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Local Content and Extractive Industry in Brazil

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Sovereign Wealth Funds, Local Content Policies and CSR

Part of the book series: CSR, Sustainability, Ethics & Governance ((CSEG))

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Abstract

Local content clause is the obligation of hiring a share of national goods, employment, as well as services in the exploration, development and production processes. If companies do not comply with this clause, they will incur a fine applied by government agents. The Brazilian oil and gas industry has used the local content clause since 2003. The clause and regulation is long, and the details allow the contractor to know each parameter before the bidding round, to be prepared, and to be aware of the penalty in case of disobeying. This chapter answers the following questions: (i) What are the main obligations related to local content in Brazil within the extractives resources industry? Are there any peculiarities? (ii) What are the main challenges that extractives resources are facing with regards to local content practices and local involvement? (iii) What are the best and worst experiences with local content requirements in the extractive resources sector in Brazil?

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Notes

  1. 1.

    According News from R7 (2016), authorities informed that the local content attendance was not be used as a metric in order to evaluate proposals in the coming bidding rounds for petroleum exploration areas.

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Acknowledgements

We gratefully acknowledge support of the RCGI—Research Centre for Gas Innovation, hosted by the University of São Paulo (USP) and sponsored by FAPESP—São Paulo Research Foundation (2014/50279-4) and Shell Brasil, and the strategic importance of the support given by ANP (Brazil’s National Oil, Natural Gas and Biofuels Agency) through the R&D levy regulation.

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Authors and Affiliations

  1. IEE, University of São Paulo, São Paulo, Brazil

    Israel Lacerda de Araújo & Hirdan Katarina Medeiro da Costa

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  1. Israel Lacerda de Araújo
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  2. Hirdan Katarina Medeiro da Costa
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Correspondence to Hirdan Katarina Medeiro da Costa .

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Editors and Affiliations

  1. Siberian Federal University, Krasnoyarsk, Russia

    Eduardo G. Pereira

  2. College of Arts, Business, Law and Social Sciences, Murdoch University, Murdoch, WA, Australia

    Rochelle Spencer

  3. Department of Sociology and Political Science, Norwegian University of Science and Technology, Trondheim, Norway

    Jonathon W. Moses

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de Araújo, I.L., da Costa, H.K.M. (2021). Local Content and Extractive Industry in Brazil. In: Pereira, E.G., Spencer, R., Moses, J.W. (eds) Sovereign Wealth Funds, Local Content Policies and CSR. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-56092-8_17

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