(Adds comment from opponents to rule change)
By Lisandra Paraguassu and Marta Nogueira
BRASILIA Feb 22 Brazil's government said on
Wednesday it would relax local purchasing rules for the oil
industry as of September in an effort to attract foreign
investment and lower costs that have hindered development of
vast off-shore reserves.
Mines and Energy Minister Fernando Coelho said the
requirement that oil companies operating in Brazil buy equipment
locally would be lowered by close to half, adding that the level
in the exploration of offshore oil fields would be 18 percent.
Temer's administration has been taking action to boost
private investment in the country's oil industry, such as
removing a requirement that state-run oil company Petrobras be
the sole operator in tapping the vast offshore reserves in the
The largest deep-water oil fields ever found were discovered
off Brazil around a decade ago but the fall in oil prices,
restrictions such as the local purchasing rules and the
indebtedness of scandal-plagued Petrobras have slowed their
development to a crawl. Much of the deep-water equipment needed
is imported U.S. technology.
"Everyone agrees that with more realistic percentages we
will be able to give new dynamism to the oil and gas industry,"
But not everyone did agree.
The Brazilian machine and equipment makers association,
ABIMAQ, complained the new rules would wipe out local companies
that supply the oil industry while foreign oil firms pumped out
oil for export creating no wealth or jobs in Brazil.
"Brazil has suddenly dumped the North Sea model of Norway
and Britain and adopted the OPEC model of Venezuela, Nigeria and
Angola which have no local service industries," said ABIMAQ
president Jose Velloso.
The lower requirements would apply to concessions to be
auctioned in September in the 14th round of exploratory oil and
gas blocs and the 3rd subsalt round scheduled for November, he
The auction of marginal oil fields in the first half of this
year would not have local purchasing rules and the 2nd subsalt
round that would auction areas discovered adjacent to current
blocs would be held under the previous purchasing rules, he
On-shore blocs would have minimum local purchasing
requirements of 50 percent, for both exploration and
development, while the percentage for off-shore exploration
would drop to 18 percent.
Off-shore development rules, however, would differ, with
well drilling requiring minimum local purchases of 25 percent,
collection and storing of oil 40 percent and stationary
production units 25 percent.
(Writing by Anthony Boadle; Editing by Alistair Bell and Andrew