Rio de Janeiro, 02/06/2011
Local Content Framework
The Brazilian Experience
To be considered
To be considered
To be considered
Highlights
Brazil
• 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)
highlights:
Brazilian Oil & Gas Market
• 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
• Contractual commitment of
purchasing local goods and
services in competitive basis.
Definition:
What is Local Content? And why?
• Development of local suppliers
& technology
• Mass creation of jobs
• Development of the economy
(GDP)
Objectives:
Bids 1 to 4
Free LC offerings
LC Incentives
Local Content Framework: the Concession experience
Bids 5 and 6
Minimum offering limits
No more incentives
Bids 7 to 10
Max. & Min. offering limits
LC Certification by 3rd part
New methodology to calculatethe LC
Local Content was required in all Bid Rounds
2008200720062005200420032002200120001999
Local Content Commitments onConcession Agreements
*
Only on-shore blocks
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4 5 6 7 8 9 10
E xploration Development
Local Content Average
BID ROUND
Loca
l Con
tent
Offe
rings
(%)
*
Pre-salt fields
High probability of penalities
Local Content Framework: the Concession experience
2008200720062005
Bids 7 to 10
LC calculation: 3rd part
(companies accredited by ANP)
Imported items cost VS sales price
Compulsory certification to prove local investments
Local Content Rules
Bids 7 to 10
Investimentos Locais Declarados
RIT
RodadaCorrente Constante (IGP‐M Março/2011)
Total Nacional 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
RodadaCorrente Constante (IGP‐M Março/2011)
Total Nacional Total NacionalBID 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
‐
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
BID 01 BID 02 BID 03 BID 04 BID 05 BID 06 BID 07 BID 09 BID 10
R$ m
ilhõe
s de
mar/201
1
Investimentos Declarados nos Blocos ‐ Fase de Exploração
Total
Nacional
LC Certification in numbers
Valores Certificados Emitidos
CLMédioDescrição das Áreas Investimento Certificado Conteúdo local (R$)
Geologia e Geofísica R$ 657.590.948,38 R$ 392.287.013,34 572 60%Sondas de Perfuração R$ 97.588.270,40 R$ 27.513.568,58 92 28%Apoio Logístico e Operacional R$ 1.411.336.187,41 R$935.450.466,37 991 66%Perfuração, Completação e Avaliação de Poços R$ 227.028.661,01 R$ 182.974.952,57 1.429 81%Engenharia Básica e de Detalhamento R$ 4.307.095,39 R$ 3.646.025,69 15 85%Gerenciamento, Construção, Montagem e Comissionamento. R$ 12.379.232,91 R$ 11.129.105,73 44 90%Sistemas Elétricos, de Controle, Instrumentação e Medição. R$ 5.237.203,68 R$ 5.138.605,26 98 98%Sistemas de Telecomunicações R$ 230.540,70 R$ 228.762,61 5 99%Oleodutos, Gasodutos e Tanques de Armazenamento. R 760.382,03 R$ 637.212,79 49 84%Unidades de Compressão. R$ 110.022,31 R$ 109.878,95 20 100%Unidades de Geração de Injeção de Vapor. R$ 2.962,64 R$ 2.934,79 2 99%Equipamentos e Controle Submarinos: linhas rígidas, flexíveis, umbilicais e manifolds. R$ 755.918,76 R$ 445.394,62 13 59%
Sistema de Processamento e Tratamento de Óleo. R$ 6.283,00 R$ 5.920,55 2 94%Sistema de Processamento e Tratamento de Gás Natural. R$ 11.304,68 R$ 11.304,68 2 100%Construção Naval (casco, turret, ancoragem e sistemas navais). R$ 68.867.461,06 R$ 43.696.404,04 1 63%Segurança Operacional R$ 9.680.695,61 R$ 8.609.997,56 97 89%Obras Civis e Utilidades R$ 9.060.920,31 R$ 8.956.875,77 24 99%Total geral R$ 2.504.954.090,26 R$ 1.620.844.423,90 3.456 65%
LC Certification in numbers
0
500
1000
1500
2000
2500
3000
3500
4000
2009.I 2009.II 2009.III 2009.IV 2010.I 2010.II 2010.III 2010.IV 2011.I
Certificados Emitidos no Trimestre
Certificados Acumulados
Local Content Auditing
• 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.
Procedures:
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 .
Local Content Auditing
Brazilian Opportunities11th 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
LEGENDMarineAMarine BMarine TransitionalMarine/LacustrineMaturo MarineTertiary DeltaicLacustrine ALacustrine BLacustrine C
BRASIL
COSTA DO MARFIM
GANA NÍGER
NIGÉRIA
CAMARÕES CHADE
GABÃO
CONGO
REPÚBLICA DEMOCRÁTICA DO CONGO
ANGOLA
The Pre-Salt as a New Paradigm
2-ANP-2A-RJS2-ANP-1-RJS
From 2004:
71 wells drilled
13 wells (19%)
without discovery
Source: PETROBRAS, 2009
Campos Basin
Brazilian Opportunities:Pre-Salt Campos & Santos Basins
(50 billion barrels ?)
Source: PETROBRAS, 2009
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
Brazilian Opportunities:Pre-Salt Campos & Santos Basins
(50 billion barrels ?)
• Competitiveness
• Supply capacity
• Goods & services - Costs in Brazil
Local suppliers:
• Technology
• Human Resources
Overcome Setbacks:
Campos & Santos Pre-salt: challenges of local supply
• Strong currency (Real)
• Importations “boom”
Economy:
Local Content Perspectives
• Art. 9º...
“I - the pace of blocks acquisitionunder the production sharingsystem will observe the energypolicy and the development ofnational industry and the itsability to supply goods andservices”
Law nº 12.351/2010 –Production Sharing Agreement:
• Focus on the methodology to calculate LC (LC Booklet)
• Focus on the LC Certification
Local Content Policy:
• Simplify the table of commitments &offers of Local Content;
• Adjust the definitions of items of theLocal Content commitments (ResolutionN°. 39/2007 ANP);
• Simplify the procedures for LocalContent Certification, giving focus onthe relevant activities. (Resolution No.36/2007 ANP);
• Transparency of actions;
• Dialogue with the industry.
Local Content Challenges for next Bidding Rounds
Local Content Regulation: 11TH BID Round & 1st Pre-salt BID Round
How to increase Local Content levels?
• 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.
Suggestions:
Objectives of Energy Policy
Oil & GasActivities in Brazil
The Development of Oil & GasActivities
Local Content
Best practiceHSSE
• Brazil will continuously develop the oil & gas
activities (pre-salt & post-salt) based on two
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
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 petroleumcompanies and for goods & services suppliers;
ANP will promote the 11º bid-round in October focusingthe equatorial margin;
Working to promote the 1st bid round focusing Pre-Saltopportunities;
The Brazilian policy for the O&G sector aims to reach astrong degree of nationalization and boost the Brazilianindustry;
Current investments in the supply chain have sufficientmagnitude to induce the local industry;
Foreign investments are welcome (as long as inaccordance 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) [email protected]
[email protected] www.anp.gov.br
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