MercoPress. South Atlantic News Agency

Brazil oil industry wants new auction rights rules and more efficient sourcing requirements

The IBP also wants the government to make changes to the legislation governing auctions to reduce “uncertainty that causes investors to stay away,” De Luca said.

The Brazilian Petroleum Institute, or IBP, has called on the government to change the regulatory framework to deal with the crisis caused by the collapse of oil prices and the corruption scandal at state-controlled oil giant Petrobras.

 The industry would like to discuss the rules for the auction of oil exploration rights with the government, which just postponed the next round of bidding until the end of the year, to implement changes, executives of the IBP, the industry's trade association, said in a press conference.

The industry wants the requirement that bidders use a minimum percentage of equipment manufactured in Brazil dropped from the next auction, outgoing IBP president João Carlos de Luca said. On Tuesday De Luca handed the post to Jorge Camargo.

The IBP also wants the government to make changes to the legislation governing auctions to reduce “uncertainty that causes investors to stay away,” De Luca said.

Camargo, for his part, said the local sourcing requirement should be changed to apply to sectors in which Brazilian firms are competitive and eliminated for those in which domestic suppliers cannot meet the demand for products, causing supply and cost overrun problems.

”The local industry lacks the capacity to meet the demand generated by the pre-salt (deepwater Atlantic oil fields that hold vast petroleum resources). Before the crisis, we already had problems,” De Luca revealed.