors to disburse hundreds of billions now that will only be recovered in the medium and long term, as oil is extracted from the fields. Contracts can last up to 35 years.

In addition, there are legal complications for advancing the proposal, such as the need to renegotiate all 19 contracts signed with 15 oil companies, national and foreign, that won the pre-salt auctions. Technicians in the control area are skeptical about the chance of advancing in this negotiation.

THE Sheet questioned the Ministries of Mines and Energy and the Economy about criticism of the operation, but received no response until the publication of this text.

PPSA negotiates the Union’s share of oil in so-called sharing contracts. In the regime, created in 2010 and applied in the pre-salt layer, the company that wins the auction is the one that offers the Union the largest share of surplus oil obtained during the contract.

The resources obtained from the commercialization of the so-called profit oil are directed to the Social Fund, created to finance actions in education, culture, sports, health and other areas.

The state-owned company is also the legal representative of the Union in these contracts and acts as an inspector of costs and also of the production curve of each field.

Members of the Jair Bolsonaro (PL) government criticize the sharing regime and prefer the concession modality, in which interested companies pay a cash grant in exchange for the right to explore a certain area.

Amid the government’s advocacy for change, Sachsida announced the inclusion of PPSA in the National Privatization Program as his first act at the head of the MME. He took office on May 11, after the resignation of Bento Albuquerque in the wake of yet another fuel readjustment announced by Petrobras.

The measure indicates, in practice, the Union’s intention to get rid of these contracts – since the company itself does not have great monetary value and would probably be liquidated in case of emptying its functions.

Government officials consulted privately recognize that the need to renegotiate contracts is an obstacle that needs to be carefully analyzed to avoid legal uncertainty.

In addition, the Executive has an assessment that it will be necessary to create incentive mechanisms so that the Union’s partners in these contracts accept the change. There is still no decision on what these stimuli could be.

The Union’s main partner in the sharing contracts is Petrobras, with participation in 13 of the 19 active contracts. But there are also partnerships with multinationals such as Shell, ExxonMobil, Total and BP, among others.

Outside the government, experts criticize the sending of the project in a period so close to the electoral calendar and point out a series of risks to the operation – both for the government and for potential investors.

Unlike a debt, which has a defined value and may have the collection rights sold to the market (generating anticipation of revenues), the value of sharing contracts depends on factors such as the amount of oil extracted, the price of a barrel and the dollar exchange rate.

All these variables can fluctuate greatly over the exploration period. In the case of quantity, a field can be more or less productive than the initial prospects. Prices vary depending on the international market.

In the evaluation of experienced technicians consulted by the Sheetthe tendency is for eventual investors to put all these risks into account, considerably reducing the amount collected by the government.

The former secretary of Petroleum, Natural Gas and Biofuels of the MME Marcio Felix, currently president of EnP Energy, says that the sale of the Union’s share in the sharing contracts is a “tempting source” of resources, but it is difficult to stipulate a minimum price when considering all the factors involved.

In addition to the risk of price fluctuations, he assesses that other events over the decades can change the attractiveness of these contracts, such as the discovery of new reservoirs or the progress of the energy transition to renewable sources.

“It’s very difficult to sell a future up front. [O contrato] It doesn’t have all that liquidity”, says Felix.

“What is the price that the control bodies will accept?”, he asks, noting that the operation would involve values ​​well above the capitalization of Eletrobras, approved by the TCU (Court of Accounts of the Union) without first leading to problems regarding the pricing of its assets. .

Given the scenario, he believes that the best buyers of the assets would be the current partners because they are already exploring oil, but even so, he sees difficulties. “[Como comprar] without knowing what will happen to Brazil? He will take the risk of a very large amount”, says Felix, ex-MME.

Professor Edmar Almeida, from the Energy Institute at PUC-Rio, believes that the simple sale of rights to future revenues — an operation known as securitization — would not be as complex as changing contracts, as proposed by the government.

“To mess with existing contracts is unacceptable. They are very complex contracts, involve many parties, and you cannot, in operations of this magnitude, generate legal uncertainty”, he says.

Almeida, who is critical of the sharing regime, says that the Union can resume the concession model for future pre-salt auctions, but “it would not be advisable or acceptable” to tamper with existing contracts.

“Looking back is like opening Pandora’s box. Because, if the current government does that, another government may also want to look back”, criticizes the professor at PUC-Rio.

“There will be a huge discount on the value because of legal, regulatory and political uncertainty. It’s a government dismantling a whole policy and regulatory framework from a previous government, and we have a polarization in the country. this sharing framework can win the elections. It might not be this one, it might be the next one. Whoever is going to buy has to know that this can be questioned”, he says.

The sharing regime was created in the government of former president Luiz Inácio Lula da Silva (PT), who is currently ranked first in polls of voting intentions, ahead of Bolsonaro.

Almeida also criticizes the fact that the bill presented by the government allows the free use of the revenues obtained from the operation — breaking the logic of the 2010 law, which sought to maximize the return on oil income by directing the funds to the Social Fund.

“The money will be used to reduce debt or pay current expenses. This ends up canceling all the effort that was made to use the resources for economic development. This bipolarity that we are experiencing is regrettable”, says the professor.