Global Shale Law Compendium: Shale Governance in Brazil

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal development and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by the Federative Republic of Brazil.

Brazil possesses promising shale gas acreage, particularly in the Paraná Basin, the Solimões Basin and the Amazonas Basin. The U.S. EIA has estimated the three basins’ technically recoverable shale gas resources to be approximately 245 Tcf. Other basins, including the Parnaiba, Parecis, Recôncavo, Potiguar, São Francisco, Sergipe-Alagoas, Taubaté, and Chaco- Paraná basins, may hold potential shale gas resources, but these resources have yet to be proven.

In June 2014, the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) granted several exploratory licenses in areas with high potential of unconventional natural gas during the 12^th Bidding Round. On March 17, 2016, however, the first Federal Court of the Judicial Section in Sergipe suspended the effects of licenses granted during the 12^th Bidding Round for shale gas exploration in the Sergipe-Alagoas basin until further studies on the environmental, economical and public health impacts of hydraulic fracturing have been made.

The existing legislative and regulatory hydrocarbon framework in Brazil did not specifically address shale gas development using the hydraulic fracturing technique, and to that effect, on April 11, 2014, the ANP issued Resolution No. 21/2014 governing hydraulic fracturing operations in unconventional natural gas formations. The Resolution provides for ANP’s approval prior to any hydraulic fracturing activity, requires operators to conduct preliminary studies in relation to the hydraulic fracturing project, and requires operators to obtain the appropriate environmental permits to perform hydraulic fracturing activities. The Resolution also requires operators to adopt an environmental management system, including an effluent control, treatment and disposal plan and to prepare an emergency response plan in order to mitigate the potential environmental impacts coming from hydraulic fracturing activities. In addition, operators must comply with specific standards in relation to hydraulic fracturing activities.

Shale gas activities have been recorded in Brazil only recently. Indeed, on November 24, 2016, Rosneft Brasil – a Rosneft subsidiary owned by the Russian government – entered into an agreement with Queiroz Galvão Óleo e Gás in order to start exploratory drilling in the Solimões Basin as part of Rosneft Brasil’s exploration program in the Amazon region. The drilling of the first exploratory well began in February 2017. According to a media report, “Rosneft Brasil is planning to drill at least four wells within the upcoming exploration drilling campaign, with the scope of obtaining valuable geological information to determine the hydrocarbon resource potential of the Solimoes basin.”