Brazil's Decio Oddone resigns as ANP director general

Rio de Janeiro — Brazil's National Petroleum Agency, or ANP, lost its director general this week as Decio Oddone resigned in a surprise move aimed at ensuring an ongoing reform movement and avoiding a leadership vacuum at the country's lead regulator for the oil and natural gas industry.

"There weren't any changes in the composition of the ANP's board of directors in 2019, although three new directors will be nominated in 2020," Oddone said in a letter published late Wednesday. "I decided to anticipate the end of my mandate, which was to go until December, but will remain in my post for sufficient time to approve my substitute. That way the first position to be nominated will be for director general."

Oddone's mandate, which started in December 2016, was scheduled to end December 23.

The move will allow the administration of President Jair Bolsonaro to select its candidate for ANP director general, with the name expected to be submitted in February when Congress returns from its holiday recess. The new director general will then play a key role in nominating candidates to replace current ANP directors Aurelio Amaral, whose mandate ends in March, and Felipe Kury, whose mandate ends in December.

The new team will then be tasked with carrying out additional oil-industry reforms aimed at maintaining momentum from regulatory changes implemented since 2017 after two subsalt production-sharing auctions failed to generate heated bidding as expected. While previous changes such as allowing foreign oil companies to operate subsalt fields under production-sharing contracts and reducing requirements to use locally produced goods and services generated record signing bonuses and profit-oil guarantees, the 6th subsalt production-sharing auction and first transfer-of-rights sales failed to generate offers from global oil companies.

In the wake of the lackluster interest, officials at the ANP, Mines and Energy Ministry and other government entities vowed to once again evaluate the regulatory regime for potential changes including lower signing bonuses, lower profit-oil requirements and the end of preferential rights to subsalt blocks for state-led oil company Petrobras. Brazil's Congress is also debating a bill that would end the subsalt polygon, which determines whether blocks are sold under production-sharing or concession contracts.

"A new phase is starting and now is the time to adjust regulations to this new model," Oddone said. "I believe this is the time to start the process of composing the ANP directorship that should approve the regulatory changes that are going to sustain the transformation that we started to build because the time period for mandates doesn't always align with cycles of change."

Oddone not only played a key role in Brazil's successful reopening of its oil and gas sector, but also carried out a massive modernization and transformation of the ANP into a transparent and agile regulator. Under Oddone's leadership, ANP rules were simplified and streamlined to reduce bureaucracy and make participation in Brazil's oil and gas industry easier for oil companies, especially smaller players.

In addition to moves aimed at attracting investments from major oil companies in the subsalt, the ANP also implemented programs to boost output and recovery rates at mature fields such as reduced royalty rates and the Open Acreage system that gives oil companies faster access to acreage that was returned to the ANP or failed to generate bids at previous auctions. Oddone also led the ANP complaints with the Justice Ministry's antitrust division, known as CADE, that led to deals with Petrobras that will end the company's monopolies in refining, fuels distribution and natural gas sales, transport and distribution.

Oddone, who previously worked at Petrobras and Prumo Logistica's Acu Port, also re-established communication between the private sector and the government, which had waned during the years the Workers' Party, or PT, was in control of the government. The PT favored a state-led model for subsalt development that nearly bankrupted Petrobras after a corruption scandal was uncovered in 2014.