Local Content Framework
The Brazilian Experience
Rio de Janeiro, 02/06/2011
To be considered
To be considered
To be considered
Brazil
Highlights
• Area: 8,514,876 km²
• Population: 190 million
• GDP: U$ 2.2 trillion
• World´s seventh largest economy
• Political, Economical and stability
• Over US$ 306 billion in International
Reserves
• Investment grade (Moody’s, Fitch
and Standard and Poors)
• Oil, Natural Gas and Biofuels regulated under the same institutional environment (ANP)
Brazilian Oil & Gas Market
highlights:
• Mature & democratic State
• Economic stability
• Solid regulations environment:
• Successful & strong concession
agreements
• Pre-salt fields
• More than 70 active operators
• More than 3500 blocks offered & 730
concession agreements
• Lots of technology gaps
What is Local Content? And
why?
Definition:
• Contractual commitment of
purchasing local goods and
services in competitive basis.
Objectives:
• Development of local suppliers
& technology
• Mass creation of jobs
• Development of the economy
(GDP)
Local Content Framework: the
Concession experience
Local Content was required in all Bid Rounds
Bids 7 to 10
Max. & Min. offering limits
Bids 1 to 4
LC Certification by 3rd part
Free LC offerings
New methodology to calculate
the LC
LC Incentives
1999
2000
2001
2002
2003
2004
2005
Bids 5 and 6
Minimum offering limits
No more incentives
2006
2007
2008
Local Content Commitments on
Concession Agreements
Local Content Average
100
High probability
of penalities
80
70
60
50
40
30
20
10
0
1
2
3
4
5
6
7
8
9
10
*
Local Content Offerings (%)
90
BID ROUND
Pre-salt fields
Development
*
E xploration
Only on-shore blocks
Local Content Framework: the
Concession experience
Local Content Rules
Bids 7 to 10
Bids 7 to 10
LC calculation: 3rd part
(companies accredited by ANP)
Imported items cost VS sales price
Compulsory certification to prove
local investments
2005
2006
2007
2008
Investimentos Locais
Declarados
RIT
Corrente
Constante (IGP‐M Março/2011)
Total
Nacional
Rodada
Total
Nacional
BID 07
R$ 7.165.289,07
R$ 3.424.143,06
R$ 7.711.652,29
R$ 3.758.168,11
BID 09
R$ 2.979.847,89
R$ 1.648.459,12
R$ 3.204.214,79
R$ 1.771.893,56
BID 10
R$ 71.484,57
R$ 67.270,63
R$ 75.273,62
R$ 70.807,91
Total
R$ 10.216.621,54
R$ 5.139.872,81
R$ 10.991.140,70
R$ 5.600.869,59
RGT
Corrente
Constante (IGP‐M Março/2011)
Total
Nacional
Rodada
Total
Nacional
BID 01
R$ 3.091.649,76
R$ 1.802.757,19
R$ 4.612.491,30
R$ 2.820.284,58
BID 02
R$ 6.821.549,23
R$ 5.242.621,22
R$ 8.746.679,09
R$ 6.764.103,79
BID 03
R$ 4.431.353,70
R$ 3.147.500,07
R$ 5.733.025,40
R$ 4.143.013,64
BID 04
R$ 2.492.280,69
R$ 2.036.799,08
R$ 3.024.620,19
R$ 2.464.563,31
BID 05
R$ 1.949.756,68
R$ 1.107.686,04
R$ 2.354.488,58
R$ 1.352.931,92
BID 06
R$ 4.970.354,97
R$ 3.571.629,25
R$ 5.858.288,87
R$ 4.232.602,53
Total
R$ 23.756.945,04
R$ 16.908.992,86
R$ 30.329.593,43
R$ 21.777.499,76
Local Investments Declared
R$ milhões de mar/2011
Investimentos Declarados nos Blocos ‐ Fase de Exploração
9.000
Total
8.000
Nacional
7.000
6.000
5.000
4.000
3.000
2.000
1.000
‐
BID 01
BID 02
BID 03
BID 04
BID 05
BID 06
BID 07
BID 09
BID 10
LC Certification in numbers
Descrição das Áreas
Geologia e Geofísica
Sondas de Perfuração
Apoio Logístico e Operacional
Perfuração, Completação e Avaliação de Poços
Engenharia Básica e de Detalhamento
Gerenciamento, Construção, Montagem e Comissionamento.
