What Danes should know about the local content policy in Brazil

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To shed some light upon this subject I´ll first bring the name and function of a few agencies and institutions in Brazil that are relevant in the Oil & Gas chain in Brazil. This perhaps can turn the subject more palatable.


Agencies and Institutions Danish companies should know before coming to Brazil

Petrobras

The largest Brazilian company, Petrobras is present in more than 28 countries today and is a major player in the energy sector. Petrobras plays a major role in the production,refining,commercialization,and transportation of oil and derived products

ANP ( Agência Nacional Petróleo, Gás e Biocombustíveis)

Created in 1997 its main function is to regulate, promote licitations and monitor any activity involving Oil&Gas, Natural Gas and Biofuels in Brazil. It is essential that Danes have the knowledge of who is ANP. ANP functions as the “referee of a match”.

ONIP ( Organização Nacional da Indústria do Petróleo)

National Organization for the Oil & Gas Industries acts as a forum to promote articulation and cooperation among the exploration, production, refining, processing,transportation and distribution of Oil and derived products, suppliers of goods and services in the oil sector.

Here you can find a record full of suppliers. You will find it in a special link called CADFOR which stands for Cadastro de Fornecedores.

Prominp ( Programa da Nacionalização da Indústria Nacional da Indústria de Óleo e Gás)

Prominp is a program created in 2003 that seeks through multiple initiatives interconnect and boost the development of the national industry in the Oil & Gas sector in Brazil.


Local Content in the Oil&Gas Industry. What Danes should know about it?

The Local content policy is a value of nationalization established by the federal government. It means that in one specific product or equipment or service there must be a percentage manufactured locally. As an example there are construction equipment, where the % of pieces and locally manufactured components must be of at least 60%.

The local content policy was created with the intent of increasing the participation of the national industry in Oil & Gas projects.


Where local content is required?

Not all goods and services must be certified. Shall only be certified goods and services acquired and  used directly by the concessionaire in the exploration and development of blocks put up for bidding.

If your company wants to have a strong presence in Brazil it is recommended that you start studying the best possibilities. Perhaps a joint venture, perhaps start producing locally. You should definitely spend a lot of time with your team studying what would be the best strategy to tap into the Brazilian Market.


Brief Outlook

Here you can have a general profile of international and national suppliers, and what type of products they supply in the Oil& Gas chain.

oil and gas opp example


Conclusion

I believe that what is most relevant for Danes is to be aware that the equipments and services will have it´s origin in the operator (concessionaire), who ultimately is responsible for the transformation of oil in product, responsible for defining the specification of products and services and the requirements of service level for the rest of the chain.

If you supply spare parts, for instance, your content might not have to be local. But still this is a vague analysis. You should invest in a market research to find out where and what are the opportunities,challenges and threats to your company within the Oil&Gas sector in Brazil.

If you´d like to see the calculation basis of local content or you have any comments on this subject, please let me know, or just put it on the discussion thread.

Did i miss out on something? Put it on the discussion thread as well.

Hope you enjoyed it.

Mange Tak!

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Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.

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