(Recasts after government confirmation of report, adds
government comment, context on oil reserves)
BRASILIA Oct 17 President Michel Temer's
government will ease requirements that oil industry equipment be
produced in Brazil as part of its effort to draw investment and
lower costs that have hindered development of vast reserves, a
senior official said on Monday.
Rules for future contracts will allow the importation of oil
industry equipment that is not available in the country, Temer's
chief spokesman Marcio de Freitas told Reuters.
"This will make it cheaper to produce oil and reduce the
cost for Petrobras," he said of Brazil's state-led oil company.
De Freitas confirmed an earlier report by financial
newspaper Valor Economico that Brazil will stop favoring
companies that offer to purchase a larger amount of goods and
services locally when selecting winners in oil and gas rights
Temer's new centre-right government also intends to loosen
minimum local content rules by not specifying whether individual
components, such as bolts, have to be produced in the country.
Temer's administration has been taking action to boost
private investment in the country's oil industry, such as
removing a requirement that Petrobras be the sole operator of
vast offshore reserves in the costly subsalt layer.
The largest deep-water oil fields ever found were discovered
two decades ago but the fall in oil prices, restrictions such as
the local content rules and the indebtedness of scandal-plagued
Petrobras have slowed their development to a crawl.
(Reporting by Anthony Boadle in Brasilia and Bruno Federowski
in Sao Paulo; Editing by Daniel Flynn and Andrew Hay)