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Oil and gas exploration and production in Brazil: concessions, production sharing and the full government take

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Last verified: 2026-10-27 · Status: Stable

Upstream oil and gas rights go only to companies incorporated in Brazil, through ANP concession rounds or, in the pre-salt and strategic areas, production sharing auctions. The government take stacks a signing bonus, royalties of 10 or 15 percent, a progressive special participation of up to 40 percent of field net revenue on large fields, an area retention fee and, onshore, a landowner share. Transfers, development plans and decommissioning all run through the ANP, so model approvals and abandonment costs from day one.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026. Conversions are for orientation only.

Key facts

Top special participation rate on field quarterly net revenue	40 %Decreto nº 2.705 art. 22, as of 2026-10-27 · in force
Lowest special participation rate above the exempt volume	10 %Decreto nº 2.705 art. 22, as of 2026-10-27 · in force
Quarterly volume exempt from special participation, first production year, water deeper than 400 m	1350 thousand m3 oil equivalentDecreto nº 2.705 art. 22 § 1 III, as of 2026-10-27 · in force
Maximum base area retention fee, exploration phase	500 BRL per km2 per yearDecreto nº 2.705 art. 28 § 3 I, as of 2026-10-27 · in force
Maximum base area retention fee, production phase	5000 BRL per km2 per yearDecreto nº 2.705 art. 28 § 3 IV, as of 2026-10-27 · in force
Maximum landowner share of onshore production	1 %Lei nº 9.478 art. 52, as of 2026-10-27 · in force
ANP deadline to review development plans before tacit approval	180 daysLei nº 9.478 art. 26 § 2, as of 2026-10-27 · in force
Oil and gas royalty, concession regime	10 %Lei nº 9.478 art. 47, as of 2026-10-27 · in force
Oil and gas royalty, production sharing regime	15 %Lei nº 12.351 art. 42 § 1, as of 2026-10-27 · in force
Minimum Petrobras stake where it takes the pre-salt operator preference	30 %Lei nº 12.351 art. 4 § 2, as of 2026-10-27 · in force

The rule

1. Exploration, development and production of oil and gas may only be carried out, under concession, authorization or production sharing, by companies incorporated under Brazilian law with head office and management in Brazil. A foreign oil company therefore bids or holds the block through a Brazilian subsidiary.
Cost to do it: Incorporation of a Brazilian subsidiary (see the Entities section); no minimum capital is set in the Petroleum Law, but the ANP qualifies each bidder on technical, economic and legal requirements (art. 25).Lei nº 9.478 (Petroleum Law), as worded by Lei nº 12.351 of 22 December 2010, Art. 5, 1997-08-06 official text · verified 2026-10-27

2. Outside the pre-salt and strategic areas, rights are granted by concession contracts preceded by bidding. Each contract has an exploration phase (including appraisal of any discovery) and a production phase (including development). The concessionaire explores at its own cost and risk and owns the oil and gas once extracted, subject to taxes and government take.Lei nº 9.478, Arts. 23, 24 and 26 caput, 1997-08-06 official text · verified 2026-10-27

3. After a discovery the concessionaire submits development and production plans to the ANP, which must give its opinion within 180 days; if it does not, the plans are deemed approved.Lei nº 9.478, Art. 26 §§ 1 to 3, 1997-08-06 official text · verified 2026-10-27

4. The concession contract carries four government takes set in the bid notice: signing bonus, royalties, special participation and payment for occupation or retention of area. Royalties and the area payment are mandatory in every contract. The signing bonus is the amount offered in the winning bid, at least the minimum in the notice, and is paid when the contract is signed.
Cost to do it: Signing bonus: the bid amount, paid in full at signature. Royalties: 10 percent of production value, which the ANP may cut to no less than 5 percent in the bid notice (art. 47).Lei nº 9.478, Arts. 45 caput and § 1, and 46, 1997-08-06 official text · verified 2026-10-27

5. Special participation applies to fields with large volume or high profitability. It is charged on gross production revenue less royalties, exploration investment, operating costs, depreciation and taxes, at progressive rates of 10 to 40 percent on each field's quarterly net revenue, with brackets that depend on location (onshore, shallow water up to 400 m, deeper than 400 m), years in production and quarterly volume. In the first production year, a field in water deeper than 400 m is exempt up to 1,350 thousand cubic meters of oil equivalent a quarter. It is computed quarterly and paid by the last business day of the following month.
Cost to do it: Up to 40 percent of field net revenue on the highest bracket.
Example: Deep water field in its first year with 2,000 thousand m3 oe in a quarter and R$2,000,000,000 of quarterly net revenue: 20 percent bracket, deduction 1,575 x net revenue / volume, so special participation = 20 percent x (R$2,000,000,000 less R$1,575,000,000) = R$85,000,000, an effective 4.25 percent. / About US$374.91 million of net revenue in the quarter and about US$15.93 million of special participation.Lei nº 9.478; Decreto nº 2.705 (government take regulation), Lei nº 9.478 art. 50 § 1; Decreto nº 2.705 arts. 21, 22 and 25, 1998-08-03 official text · verified 2026-10-27

