Shell: Incentives Needed To Reach Brazil's Local-Content Targets

RIO DE JANEIRO - The Brazilian unit of oil and gas firm Royal Dutch Shell PLC is calling for a system of incentives to help companies reach local-content requirements in Brazilian oil and gas production projects, Shell Brasil's Chief Executive Andre Araujo said Tuesday.

"Incentives need to be introduced to create greater interest among suppliers" to the industry and as oil companies come to grips with Brazil's regulatory framework for development of the nation's presalt oil fields, Araujo said during an event on Brazil's development in Rio de Janeiro.

These could include tax incentives and a move away from a system involving penalties if targets aren't met, Araujo told reporters at the event.

"We're not talking about radical changes," Araujo said. "The dialogue is open."

Proposals for the introduction of incentives in the area of national content could be channeled to the government via the Brazilian Oil Institute, or IBP, he said.

Brazil's oil industry will eventually reach the national input targets of 65% set by the government, Araujo said, without indicating when this may occur.

However, this needs to be achieved without creating market protectionism, of which there is currently a risk, he said.


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