Foreign participation in R&D investments will increase

A solid industry must always invest in research and development of new technologies, as this is the only way to find new solutions to increase productivity, improve processes and pave the path towards the future.

Currently, there are four types of Governmental takes foreseen in Law 9,478/97: (i) Signature Bonus; (ii) Royalties; (iii) Special Participation; and (iv) Area Retention Tax. In addition, it is also important to note that concession agreements have been stipulating an obligation to invest 1% of the gross revenues in Research & Development.

ANP regulation states that the owner of an oil field concession shall pay expenses for R&D equivalent to 1% of the gross production of such field in any quarter of the year when Special Participation payments are due. It is also determined that up to 50% of the R&D investment may be spent in facilities owned by the concessionaire in Brazil (or contracted with national companies). The remaining share must be invested in activities with R&D institutes accredited by ANP (such as universities). Today, approximately 95% of the total R&D investments made by concessionaires is spent by market leader Petrobras.

However, this scenario is very likely to change in the near future, as more and more new oil fields start to be operated by international companies. ANP foresees that those multinational enterprises will account for approximately 25% of the investments in R&D by 2018.

Currently, 13 of the 15 concessionaires (excluding Petrobras) that must invest in R&D in Brazil are foreign. Those companies have invested almost USD 76 million since 2004, and are expected to invest more USD 7.7 million this year.

R&D investments slide

ANP Superintendent of R&D said “one of the benefits of the growth in foreign participation is the possibility of increasing exchanges with universities in other countries. The investment however must be made exclusively in Brazil.”

BG Group for instance plans to build a world-class R&D facility in Brazil. In a presentation at Innovation House Rio, Sarah Potts, from BG Group Technology Team, showed the company’s R&D processes and plans to the audience. Furthermore collaboration with Petrobras and IOCs can be seen as a key to overcome the technology challenges and to develop solutions for the Oil & Gas business in Brazil, according to the company. Innovation Norway and BG Group have a memorandum of understanding on R&D cooperation.

After extensive oil discoveries in the pre-salt layer, which presents extreme opportunities and challenges, innovative applicable technology solutions will be necessary to help building the Brazilian oil industry in a sustainable way.

Innovation Norway is responsible for promoting the Norwegian industry abroad. Our office in Rio de Janeiro manages Innovation House Rio, our business incubator office, and helps Norwegian companies in their efforts towards the Brazilian market.

Posted in Oil & Gas

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