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The Local Content Regulation forThe Local Content Regulation for

Concession AgreementsConcession Agreements

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Mature & democratic State

Economic stability

Solid regulations

environment: The BidRounds

Successful & strong

concession agreements

Pre-salt fields

61 active operators

3513 blocks offered & 731

concession agreements

Highlights

The Brazilian Oil & Gas MarketThe Brazilian Oil & Gas Market

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Contractual commitment ofpurchasing local goods and

services in a competitive

basis.

Definition:

What is Local Content? And why?What is Local Content? And why?

Development of local

suppliers & technology

Employment & income

growth

Objectives:

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Local Content RulesLocal Content Rules

Bids 1 to 4

Free LC offerings

LC Incentives

Bids 5 and 6

Minimum offering limits

No more incentives

Bids 7 to 10

Max. & Min. offering limits

LC Certification by 3 rd part

New methodology to calculatethe LC

Local Content was required in all Bid Rounds

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Local Content OfferingsLocal Content Offerings

40%MEP

40%Bonus

Local Content represents 20%

of the final score:

5% to exploratory phase

15% to development phase

LC offering applied on the 20 th

clause of the concession

agreement

Certificates to prove local

investments

At the Bid Round 20%Local

Content

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Local Investments

CertificationCertificationCertification

The ProcessThe Process

The 20th Clause of thecontract sets the localcontent commitment ofthe winning offering forthe exploratory anddevelopment phases.

C o n c e s s i o

n C o n c

e s s i o n

A g r e e m e n

tA g r e

e m e n t

Concessionaires

Local goods & services acquisition

ANP monitoring and auditing the contractual localcontent requirements

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Local Content RulesLocal Content Rules

Bids 1 toBids 1 to 66

Bids 1 to 6LC calculation: Declaration of Origin

Goods > 60% local items cost = 100% LC

Services > 80% local items cost = 100% LC

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Bids 7 to 10

LC calculation: 3rd part(companies accredited by ANP)

Imported items cost VS sales price

Compulsory certification to prove

local investments

Local Content RulesLocal Content Rules

Bids 7 to 10Bids 7 to 10

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Local Content Commitments onLocal Content Commitments on

Concession AgreementsConcession Agreements

* Only on-shore blocks

*

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Local Content AuditingLocal Content Auditing

Check the accomplishment ofcontractual Local Content

requirements.

Apply penalties when the contract

terms are not completely fulfilled.

Fines are proportional to the non-

realized local investment.

Procedures:

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How to increase Local ContentHow to increase Local Content

Making partnership andcooperation with local

companies;

Setting production units in Brazil;

Increasing the participation of

local labor on services;

Obtaining local contentcertification on goods and

services.

Suggestions:

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Increase the volume of local

investments (certification);

Inform the market about

certification process and its

rules;

Expand the dialog and

interaction with the industry,building a strong relationship

capable of facing controversial

issues.

Local Content ChallengesLocal Content Challenges

Main Challenges:

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Our Web SiteOur Web Site

www.brazil-rounds.gov.br

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Agncia Nacional do Petrleo, Gs Natural e BiocombustveisCoordenadoria de Contedo Local (CCL)

Av. Rio Branco, 65 - 17 andar - Rio de Janeiro RJ Brasil

Tel.: (55 21) 2112-8550 / (55 21) 2112-8535

mmacedo@anp.gov.brccl@anp.gov.brwww.anp.gov.br

Thanks!