Oddone resigns as ANP director general amid Brazil's oil, gas reforms

Rio de Janeiro — Decio Oddone, director general of Brazil's National Petroleum Agency (ANP), has resigned in a surprise move, but said he will remain until his successor is selected to avoid a leadership vacuum amid ongoing reforms across the country's oil and natural gas sector.

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

"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."

Brazil President Jair Bolsonaro will select a candidate for ANP director general, with the nominee expected to be submitted in February when Congress returns from holiday recess.

Ongoing reform

ANP's next head will play a key role in nominating candidates to replace current directors Aurelio Amaral, whose mandate ends in March, and Felipe Kury, whose mandate ends in December.

The new team will 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 sixth 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."

Leading 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, ANP also implemented programs to boost output and recovery rates at mature fields. It reduced royalty rates and started the open acreage system, which gives oil companies faster access to acreage returned to the ANP or that failed to generate bids in previous auctions.

Oddone also led the ANP complaints with the Justice Ministry's antitrust division, known as CADE, which 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 was in control of the government. The party favored a state-led model for subsalt development that nearly bankrupted Petrobras after a corruption scandal was uncovered in 2014.