The government is giving signs of wanting to dismantle the oil sector local content model

The announcement that the government decided to review the model created by the Lula administration for the oil fields extraction attracted much media attention and generated several articles in the Brazilian press.

The requirement that much of the equipment used in the exploration of these fields must be domestically manufactured, turned away private investors and invalidated the model, according to O Estado de São Paulo (11/05).

Foto: Reprodução

Foto: Reprodução

The Minister of Mines and Energy, Eduardo Braga, said the government is evaluating some possible changes in the oil sector local content model. The statement was made at a presentation by the minister to international investors in the oil industry during the Offshore Technology Conference (OTC) held in the US, between the 3rd and 7th May.

“The analysis of the local content requirements should be made cautiously and strategically, in order to respect the contracts, which may increase some components and relax the requirement for other”, according to Braga.

Petrobras presented proposals for changes of this model to ANP – National Agency of Petroleum, according to Valor Econômico. The government must ensure favorable conditions for international investors to invest in areas that the public sector is no longer able to develop.

The newspaper O Globo (04/05), said the Brazilian government is discussing changes in the oil sector regulation, but added the new rules will not take effect before the next round of bidding for oil exploration blocks scheduled for October.

The model currently in place delayed the pre- salt projects due to inability of the national industry to comply with the requirements and this prevented the growth in oil production. Another obstacle is the requirement that Petrobras is the sole operator of the pre-salt fields, with a minimum stake of 30 % in all blocks.

Other encouraging signs of change are visible in the national aviation program. According to O Estado de São Paulo, the Secretariat of Civil Aviation and the Ministry of Environment prepared a resolution that will simplify the licensing process for renovation and construction of airports.