5th Auction of Brazilian Government Oil: Tender Protocol and Draft Agreement

On April 2, 2025, Pré-Sal Petróleo S.A. (“PPSA”) published the Draft Tender Protocol of the 5th Auction (“5th Auction”) for the sale of national oil from the Mero, Búzios, Sépia, Itapu e Bacalhau fields (“Draft Tender Protocol”). The Draft Tender Protocol aims to establish the rules and procedures for participation in the 5th Auction, to be held on June 26, 2025 at São Paulo Stock Exchange (B3), and provide the draft of the Crude Oil Purchase and Sale Agreement (the “Agreement”) to be executed by the winning bidders.

The volumes of oil to be sold are estimates of the future share of Federal Government’s oil in the abovementioned fields, split into eight lots. The actual volume may vary, depending on the evolution of the price of oil and the operational conditions of the platforms in the relevant fields. Fluctuations in the volumes made available will not be attributable to PPSA, which is exempt from any indemnification, reimbursement, or refund of any nature whatsoever.

The last auction (4th Auction of Brazilian Government Oil) was held in July 2024 and included four lots, corresponding to approximately 37.5 million barrels of crude oil sold. On that occasion, two lots were awarded to Petróleo Brasileiro S.A. – Petrobras; one by CNOOC Petroleum Brasil and one by PetroChina International (Brazil) Trading.

In the 5^th Auction, PPSA will offer approximately 75,500,000 barrels of crude oil (“bbl”), divided as follows (“Offered Volumes”):

The following will be able to participate as Individual Bidders in the 5th Auction: (i) E&P Companies; (ii) Brazilian Oil Refining Companies; (iii) Brazilian Oil Trading Companies that are part of an Economic Group in which an E&P Company participates; and (iv) Brazilian Oil Trading Companies that are part of an Economic Group that owns a refinery abroad. The participation of companies mentioned in item (iv) is an innovation from the 5th Auction.

The participation of Joint Bidders will also be accepted, in groups of two or three companies, of which at least one shall be a company mentioned in items (i) to (iv) above, and a maximum of two E&P Companies will be accepted. Joint Bidders will be jointly and severally liable before PPSA in accordance with the Agreement.

Consortia may also participate, provided that they consist of two or three companies. The following companies can be Consortium members: (i) E&P companies; (ii) Brazilian oil refining companies; (iii) Brazilian or foreign oil trading companies that are part of an Economic Group in which an E&P Company participates; (iv) Brazilian or foreign oil trading companies that are part of an economic group that owns a refinery abroad; and (v) Brazilian or foreign logistics companies.

Note that foreign companies may not participate in the 5th Auction as an Individual Bidder or Joint Bidder. However, they may participate as Consortium members, provided that they are not the leaders of the Consortium.

The public session of the 5th Auction will be held on June will serve to select the best proposal for the direct sale of the Offered Volumes. The session will be in person and may take up to two stages:

• 1st Stage - The criteria for defining the winning bid will be the highest offer, taking into consideration the Minimum Price Limit per Lot established in the Draft Tender Protocol for each lot. This stage is mandatory and restricted to Price Proposals equal to or greater than the Minimum Price Limit per Lot; and
• 2nd Stage – This is a Re-Bidding process, which is subject to there being no winning bid in the previous stage. The Re-Bidding will also have as criteria the highest offer and will follow the same order of Lots from the 1st Stage. In addition, the bids in this stage shall be in oral form, and subsequent bids must be higher than the previous ones.

At the Stage, the Tender Committee will inform the Minimum Price Limit per Lot for the re-bidding for each lot not awarded in the Stage to the director of the Public Session, who shall make it public. In the event that no bidder makes an offer higher than the Minimum Price Limit per Lot for the re-bidding, the Draft Tender Committee may authorize the director of the Public Session to accept offers that lead to a price lower than the abovementioned limit.

The 5th Auction shall follow the schedule described below.

The complete Draft Tender Protocol and the Draft Agreement are available on PPSA’s website and will be available for public consultation by April 14, 2025.

We will keep you posted on the 5th Auction developments through our Legal Updates.

For more information on the topic of this Legal Update, please contact EnergypartnersTC@mayerbrown.com.

¹ Pursuant to Draft Tender Protocol. The table published in PPSA’s website has different information, and indicates May 2027.