Brazil’s Petroleum Institute calls for modern local content regulation

The Brazilian Institute of Petroleum, Gas and Biofuels (IBP), has called on the government to change the regulatory framework to deal with the crisis caused by the collapse of oil prices and the corruption scandal at state-controlled oil giant Petrobras.

The industry would like to discuss the rules for the next oil auction, which was just postponed to the end of the year, executives of IBP said in a press conference. The industry wants the requirement that bidders use a minimum percentage of equipment manufactured in Brazil dropped from the next auction, outgoing IBP president João Carlos de Luca said Monday.

De Luca is handing over the post to Jorge Camargo on Tuesday. Camargo is the former president of Statoil in Brazil.

Jorge Camargo took over the presidency of IBP this week

Jorge Camargo took over the presidency of IBP this week

IBP proposes that local content does not count points to determine the winner of the bidding round.

“The framework, the bonus and the local content percentage compose the result of a bid. IPB wants local content to be considered in the process, but not to count points,” said Jorge Camargo, and added that IBP wants to preserve the local content policy.

IBP also wants the government to make changes to the legislation governing auctions to reduce “uncertainty that causes investors to stay away,” De Luca said.

Camargo said the local sourcing requirement should be changed to apply to sectors in which Brazilian firms are competitive and eliminated for those in which domestic suppliers cannot meet the demand for products, causing supply and cost overrun problems.

“The local industry lacks the capacity to meet the demand generated by the pre-salt (deepwater Atlantic oil fields that hold vast petroleum resources). Before the crisis, we already had problems,” De Luca said.

Source: EFE / EBC

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.

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Posted in Oil & Gas

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