On December 22, 2017, Provisional Measure No. 811/2017 ("MP 811") was published in the Official Gazette to amend Law No. 12,304, of August 2, 2010 ("PPSA Law"), which authorized the Executive Branch to create the "Empresa Brasileira de Administração de Petróleo e Gás Natural SA - Pre-Sal Petróleo SA” ("PPSA").

PPSA is the public company whose purpose is the management of production sharing contracts entered into by the Ministry of Mines and Energy ("MME") and of contracts for the marketing of oil, natural gas and other hydrocarbons belonging to the national government.

Before MP 811, PPSA was required to hire a marketing agent if it decided to directly or indirectly carry out oil and natural gas marketing activities. However, with the new wording introduced by MP 811, PPSA may choose to hire a marketing agent or to market the oil itself.

MP 811 also establishes that revenues derived from the sale of hydrocarbons will form part of the "Social Fund", after payment of (i) taxes and expenses directly related to the operation and (ii) the remuneration of the marketing agent, as the case may be.

The “Social Fund” created by Law No. 12,351/2010 (“Pre-Salt Law”) is of an accounting and financial nature, and is tied to the Presidency of the Republic. Its purpose is to provide resources for social and regional development, in the form of programs and projects to combat poverty and in the following areas: (i) education; (ii) culture; (iii) sports; (iv) public health; (v) science and technology; (vi) environment; and (vii) action to combat climate change.

Under MP 811, PPSA's resources include remuneration obtained from the management of (i) production sharing contracts, including a portion of the signature bonus and (ii) contracts entered into with brokers and direct oil and gas sales contracts of the national government.

MP 811 also determines that PPSA, when directly marketing oil, natural gas, and hydrocarbons belonging to the national government should do so preferentially through holding auctions.

Nevertheless, it is important to note that Article 45, sole paragraph, of the Pre-Salt Law authorizes PPSA to directly contract Petrobras without a bid, as a marketing agent of the oil, natural gas and other liquid hydrocarbons belonging to the national government.

MP 811 established that the marketing of hydrocarbons by the PPSA must comply with the policy defined by the National Energy Policy Council ("CNPE"), as well as a reference price set by the National Agency for Petroleum, Natural Gas, and Biofuels ("ANP"). The marketing can only be carried out for a price lower than the reference price if there are no interested parties in the purchase, in which case the prices obtained should be arm´s length prices.

According to MP 811, direct marketing by PPSA will be regulated by CNPE until December 31, 2018.

It is important to note that MP 811 must undergo the process of being converted into law in Congress and  must then receive presidential sanction.