New Federal Decree Seeks To Improve The Brazilian O&G Local Content Policy

Author:Mr Giovani Loss, Pablo Sorj, Bruno Werneck and Fabiano Luz De Brito
Profession:Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados

On January 18, 2016, the federal government enacted Federal Decree No. 8,637/2016 ("Decree"), establishing a program called Pedefor ("Pedefor") to foster competition in the chain of suppliers to E&P companies. This program seeks to facilitate the process for E&P companies to achieve their local content commitments to the National Agency for Oil and Natural Gas ("ANP") through new types of investments and activities. Pursuant to the Decree, E&P companies may undertake the following activities, among others: (i) purchasing goods, services and systems from a foreign supplier in order to facilitate its establishment in Brazil; (ii) directly investing in the suppliers' technological innovation; (iii) acquiring goods and systems in Brazil for use in activities abroad. 

E&P companies that choose to observe Pedefor's guidelines will receive Local Content Units ("UCL"). These UCLs may be used by E&P companies in complying with their local content obligations to the ANP.

The Pedefor will be coordinated and implemented by a Directive Board and by a Technical-Operational Board...

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