ABS Group Local Content Manager, Thereza Moreira recently provided Offshore Technology Conference attendees with an inside look at local content requirements in Brazil, along with guidelines on how they can be met. Thereza is based in ABS Group's office in Rio de Janeiro, Brazil.
An inside look at local content in Brazil
By Thereza Moreira, Local Content Manager
Local Content Manager,
In recent years, local content has become a common industry term as well as a key driver in the bid process for projects around the world. Local content refers to the actions necessary to develop manpower skills, develop new technologies and set a strong industry in countries that host oil and gas projects. These actions can be comprised of local recruitment, training and the purchase of local goods and services.
Local content standards are established by the company executing the project, meaning they specify the percentage required of each type of local content certification for the project - whether it is for goods, services or systems. Some companies place more emphasis on goods and systems while others may place more value on the local content of services, such as using local suppliers and training local employees. As service companies or suppliers bid for work, they must take into account how they will meet these requirements.
Local content is measured by the ratio between the value of goods and services provided domestically (in Brazil) to meet contract obligations and the total value of goods and services used. Though there are different types of local content certifications, the overall goal of local content is unified. The aim is to increase the participation of domestic manufacturers and service providers in the oil and gas supply chain on a competitive basis. This promotes the growth of domestic businesses, the country’s technological development, the development of local professional talent and the generation of employment and income.
Regulation of Local Content in Brazil
Since local content standards can vary for each company, the National Petroleum Agency (ANP) - the Brazilian government regulatory agency - audits the oil and gas companies to ensure local content requirements comply with national standards.
Additionally, third-party certifiers, such as ABS Group, are accredited by ANP to audit suppliers of goods and services. These certifiers check for the total amount of local content to ensure they are in compliance with the requirements established in the regulations of local content certification.
By implementing local content into projects, the Brazilian government hopes to expand Brazilian reserves of oil and natural gas, maintain self-sufficiency in oil production, minimize dependence on foreign natural gas, attract new investment to the E&P sector and encourage domestic companies to supply goods and services.
ABS Group’s Local Content Presence in Brazil
ABS Group has been performing a range of certification activities in Brazil for more than 40 years and has been a local content certifier accredited by ANP since 2008. ABS Group is a leader in local content certification, delivering more than 40 percent of all local content certifications, and overall, is one of the largest oil and gas certifiers in Brazil and around the world.
We are authorized to certify a range of activities such as geophysical, rig or vessel construction, drilling, completion, cementing, pumps and all other local content relevant activities. We support the greater integration among the client’s divisions and can rapidly identify the items that need to be measured, audited and certified. This strategy allows us to customize our approach to local content while maintaining independence from other certification activities.
Meeting Local Content Objectives
To establish a successful local content program, it is important for companies to understand the business benefits and create a well-defined strategic plan for its development. Companies who want to implement a successful local content program should invest in the following strategies:
- Build and maintain a partnership with local companies
- Set production units in Brazil or joint ventures with Brazilian suppliers
- Increase the participation of local labor on services and provide training to Brazilian employees
- Expand the dialogue and interaction with the supply chain
As companies look to expand their business into Brazil, ABS Group is on the ground in Brazil and ready to help tap into the rich market.
Learm more about Local Content in Brazil.
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