By Brazil Stock Guide – Brazil’s oil regulator has surpassed 30 compliance agreements that convert penalties into investments, mobilizing about 2 billion reais ($400 million) for the domestic oil and gas supply chain.
According to a statement released by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), a total of 31 Termos de Ajustamento de Conduta (TACs) have been signed since September 2022, when the first agreement was executed.
Five of these agreements have already been fully completed and closed, highlighting the effectiveness of the mechanism and the ability of companies to meet their commitments, the agency said.
The TAC framework allows companies to replace fines related to non-compliance with local content requirements by committing to new investments in Brazil’s oil and gas industry. The measure applies to exploration and production contracts concluded or with phases completed before April 2018.
The agreements have generated an average investment of around 70 million reais per deal, with some exceeding 200 million reais, underscoring their economic relevance.
ANP expects the total volume of investments tied to these agreements to continue growing significantly through December 2027, the deadline for submitting new requests.
In operational terms, most TAC commitments have been concentrated in three areas: procurement of goods and services in so-called “Round Zero” fields, use of excess local content in other contracts within regulatory limits, and targeted projects such as exports and decommissioning activities.
For international projects, operations must be carried out by the TAC proponent or affiliated companies within the same corporate group. Decommissioning activities may also occur in third-party areas, subject to approval.
Local content rules in Brazil require oil and gas operators to prioritize domestic goods and services, aiming to boost industrial development, job creation and technological advancement. Policy guidelines are defined by the Ministry of Mines and Energy and the National Energy Policy Council, with ANP responsible for enforcement.