With its Polvo Field incremental production royalties cut from 10 percent to 5 percent, PetroRio has received the first royalty reduction under the terms of Brazil's National Agency of Petroleum, Natural Gas and Biofuels (ANP) Resolution No. 749/2018. 

As Petrobras divests itself of mature fields, purchasers can request the extension of concession contract terms, including a reduction of royalties, by committing to new investments to increase production in these fields.

As we previously noted, only mature fields—with 25 or more years of production or having accumulated production equal to or greater than 70 percent of the volume expected to be produced, considering the proven reserves—will be eligible to obtain the reduction of royalties. 

Tauil & Chequer advised PetroRio in approving the development plan review, extending the concession contract, presenting the parent company guarantee (PCG) as a guarantee for the decommissioning activities and requesting the royalty reductions. 

We remain at your disposal for any clarification or further information.

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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.