Abimaq and Sinaval want reinforcements in local content

The Brazilian Association of Machinery and Equipment (Abimaq) and the National Union of Naval & Offshore Construction and Repair Industry (Sinaval) are still hoping to negotiate better local content conditions for the next rounds of exploration auctions, which will take place in 2019. In the last revision of regulation, in April last year, in addition to the local content no longer being factor of punctuation of the bids, there was simplification of the commitments and reduction of the minimum percentages.

For land blocks, only global commitments are required for the exploration phase and for the 50% development stage of production. In offshore the overall commitment is 18% for the exploration phase and, in the case of the development stage, minimum indices were set for three macro groups: well construction (25%); collection and disposal system (40%); and stationary production unit (25%).

Despite the reduction, Abimaq considers that it was a victory over the original proposal, which provided a global index of 40% of the project, without distinction of goods and services. “As it was, for the auctions that took place in 2017 and 2018, the 40% index could be reached only with services, without opportunities for the industry,” says Alberto Machado, director of oil, natural gas, bioenergy and petrochemicals of Abimaq .


According to Sérgio Bacci, executive vice president of Sinaval, the naval industry was most affected by the new rules. The entity will try to presuade the governors and the federal government on the importance of the naval sector. “We lost two-thirds of the workforce, falling from 82,000 direct jobs and 320,000 indirect jobs in 2014 to 23,000 direct jobs and 69,000 indirect jobs in 2019.”

The new rules – gathered in ANP Resolution No. 726/2018 of April 12, 2018 – also contemplate the contractual mechanisms of exemption (waiver), adjustment and transfer of surplus. In addition to enabling the addition (adding or supplementing new data) of contracts with new local content requirements.

The waiver was the device that allowed the operators to import goods if they did not find in the country in the same conditions of price and term. When requesting the additive, the operator waives the right to the waiver. Companies must also waive any lawsuits they may have against the National Oil, Gas and Biofuels Agency (ANP) because of fines paid for noncompliance with the local content obligation.

From 2011 until this year, 16 companies registered waiver applications in the ANP covering 93 contracts. Of these, 54 contracts remain waiting analysis. Perenco, Equinor (requests made by Perenco when it was the operator of the contracts), Shell, ONGC, Sonangol, Petrobras, BP, Repsol, Karoon, Petra, Maha Energy (requests made by Gran Tierra when it was operator of the contracts), Parnaíba, Dommo (requests made by OGX when it was operator). Operators with application processes completed due to withdrawal, deferment, rejection or extinction: Anadarko, Chariot, Sipet and Statoil (current Equinor).

Created in 1999, the local content policy had as justification the strategic need to establish an industry supplying capital goods and services in the country. At Abimaq, there are 400 companies that participate in the oil and gas market, and about 150 of them have the majority of their portfolio in this market, depending heavily on the demands of the sector.

Source: Portos e Navios

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