Procuring of goods and services concessionaires have to meet local content targets when procuring goods and services. Pdf an assessment of localcontent policies in oil and gas. The work analyses two specific local content policies affecting directly or indirectly the shipbuilding industry in two countries. Brazil will stop favoringcompanies that offer to purchase a larger amount of local goodsand services when selecting. Pdf the purpose of this article is to discuss the development, goals, and. Stimulating direct local employment executive summary when a mining company arrives in an area, the promise of local employment is central to public debate in leastdeveloped, developing and developed countries alike. Local content requirements are defined on the basis of percentages. Bidders have to comply with a minimum threshold of local content requirements to win a bid. Brazils local content requirement as part of national concession contracts in the oil and gas sector, and the longstanding us jones act obliging intraus seaborne trade to be conducted on us built and us flagged. Brazil was forced to ease local content rules after oil.
What percentage of your countrys energy needs is covered, directly or indirectly, by oil or gas as opposed to nuclear or nonconventional sources. Many oil and gas producing states are introducing requirements for local content into their regulatory frameworks. Countries vary on the level of specificity of local content requirements and whether they include provisions for employment, training or ownership. Olawuyi, senior visiting research fellow, oies and associate professor of law, hamad bin khalifa university, doha, qatar. Local content requirements in the oil and gas industry in. This is particularly true in the ipc segment, in which the requirements of. Local content requirements in argentina and brazil and what. Increasing the competitiveness of the brazilian industry would ultimately lead to social and. Increasingly, more resourcerich developing countries are enacting localcontent legislation as a means. What percentage of the petroleum product needs of your country is supplied with domestic production. British companies often quote the local content requirements of both countries as a barrier to trade, although some have seen it as an opportunity to enter these markets through local production. It was commissioned for and forms part of the background documentation for an ad hoc expert group, entitled.
Opportunities and benefits of local content requirement. Minimum local content requirements are established in licensing round for the award of oil and gas exploration and production rights, and change over time and for different type of acreage based on relative maturity and location specific commitments are set out in petroleum contracts. Categories of local content metrics in the oil and gas sector 66. We have covered protectionist measures elsewhere in this blog, particularly when discussing trade with argentina and brazil. Local content in the oil and gas sector world bank documents. The angolan government is due to approve legislation to regulate local content and introduce clear, feasible and nonbureaucratic procedures in the oil industry in order to allow an effective and growing participation by the domestic industry, said on monday in luanda the minister of state and head of the civil house of the president of the republic. And oil, gas and mining companies now rate local content among the most significant expectations in the communities in which they operate. Employment and training there are no employment or training requirements in the brazilian legal framework for local content. The use of local content requirements in the world economy local content requirements lcrs have a long history. The fifth section will highlight the recent developments in the oil and gas industry, such as the petroleum industry bill and the local content act. It sets minimum targets for nigerian participation in 280 categories of oil services with the aim of fostering backward and forward linkages. The world banks sustainable energy department and oil, gas and mining unit are organizing a global conference on local content in the oil, gas, and mining sectors, to be held in vienna on september 30october 1, 20. Classification of local content policies by channel of intervention and transversality 60 figure 4. Brazil to ease local content requirements in oil, gas auctions report.
Oil and gas local content online learning alliance outline. An attempt is made to measure local content levels in a wide sample of petroleumproducing countries including net importers and net exporters, and countries at different stages of economic development to put lcps in context and to consider if the structure of an economy is a key driver of local content levels. The brazilian localcontent policy in the oil and gas. Brazil will likely limit planned cuts in local content requirements for future oil exploration and production contracts in a move aimed at appeasing local suppliers and to pave the way for an. Oil companies that migrate to the revamped requirements will no longer be eligible to seek a waiver for noncompliance related to previous commitments, the anp said. Local content management in the oil and gas industry 5day. Average local content offered for various bidding rounds. Nov 27, 2018 a structured guide to oil and gas exploration and production laws in brazil. The oil and gas industries have revolutionized human lives and improved our standard of living. This percentage was one of the highest local content requirements in the world, contributing to high breakeven prices. A survey of the literature on local content policies in the oil and gas industry in east africa chilenye nwapi summary although oil and gas exploration has been going on in east africa for decades, until recently exploration activities grew more slowly compared to. Local content and procurement requirements in oil and gas. Focusing on the experience of the eastern siberia the paper examines the way national companies operate in the newly developing oil and gas provinces of.
Local content policy in the brazilian oil and gas sectoral system of. Previously, oil and natural gas operators in brazil were required to source up to 85% of equipment and services from domestic industry. Local content policies in the oil, gas, and mining sector. To minimise the difficulties faced by oil companies in relation to the local content requirements, the brazilian government enacted federal decree no. Local content requirements in brazil are compounding a manpower shortage and contributing to cost inflation in the countrys booming oil and gas sector as staterun petrobras starts to bring a series of deepwater projects into production, the head brazils largest oilfield services provider odebrecht has said.