Sistemas Elétricos, de Controle, Instrumentação e Medição.
Sistemas de Telecomunicações
Oleodutos, Gasodutos e Tanques de Armazenamento.
Unidades de Compressão.
Unidades de Geração de Injeção de Vapor.
Equipamentos e Controle Submarinos: linhas rígidas, flexíveis, umbilicais e manifolds.
Sistema de Processamento e Tratamento de Óleo.
Sistema de Processamento e Tratamento de Gás Natural.
Construção Naval (casco, turret, ancoragem e sistemas navais).
Segurança Operacional
Obras Civis e Utilidades
Total geral
Valores
Investimento Certificado
R$ 657.590.948,38 R$ 97.588.270,40 R$ 1.411.336.187,41 R$ 227.028.661,01 R$ 4.307.095,39 Conteúdo local (R$)
R$ 392.287.013,34 R$ 27.513.568,58 R$935.450.466,37 R$ 182.974.952,57 R$ 3.646.025,69 R$ 12.379.232,91 R$ 11.129.105,73 44
90%
R$ 5.237.203,68 R$ 230.540,70 R 760.382,03 R$ 110.022,31 R$ 2.962,64 R$ 5.138.605,26 R$ 228.762,61 R$ 637.212,79 R$ 109.878,95 R$ 2.934,79 98
5
49
20
2
98%
99%
84%
100%
99%
R$ 755.918,76 R$ 445.394,62 13
59%
R$ 6.283,00 R$ 5.920,55 2
94%
R$ 11.304,68 R$ 11.304,68 2
100%
R$ 68.867.461,06 R$ 9.680.695,61 R$ 9.060.920,31 R$ 2.504.954.090,26 R$ 43.696.404,04 R$ 8.609.997,56 R$ 8.956.875,77 R$ 1.620.844.423,90 1
97
24
3.456
63%
89%
99%
65%
Certificados CL
Emitidos
Médio
572
60%
92
28%
991
66%
1.429
81%
15
85%
LC Certification in numbers
4000
3500
Certificados Emitidos no Trimestre
3000
Certificados Acumulados
2500
2000
1500
1000
500
0
2009.I
2009.II
2009.III
2009.IV
2010.I
2010.II
2010.III
2010.IV
2011.I
Local Content Auditing
Procedures:
• Check the accomplishment of contractual
Local Content requirements
• Penalties when contract terms are not
completely fulfilled.
• Fines are proportional to the non-realized
local investment.
Local Content Auditing
Audits:
• 2008/2010
• 11 blocks (BID 1st to 4th), no penalities.
• 5 blocks (AM) , no penalities.
• 2011- new new technical approach
• 5 blocks (BID 1st to 4th), no penalities.
• 69 blocks (BID 5th a 6th) with high probability of
penalities
• 60 blocks - notification sent to operators .
Brazilian Opportunities
11th Bid Round
ANP shall bid:
Pre-Salt areas under PSC
(~ 2,3% sedimentary area)
Other areas under
concession contracts
(> 97% sedimentary area)
The focus of the 11th
Bid Round is the
Brazilian Equatorial
Margin
The Equatorial Margin
COSTA DO MARFIM
NÍGER
GANA
NIGÉRIA
LEGEND
MarineA
Marine B
Marine Transitional
Marine/Lacustrine
BRASIL
CAMARÕES
Maturo Marine
Tertiary Deltaic
Lacustrine A
Lacustrine B
Lacustrine C
CHADE
GABÃO
CONGO
REPÚBLICA
DEMOCRÁTICA DO CONGO
ANGOLA
The Pre-Salt as a New
Paradigm
From 2004:
71 wells drilled
13 wells (19%)
without discovery
2-ANP-1-RJS
2-ANP-2A-RJS
Brazilian Opportunities:
Pre-Salt Campos & Santos Basins
(50 billion barrels ?)
