Unitization Involving Non Contracted Area: Comparison Between Contractual Models

Abstract

Abstract In accordance with the regulations in force with respect to individualization of production (unitization), the Brazilian Government does not make any disbursement to bear its share of the investments and operating costs related to the production development of a shared reservoir. Accordingly, the amount must be paid by the other parties and discounted from the volume to which the Brazilian Government will be entitled according to its working interest determined on Production Individualization Agreement (AIP). Therefore, the Brazilian Government isn't has any business risk. Representatives of private companies operating in Brazil refer to this situation as "the fourth regime", in reference to the three different exploration and production contracts in the country: Concession Contract, Onerous Assignment Contract and Production Sharing Contract. In this sense, the objective of this study is to compare the devices contained in the Brazilian legislation of the petroleum industry, regarding the individualization of the production of deposits, with the characteristics of the most common models of risk service contracts, according of the literature, and with production sharing contracts. As a result, it is hoped to contribute to the academic understanding of the subject by legislators, regulators and negotiators, representatives of the Brazilian Government and the private sector, considering that the estimated oil production from deposits that are or will be involved in significant unitization processes with the Brazilian Government.