Optimization of the local content policy
On 12/27/2024, the Presidency of the Republic sanctioned Law No. 15,075, allowing the transfer of surpluses from the minimum local content monetary values between existing oil and natural gas exploration and production contracts.
The law also authorizes the federal executive branch to reduce royalty rates from oil and natural gas exploration and production concession contracts originating from the so-called Zero Bidding Round, promoted by the National Agency of Petroleum, Natural Gas, and Biofuels (ANP) in 2000. The reduction may be up to 5%, provided that companies invest in local content in these contracts, since they were initially established without minimum local content requirements.
These measures result from an initiative of the Presidency of the Republic and the Ministry of Mines and Energy (MME) aimed at optimizing the Local Content Policy (PCL), thereby encouraging greater contracting of Brazilian companies by operators in the oil and natural gas sector.
The measure strengthens Brazilian industry, as expanding local content generates higher-quality jobs, income, and competitiveness. The optimization allows for the transfer of any surpluses between contracts and ensures that Round Zero contracts will have local content obligations specifically related to the construction of new stationary production units, incentivizing domestic contracting at levels higher than the required minimum.
These adjustments aim to stimulate the national industry, creating incentives for the domestic acquisition of goods and services linked to oil and natural gas activities. This dynamic generates new opportunities for local industrial development while also driving technological innovation and human resource training.
The proposal applies to bids and contracts for oil and natural gas exploration and production. By permitting the transfer of surpluses between concession and production sharing contracts, operators are expected to invest in local content instead of paying fines for failing to meet minimum requirements in projects where indices proved difficult to achieve.
The Local Content Policy is a tool designed to increase the participation of domestic equipment and services in the oil and gas production chain. Within the scope of the Potencializa E&P Program, this agenda has been included as a priority, with the creation of a specific subcommittee to study the issue and propose regulatory and normative improvements to strengthen the national supply chain.
NUMBERS
Achieving 15% local content in the construction of a typical offshore production platform would bring:
R$ 2.7 billion in domestic goods and services procurement in the first two years
Approximately 18,000 direct and indirect jobs
Added value of R$ 2.4 billion injected into the economy, with around R$ 804 million in tax revenues
DATES
08/26/2024 – Bill 3,337/2024 submitted to the National Congress by the Presidency of the Republic and MME
12/12/2024 – Approved by the Chamber of Deputies as Law Nº. 15,075/2024
01/17/2025 – Decree No. 12,362/2025 was published, which regulates the procedure for reducing the amount of royalties in Round Zero contracts (contracts in force prior to the Sharing Regime Law) as an incentive for investments in the realization of local content in the exploration and production activities of these contracts
