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Friday, Sep 20
Petrobras production cut severely by made-in-Brazil rules, IHS says
- Petrobras (PBR -2.3%) could increase its productivity by as much as 1.5M bbl/day by loosening up on its made-in-Brazil rules, according to IHS managing director Enrique Sira.
- The challenges of meeting ambitious local content requirements - often higher than the local materials available - can make Brazilian projects less financially viable for foreign investors, Sira says; at least 37% of project materials must be locally sourced in the exploration phase and 51%-55% for the development phase, plus added requirements for specific inputs or activities, which further limits operators’ flexibility.
- The added cost burden from these rules is no doubt a major reason for the lack of interest in the upcoming auction for Brazil's huge Libra field, despite holding 8B-12B barrels of oil.