6. The area occupation or retention payment is set per square kilometer in the bid notice and contract, within ranges of R$10 to R$500 per km2 in the exploration phase, 200 percent of the exploration value if that phase is extended, R$20 to R$1,000 per km2 in the development period and R$100 to R$5,000 per km2 in the production phase. Unit values are adjusted yearly by the IGP-DI index, and the payment for each calendar year is due on 15 January of the following year.
Cost to do it: Base ranges R$10 to R$5,000 per km2 a year (about US$1.87 to US$937), before IGP-DI adjustment.
Example: An exploration block of 3,000 km2 with a contract value of R$100 per km2 pays R$300,000 for a full year, doubling to R$600,000 if the exploration phase is extended. / About US$56,240, or US$112,470 after an extension.Decreto nº 2.705, Art. 28 caput and §§ 2 to 4 and 6, 1998-08-03 official text · verified 2026-10-27

7. Onshore concession contracts must pay the surface landowners a share of 0.5 to 1 percent of oil or gas production, set by the ANP and split in proportion to production on each property.
Cost to do it: 0.5 to 1 percent of production value, on top of royalties.Lei nº 9.478, Art. 52, 1997-08-06 official text · verified 2026-10-27

8. A concession contract may be transferred only with the ANP's prior express authorization, and the new holder must meet the ANP's technical, economic and legal requirements. The contract must contain dispute resolution rules, including conciliation and international arbitration.Lei nº 9.478, Arts. 29 and 43 X, 1997-08-06 official text · verified 2026-10-27

9. When a concession ends, returned areas and reversible assets pass to the Union with no indemnity to the concessionaire, which must remove at its own cost equipment that does not revert and repair environmental damage.
Cost to do it: Decommissioning and environmental recovery costs fall entirely on the concessionaire.Lei nº 9.478, Art. 28 §§ 1 and 2, 1997-08-06 official text · verified 2026-10-27

10. Pre-salt and strategic areas use production sharing contracts, signed by the Union either directly with Petrobras or after an auction. The winner is the bidder offering the largest share of profit oil to the Union, above the minimum in the notice. The CNPE first offers Petrobras a preference to operate; Petrobras answers within 30 days, and if it operates, its stake cannot be below 30 percent. Royalties are 15 percent of production value and, like the signing bonus, cannot be recovered as cost oil.
Cost to do it: Signing bonus fixed in the notice, plus 15 percent royalties and the profit oil share offered.Lei nº 12.351 (production sharing), as amended by Lei nº 13.365 of 29 November 2016 and Lei nº 12.734 of 30 November 2012, Arts. 4, 8, 15, 18 and 42, 2010-12-22 official text · verified 2026-10-27 · changed: Lei nº 13.365 (29 November 2016) ended Petrobras's mandatory operatorship and replaced it with a 30 day preference right.

Item	Concession	Production sharing
Signing bonus	Bid amount, paid at signature	Fixed in the notice, paid at signature, not cost recoverable
Royalties	10 percent (floor 5 percent)	15 percent, not cost recoverable
Special participation	10 to 40 percent of field net revenue on large fields	Not applicable
Area retention	R$10 to R$5,000 per km2 a year by phase	Not applicable
Profit oil to the Union	Not applicable	Share offered in the auction, the bid criterion
Landowner share (onshore)	0.5 to 1 percent of production	Up to 1 percent of production (Lei nº 12.351 art. 43)

Government take by regime (Lei nº 9.478, Lei nº 12.351, Decreto nº 2.705).

Worked example

Quarter of a deep water concession field in its first production year: 2,000 thousand m3 oe and R$2,000,000,000 (about US$374.91 million) of net revenue. Royalties at 10 percent are charged on production value first; special participation then takes 20 percent of net revenue above the bracket deduction, R$85,000,000 (about US$15.93 million), an effective 4.25 percent (Decreto nº 2.705 art. 22 § 1 III).

Step by step

1. Incorporate a Brazilian subsidiary with head office and management in Brazil (Lei nº 9.478 art. 5).
2. Qualify with the ANP for the relevant operator level and follow the bid notice for the round or Permanent Offer cycle.
3. Bid the signing bonus (concession) or the profit oil share (production sharing) and post the bid and contract guarantees.
4. Pay the signing bonus at signature; budget royalties from first production and the area fee every 15 January.
5. On a discovery, file the development plan; the ANP has 180 days before tacit approval.
6. For any farm in or farm out, obtain prior ANP authorization before closing (art. 29).
7. Provision decommissioning from the start: no indemnity on reversion and removal is at your cost.

Common traps

Special participation brackets reset by production year and location; a field crossing into its second or later year moves to tables with lower exempt volumes.
A farm out signed without prior ANP approval does not transfer the contract; build ANP approval in as a condition precedent.
In production sharing, royalties and the signing bonus can never be recovered as cost oil (Lei nº 12.351 art. 42).
Onshore projects add a 0.5 to 1 percent landowner share on top of royalties.
Area fee values in the decree are base values; contracts adjust them annually by IGP-DI, so use the contract figure.

Sources

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