IBP Positioning – House of Representatives passes bill with new local content rules affecting the competitiveness of Brazil’s O&G sector

Criado em : May 29, 2024 | Atualizado em : June 5, 2024

IBP is concerned at the passing by the House of Representatives last night of Amendment 26 to Bill 914/24 (Provisional Measure 1205 MOVER Program), which establishes new local content rules for oil exploration and production activities. The indices set out in the measure were not included in the original wording of Provisional Measure 1205 and have no thematic relevance in the matter.

The provision included at the last minute and without the necessary debate with the productive sector represents a serious barrier to the viability of projects, having been established without any further in-depth technical study. This new framework suppresses the powers and prerogatives of the MME, ANP and CNPE to set local content rates according to the characteristics of each project, in line with international practice, which could even constitute a possible breach of international trade agreements to which Brazil is a signatory, opening the way for challenges at the WTO and other forums.

Changing the rules without proper debate with the sectors involved represents a clear deterioration in the national business environment for investments in the oil and gas sector. The immediate effect of such is the potential loss of attractiveness for the ANP’s next auctions of exploratory areas, hindering the development of future projects in Brazil.