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Local content will have ‘macro-segments’

 

The government is close to overcoming internal differences and hammering the new local content rules for the 14th round of oil and gas bids.

A conciliation proposal has been sewn in recent days by the initiative of two authorities: the Ministry of Mines and Energy (MME) and the Ministry of Industry, Foreign Trade and Services (Mdic). Instead of a global index for calculating the nationalization of goods and services, as oil companies wanted, the proposal envisages the creation of six “macro-segments” of requirements.

As there is differentiation between offshore and onshore blocks, each contract would have four segments at most. Today the requirements are detailed in about 90 items and sub-items, which creates a set of rules and generates a proliferation of certifiers to see if each contractual requirement has been followed to the letter.

According to the Minister of Mines and Energy, Fernando Coelho Filho, the discussions “are moving towards a point of convergence” and a final definition can take place next Wednesday.

In the proposal elaborated by MME and Mdic, the attempt was to find a middle way between the requests of the oil operators for reduction of the current requirements and the strong pressures of the national industry by moderation in the degree of inclusion of foreign suppliers.

In the “onshore” areas, two global indices would be required, both of 50%. One would be worth for the exploration stage; Another, to the development stage – but with segregated calculations.

However, the idea of having segmented indexes in the offshore blocks prevails. In the exploration phase, there would be a minimum requirement of 18% for the nationalization of goods and services in the exploration phase. The development phase would be 25% in the construction of marine wells and would increase to 40% in the outflow and production activities, including subsea systems.

The only uncertainty revolves around the percentage of stationary production units (offshore platforms). This phase is seen as fundamental for the technological development of the industry and, therefore, there is still no consensus. Three percentages are discussed: 15%, 25% or 30%.

For comparison purposes: in the 13th round of bids, which occurred in 2015, local content required for land areas varied from 70% to 77%. For offshore blocks, the minimum requirements were between 37% and 51% in the exploration phase; In the development stage, from 55% to 63%.

“It is clear that there will be a relaxation. We will not continue in the rates practiced today,” said Coelho Filho, minister. For him, the definition will be able to guarantee attractiveness of the exploratory field auctions and reheat the local national production of goods and services.

“It is a breakthrough compared to the beginning of the discussions, but with indices lower than those we were pleading for,” says the director of competitiveness and technology of the Federation of Industries of the State of São Paulo (Fiesp), José Ricardo Roriz. He is a spokesman for the Movimento Produz Brasil, which brings together state federations, industry associations and labor unions that defend the demands of local content.

To win support from suppliers who are still reluctant to reduce, the “conciliation” proposal also includes putting research and development incentives on the table, expanding access to resources already available to fewer companies, and tax equalization with competitors abroad .

The oil companies will obtain, as requested, the extension of the Repetro for 20 years. The special customs regime for the export and import of goods and services for oil and gas will have its validity extended from 2019 to 2039. This signalization had already been given by the government of former President Dilma Rousseff, but has not been formalized until now.

 

Source: Valor

Categories: Uncategorized

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