Campos Basin
Source: PETROBRAS, 2009
Brazilian Opportunities:
Pre-Salt Campos & Santos Basins
(50 billion barrels ?)
Brazil deepwater oil production is about 25% of the country’s oil production. Pre‐salt new province shall increase this percentage significantly.
If proven the way ANP forecasted, Brazil shall need to invest heavily in infrastructure (platforms, pipelines, oil pipelines, ports, ships, steel, etc.).
Santos Basin
Source: PETROBRAS, 2009
Campos & Santos Pre-salt:
challenges of local supply
Local suppliers:
• Competitiveness
• Supply capacity
• Goods & services - Costs in Brazil
Overcome Setbacks:
• Technology
• Human Resources
Economy:
• Strong currency (Real)
• Importations “boom”
Local Content Perspectives
Law nº 12.351/2010 –
Production Sharing Agreement:
• Art. 9º...
“I - the pace of blocks acquisition
under the production sharing
system will observe the energy
policy and the development of
national industry and the its
ability to supply goods and
services”
Local Content Policy:
• Focus on the methodology to
calculate LC (LC Booklet)
• Focus on the LC Certification
Local Content Challenges
for next Bidding Rounds
Local Content Regulation: 11TH BID
Round & 1st Pre-salt BID Round
• Simplify the table of commitments &
offers of Local Content;
• Adjust the definitions of items of the
Local Content commitments (Resolution
N°. 39/2007 ANP);
• Simplify
the
procedures
for
Local
Content Certification, giving focus on
the relevant activities. (Resolution No.
36/2007 ANP);
• Transparency of actions;
• Dialogue with the industry.
How to increase Local
Content levels?
Suggestions:
• Partnership and cooperation
with local companies;
• Install production units in
Brazil;
• Increase the share of local
professionals on services;
• Obtain local content
certification on goods and
services.
Oil & Gas
Activities in Brazil
Objectives of Energy Policy
• Brazil will continuously develop the oil & gas
activities (pre-salt & post-salt) based on two
The Development of Oil & Gas
Activities
strong pillars: HSSE and Local Content.
• The Law 12.351/2010 sets that the pace of
blocks
acquisition
under
the
Production
Sharing System will observe the energy policy
Best practice
HSSE
Local Content
and the development of national industry and
its capacity to supply goods and services.
• Brazil shall be, in medium term, an oil & gas
exporter regarding this strategic model.
Self‐
Sufficiency
Final Remarks
 Brazil
is the biggest exploratory opportunity in the world;
 Brazilian
petroleum sector is an extraordinary
(worldwide) business opportunity for petroleum
companies and for goods & services suppliers;
 ANP
will promote the 11º bid-round in October focusing
the equatorial margin;
 Working
to promote the 1st bid round focusing Pre-Salt
opportunities;
 The
Brazilian policy for the O&G sector aims to reach a
strong degree of nationalization and boost the Brazilian
industry;
 Current
investments in the supply chain have sufficient
magnitude to induce the local industry;
 Foreign
investments are welcome (as long as in
accordance with Brazilian goals).
Agência Nacional do Petróleo, Gás Natural e
Biocombustíveis - ANP
Coordenadoria de Conteúdo Local (CCL)
Marcelo Mafra Borges de Macedo
Av. Rio Branco, 65 - 17º andar - Rio de Janeiro – RJ – Brasil
Tel.: (55 21) 2112-8550 / (55 21) 2112-8535
[email protected]
[email protected]
www.anp.gov.br