By Brazil Stock Guide – Brazil’s National Agency of Petroleum, Natural Gas and Biofuels, known as ANP, said Tuesday it will appeal a court decision removing 18 oil and gas blocks from the country’s permanent offer system.
The affected areas are in the Potiguar, Sergipe-Alagoas and Espírito Santo basins, according to a report by Valor Econômico. ANP said none of the blocks is included in the sixth permanent offer cycle, whose public bidding session is scheduled for Oct. 7.
“The blocks mentioned in the ruling are not currently being offered for the granting of rights to carry out oil and natural gas exploration, rehabilitation and production activities,” the regulator said in a statement.
Court Demands Environmental Clearance
Substitute Federal Judge Manoel Pedro Martins de Castro Filho, from the 6th Federal Civil Court of the Federal District, granted a request filed by the Arayara Institute and ordered the areas removed from the permanent offer system.
The blocks cannot be offered again until their technical and environmental compliance has been demonstrated, the ruling said. That clearance must be supported by reasoned, favorable opinions issued by the relevant environmental protection authorities.
Arayara argued in the case that the blocks overlap with conservation units, breeding grounds for endangered species, ecological corridors and territories considered highly important to Brazil’s biodiversity.
The institute’s position is that those environmental concerns should be addressed before the areas are made available to prospective bidders.
ANP Says Auction Is Not an Operating License
ANP said the inclusion of a block in a bidding process does not authorize a company to begin oil and gas exploration. The regulator argued that a detailed assessment of environmental conditions should take place later, during the licensing process.
The dispute centers in part on when environmental risks must be evaluated. Arayara is seeking proof of compliance before the blocks can be offered, while ANP maintains that project-specific reviews belong in the environmental licensing stage.
The ruling has no immediate effect on the Oct. 7 bidding session because the 18 blocks are not among the areas scheduled to be auctioned. ANP’s planned appeal will determine whether the court-imposed requirements remain in place for any future inclusion of the areas.
Permanent Offer Model
ANP’s permanent offer system is designed as a faster alternative to traditional oil and gas auctions. Under the conventional model, companies qualify for individual rounds, and the regulator issues a separate notice listing the blocks available in each auction.
The permanent system uses a single bidding notice that can be amended when new areas are added, previously awarded blocks are removed or other acreage must be withdrawn.
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