Compliance with a minimum threshold of local content requirements is a criterion for winning a bid. View local content in oil and gas industry research papers on academia. The industries products constitute building blocks at every level of production and consumption in key. Regional trends in the middle east and north africa damilola s. Examining local content law and policy in the oil and gas industry, this book uses nigeria as a primary case study, comparing its approach to countries such as brazil and norway which have also adopted local content laws in relation to their gas and oil industries. In the brazilian oil and gas industry, two agents stand out. Jun 20, 2018 relaxing of brazil local content rules will boost oil output capacity. In the recent years, a growing number of developing countries are adopting local content lc requirements as condition for exploring and developing oil and gas resources in their home countries, with brazil being a leading example and mexico as the latest follower. Local content and procurement requirements in oil and gas contracts. Angolan government wants to increase local content in the. A survey of the literature on local content policies in the. Angolan government wants to increase local content in the oil. In the upstream oil and gas subsector, pemex is no longer the only player. These requirements aim to create jobs, promote enterprise development and accelerate the transfer of skills and technologies.
Local content legislation and policies in oil and gas producing countries have become a key priority of host governments and industry players alike. The sixth part will conclude the analysis, where the inherent weaknesses of the aforementioned laws and regulations will be brought to the fore. Local content is the development of local skills, oil and gas technology transfer, and use of local manpower and local manufacturing. Local content in the oil and gas sector english the world. The subsoil use law also established the governments right to preempt any sale of oil and gas assets. Nigeria has long experience of local content policy in the oil and gas sector. Local content requirements also have been lowered to match levels that operators were able to achieve. Lifting the resource curse by using local content requirements. Part 2 briefly outlines the policies and regulatory frameworks adopted by the countries in their local content strategies.
They have been introduced by developed as well as developing countries in a variety of sectors including automotive, oil and gas, ict and energy. It also indicates that the introduction of competition also has brought new features and improvements to oil and gas industry in brazil. Ghana is fortunate to be one of the few nations that have strong regulatory framework dealing with issues relating to the local content. Relaxing of brazil local content rules will boost oil output. A guide to brazils oil and oil derivatives compliance. Eduardo g pereira has been active in the oil and gas industry for over 10 years and. Enhancing the benefits at the subnational level policy framework prepared for revenue watch institute october 2012 draft.
Petroleum local content and local participation regulations, 20 in exercise of the power conferred on the minister responsible for energy by section 22 of the petroleum commission act, 2011 act 821, these regulations are made this 5th day of july, 20. The adoption of local content policies could facilitate the exploitation of oil, gas and mining resources to generate sustainable social and economic benefits to the society. Brazil likely to limit cuts to local content requirements. For local communities, decent mining company jobs that are safe, stable and fairly compensated. Apr 21, 2016 there is a strong case for emerging oil and gas producing east african countries to consider adopting the local content policy lcp. Local content law established strict local content requirements for oil and gas contracts. Public regulation of the oil and gas industry in nigeria. In an effort to attract new investments, brazilian authorities made substantial changes to local content requirements for the 14th bidding round for exclusive rights to exploration and production of oil and gas. Local content policy upstream guide deloitte brazil. Authorities reduce local content requirements for oil and gas. Local content requirements in a country can be implemented on a projectbyproject basis through contracts or universally through national legislation. This publication, local content requirements and the green economy, is a product of the trade environment, climate change and sustainable development branch, ditc, unctad.
This gl o macs local content management in the oil and gas industry training seminar will discuss the business benefits of developing the primary components of a local content strategy, including building local workforce and supplier capacity, integrating local. Local content in the oil and gas sector english the. Structuring a robust legal framework that will foster the. Local content requirements have been set up historically in each bidding. General view of the brazilian regulatory framework. Procedures in the oil industry decree 4806, decree law on. Ecipe occasional paper 12018 the economic impact of local. While there is no universallyaccepted definition of this term in the petroleum industry, local content or national content can be thought of as the. After many weeks of heated discussion between different branches of government and industry bodies, on 22 february 2017, the brazilian government announced its proposed changes to the rules on local content requirements for goods and services used in the exploration and development of oil and gas, indicating that the rules will be simplified and current levels will be relaxed significantly. Local content in the extractive industries is being given ever higher priority by host governments through a wide array of policy instruments. At the core of this paper prepared for revenue watch institute is the assumption that there is a need for greater effort in ensuring local content development increases economic activity within the geographic area affected by oil, gas or mining ogm projects.
