Page 41: of Marine News Magazine (May 2012)

www.marinelink.com MN41harsh rhetoric from Brazilian prose- cutors and some politicians, I doubtthat the Frade incident will prompt any major changes in how Brazil reg- ulates its industry.? Tyler Priest, global studies professor at the University of Houston and an expert on the history of offshore oil, said foreign companies interested in supplying Brazil's offshore market need to be aware of local content laws. Petrobras has to purchase 65 percent of its equipment from domestic suppliers to meet local con-tent rules set out by former President Luiz Inacio Lula da Silva. And drilling vessels built in Brazil should be made of mostly local content.Brazilian manufacturers, however, are struggling to deliver equipment as quickly and cheaply as more-estab- lished, overseas suppliers. All of Brazil's shipyards are fully booked, with backlogs. Reports are that Petrobras wants to lower the share of locally-produced content it uses in its supplies and services because many Brazilian companies can't meet demand fast enough. Freire adds, ?local content laws affect the off-shore industry in several ways, with higher costs, longer delivery sched- ules and below-standard quality.? Brazil's oil industry is flourishing but is also straining to access its findsefficiently. In early April, Petrobras said it had made a new, pre-salt dis- covery in the Santos Basin in the Dolomita Sul, well north of the Lula pre-salt oil field. "This discovery con- firms the potential of the pre-salt region outside the limits of the first discoveries," Petrobras said. That translates into opportunity. Foreign companies have opportunities in off- shore Brazil now and will have more if local content laws are eased. MN#5 (32-49):MN 2011 Layouts 5/7/2012 10:07 AM Page 41