Reuters logo
Brazil president says to maintain oil rules, national content
May 14, 2015 / 6:06 PM / 3 years ago

Brazil president says to maintain oil rules, national content

RIO DE JANEIRO, May 14 (Reuters) - Brazilian President Dilma Rousseff said on Thursday that her government will maintain rules that mandate production-sharing contracts for the country’s most promising areas and high national content requirements for the oil industry.

“The local content policy is not something that can be set aside, it is central to my policy of reviving our country’s investment capacity,” Rousseff said at the christening of an oil tanker at the Atlântico Sul Shipyard near Recife, Brazil.

“We are going through a period of macroeconomic difficulty, but today things are different because we have these shipyards.”

The national content rules, which led to the building of the Atlântico Sul and Rio Grande shipyards, have been blamed for excessive costs and project delays by many oil companies, including state-run Petroleo Brasileiro SA. The rules have been strengthened under Rousseff.

Atlântico Sul and Rio Grande, located in Brazil’s southernmost state of Rio Grande do Sul, have reputations for delivering overpriced ships behind schedule.

Both have recently been forced to give up or scale back some of their biggest potential contracts. At least one oil production ship from Rio Grande was delivered to Petrobras unfinished, forcing high-cost completion at sea and forcing a safety shut-down by Brazil’s oil regulator ANP.

The debt of Petrobras, as the oil company is commonly known, has soared and its financial strength has been weakened by falling world oil prices and a massive corruption scandal. As a result, Rousseff has come under pressure to ease some of the content requirements.

Business leaders and politicians, and even some of Rousseff’s aides, are urging Rousseff to change rules on the sale of rights to develop new areas in Brazil’s most-promising offshore oil region, known as the Subsalt Polygon, which already accounts for more than 80 percent of the country’s oil output.

Under a 2010 law written by Rousseff, Petrobras is the only company that can operate oil fields in unleased parts of the subsalt region. Critics say this will saddle Petrobras, the world’s most-indebted major oil company, with projects it does not want or cannot develop financially, forcing the government to forgo auctions of new areas. (Reporting by Jeb Blount; Additional reporting by Pedro Fonseca; Editing by Chizu Nomiyama)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below