Oil and natural gas: Change of strategy

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2018 was not an easy year for suppliers of goods and services for oil and natural gas activities. In recent years, there has been a reduction in Petrobras’ pre-salt obligations and the definition of concession and production-sharing auctions, generating optimism and increasing investments. However, the local content policy was redesigned, which at first generated legal uncertainty and bad expectations. Adbid’s Oil and Natural Gas Committee started evaluating changes and redefining strategies.

One of the changes referred to Repetro, a customs tax regime that suspends the collection of federal taxes when importing any piece of equipment for the oil and gas sector, mainly exploration platforms. Another change was the reduction of local content indices for future concession and production-sharing auctions for already contracted blocks, including pardon for local content obligations not complied with. However, the publication of a program to foster the modernization of the production chain raised expectations for the sector.

The local content policy was established in the past to compensate for higher production costs and provide Brazilian companies with better conditions to compete with foreign suppliers of goods and services used in the development of the oil and gas blocks. The strategy now is to accelerate investments that increase orders and opportunities for all competitors. However, this guideline does not relieve the government from carrying out reforms that reduce tax, financial, labor and logistics costs.