New Rules To Alleviate Local Content Compliance

In an attempt to give a positive sign to the Brazilian oil and gas industry, the government recently published two new rules aimed at relaxing regulations for compliance on local content obligations of oil and gas exploration and production contracts, as detailed below.

Local Content Bonus

On January 18, 2016, Decree 8,637/2016 was published to create the "Program to Stimulate Supply Chain Competitiveness and for the Development and Improvement of Oil and Gas Sector Suppliers" (Pedefor). According to the Ministry of Mines and Energy (MME), the program seeks to incentivize suppliers to invest in productive capacity, technology and innovation in the country.

In practice, the decree creates a mechanism to give bonuses to exploration and production consortiums or companies that contribute to the establishment or expansion of suppliers in the country, invest in technological innovation, perform exportation of national equipments or engage in the acquisition of