The upstream petroleum industry and local industrial development. Ipieca has also developed a second edition of the guidance, local content strategy. Local content in brazilian oil industry national oil company of. Brazil proposes relaxation of local content requirements. Pdf an assessment of localcontent policies in oil and. Overview of local content regulatory frameworks in. In the context of oil and natural gas, local content is the portion of the. Overview of local content regulatory frameworks in selected. Ecipe occasional paper 12018 the economic impact of. The local content level for offshore exploration will be 18%, while the offshore production phase will be divided into three subgroups. Pdf local content policy in the brazilian oil and gas. Localcontent legislation and policies in oil and gas producing countries have become a key priority of host governments and industry players alike. Policy makers in such countries are anxious to obtain the greatest benefits for their economies from the extraction of these exhaustible resources by designing appropriate. The sixth part will conclude the analysis, where the inherent.
Local content in brazil is addressed in the context of bidding rounds for concession and productionsharing contracts. Brazil cuts local content requirements to attract oil. The energy reform is driving market growth in that large investments will be required in order to comply with the award schedules for shallow water, onshore, deep water, and heavy oil and gas projects. In recent years, these requirements have been one of several factors contributing. Resourcerich countries are increasingly inserting requirements for local content local content provisions into their legal framework, through legislation, regulations, contracts, and bidding practices. Brazil oil regulation getting the deal through gtdt. The national energy policy council cnpe develops brazils local content policy and the. These two agents bear the responsibility to both implement and carry out brazil s industrial policy for the oil and gas supply chain. Once a pyxera global local content development initiative is in place, local businesses are better able to comply with complex contracting requirements and stringent environmental health and safety standards, to meet the procurement demands of contractors and the extraction site owner, and to drive economic growth across the entire community.
Ghanas participation of local content in oil and gas industry. Oil and gas are essential components of modem, industrialized civilization. The government was forced to take steps to loosen local content rules. The nigerian oil and gas industry content development act 2010 lists targets for progressive increases in local content. The enduser community using this resource is diverse, and includes representatives of government, industry, academic institutions, nongovernmental organizations, and individuals. Oil and gas exploration and production laws in brazil lexology. Normalized links are the ratio of the oil and gas sector link to the average unweighted link over all sectors. This paper explores the regional economic impact of mineral resource endowment and offers specific inputs to the debate on the local content requirement lcr policy, gaining urgency in modern economic and political environment. Oil companies will be required to use 50% local content during the exploration and production phases of onshore oil and natural gas projects, the anp said in a statement late wednesday. Consequently, oil companies are subject from timetotime to high fines imposed by the agency. Local content requirements in the solar and windenergy global value chains this chapter describes the increasing use of local content requirements in green industrial policies. Local content in oil and gas industry research papers. The oil and gas industry in nigeria published by ggu law digital commons, 2016.
Not for citation or quotation ana maria esteves bruce coyne ana moreno. Nigerian oil and gas industry content development act 2010 no. The purpose of this article is to discuss the development, goals, and format of local content public policy within the context of the brazilian oil and gas sectoral system of innovation. Pdf local content policy in the brazilian oil and gas sectoral. General view of the brazilian regulatory framework 3. Brazil issues new endoflife rules for oil and gas fields. Changes to brazilian oil and gas industry regulations. Oil and gas local content online learning alliance outline learning goal participants will discuss and reflect on different strategies and approaches to local content and analyse the policy and outcome experiences of oil and gas producing countries in latin america and africa who have experimented with these policies. As brazil has now completed its 10th bid round, local content requirements have evolved over time. Oecd ilibrary local content requirements and their economic. Authorities reduce local content requirements for oil and. It discusses the arguments for and against such policies and describes the key findings of recent evidencebased analysis regarding their possible impacts on. Brazils move to ease rules forcing oil producers to buy from domestic suppliers means latin americas top producer will be able to sustain output of 5 million barrels per day pbd by the mid.
A number of countries have recently discovered and are developing oil and gas reserves. Firm local content commitments were not included in brazil s 1st to 6th bid rounds. Local content in the oil and gas sector english abstract. This article discusses the brazilian industrial policy to increase the local content of the oil and gas supply chain, focusing in the case of the instrumentation and process control sectors. Local content is now, more then ever, one of the major hurdles of thebrazilian oil and gas industry. Oct 17, 2016 brazil will stop favoring companies that offer to purchase a larger amount of local goods and services when selecting winners in oil and gas rights auctions, newspaper valor economico reported on. Brazil to ease local content requirements in oil, gas. Under stringent local content requirements in the south american country of brazil, oil production and the growth and development of the petroleum industry were significantly affected. The nascent nature of the oil and gas industry in the region means that these countries would not have the technical and even managerial expertise to meet the demands of the industry. Relaxing of brazil local content rules will boost oil. The online ei source book platform was conceived and.