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Petrobras seeks to shake off local content rules

05th March 2013

Petrobras asks ANP to ease strict local content rules ahead of May auction

Petrobras seeks to shake off local content rules
The move comes ahead of a crucial auction in May which will spur new oil and gas exploration in the country

Brazilian oil giant Petrobras has turned to national regulators in its first ever bid to reduce the country’s strict local content rules for goods and services, newspaper O Globo reported late on Thursday. The move comes ahead of a crucial auction in May which will spur new oil and gas exploration in the country.

The national industry will not be able to keep to the minimum local content required for exploration and production activities in the areas up for grabs in the upcoming auction, Petrobras said in a letter addressed to ANP, the country’s oil and gas regulator.

"The minimum percentages of local content [...] cannot be met by the national supply chain," Petrobras said.

As a result, the state-owned oil company has requested a reduction in local content requirements for 43 items related to the onshore exploration and production of oil and gas as well as offshore activates in shallow and deep waters.

In reaction, ANP director Magda Chambriard told O Globo newspaper: “Local content is a government policy. It is up to Petrobras and ANP to implement it.”

According to ANP, drilling rigs for exploration in shallow and deep waters (100-400 metres) must have a minimum of 10 per cent of local content and 90 per cent for onshore exploration. For offshore production, 85 per cent of each Christmas tree must be produced nationally, with the figure rising to 90 per cent in onshore production.