Abstract

In order to improve the attraction of petroleum exploration and production investments, Brazil is reviewing their resource allocation systems to increase their attractiveness to private investments. This paper aims at analyzing the Permanent Offering, an open resource allocation system (or simply Open Acreage), recently adopted by the country to award acreages for the concession of upstream activities. The analysis focuses on a comparison among the main contractual features of both the new system and the regular bidding rounds promoted by the Brazilian regulation authority, the National Petroleum, Natural Gas and Biofuels Agency - ANP. Findings show that Brazil´s government aims at making the licensing process more competitive, dynamic and less bureaucratic in order to boost the domestic oil industry and promoting local economic development. Brazilian Permanent Offering continuously provides acreages with diverse exploratory environments and attractive resources, as well as marginal declining fields that have not been awarded in previous auctions or have been returned to ANP, after unsuccessful exploratory activities. Moreover, another important Government’s concern is to monetize Brazil´s significant petroleum resources while they are valuable in a context of energy transition and global divestments in the oil sector.