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Brazil's local content versus cost and production levels dilemma

Brazil's local content versus cost and production levels dilemma
The drive for protectionism and local content in the offshore oil and gas industry are facing issues of higher costs and lower production.

Peter Evensen, president and ceo of Teekay Corp told the Nor-Shipping Agenda Offshore conference that there would always be protectionism but what was more interesting was when a country realised they did not need its. Evensen cited the example of Australia and the relaxation of its cabotage laws, a move which is strongly opposed by the unions.

Brazil, which has rolled increasingly strict local content rules, is now looking at relaxing the rules having been hit by soaring costs.

“Brazil is the most interesting question because they are going to have to choose between prioristisng local content, which will mean lower oil production or allowing more foreign content, which will mean faster oil production. That is part of the debate that is going on right now.”

Kristian Siem, chairman and ceo of Siem Industries also sees Brazil realising it needs to relax its local content rules.

“The problem is when a country like Brazil where there is some experience now, they actually force high technological requirements for local content which drove the prices up to a point where its detrimental to Brazil as a country, and I think Brazil has realised that,” Siem said.

With African countries such as Nigeria pushing to have similar local content rules he said they should learn from the Brazilian experience.

“I think when you look at the continent of Africa hope they will take a leaf out of the Brazilian experience and think about what is natural for each individual country to do, and what will take a bit longer before they force it onto the local industry,” he said.