Flexibility in the contents of the oil and gas auctions

The Government has not yet defined what would be the percentage of local content in the 14th round of bidding for exploration blocks, scheduled for 2017, but proposed to relax the current rules of the market policy of nationalisation.

In one of the main changes proposed, the local content will no longer be recorded as scoring criteria in bids for exploration blocks in the auctions. Instead, the demands for nationalization will be defined in the concession agreement.

Another important change is the concept of “local content”, similar to the rules adopted in the early bidding. The measure puts an end to the requirements specific to each type of equipment.

Since the 7th Round, the national petroleum Agency (ANP) required specific commitments to a series of items and subitems. To illustrate, to the same block, the Government could require 10% percentages to probe and Charter 100% for drainage ducts. Now, the percentage of local content requirement will be for the overall investment in the project.
For the auction of the unitizáveis areas of the Union, in the pre-salt layer, the percentage of local content has already been defined. In order to not create additional obligations for the oil companies, the percentage of unitizáveis areas of Carcará, Sapinhoá, oncilla and green turtle (discoveries whose reservoirs extend beyond the limits of the concession), will be required the same percentages of those provided for in the original auction of the areas adjacent to the Union.

To the unitizável area of Carcará, for example, will be required overall 35% local content in the exploration phase and 30% in the development of production-the same percentages required in the Second Round, in 2000, when the block BM-S-8 was purchased. Higher rates are required to the unitizável area of green turtle (55% to 65% for exploration and development).
The Government’s proposals were presented this week by the Board of the program to stimulate the Competitiveness of the production chain, to the development and enhancement of Suppliers of oil and Natural gas industry (Pedefor) and will be shown to the National Council of energy policy (CNPE), in December.

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