Brazil: The PROMINP Program, PETROBRAS Local Content Policy and Maritime Equipment Demands

Brazil: The PROMINP Program, PETROBRAS Local Content Policy and Maritime Equipment Demands Opportunities for Suppliers Houston, Texas 6 th to 9 th May 2013

Agenda PROMINP: O&G Brazilian Industry Mobilization Program PETROBRAS' Local Content Policy Brazilian Main Shipyards Offshore and Maritime Equipment Demand

Agenda PROMINP: O&G Brazilian Industry Mobilization Program PETROBRAS' Local Content Policy Brazilian Main Shipyards Offshore and Maritime Equipment Demand

PROMINP: O&G Brazilian Industry Mobilization Program May 2013 Apresentação ao Comitê Diretivo

PROMINP s Mission Maximize goods and services national industry content, within competitive and sustainable basis, in the implantation of oil and gas projects in Brazil and abroad.

Prominp Management Structure Steering Committee MME Minister MDIC Minister PETROBRAS President and Services Director ONIP CEO/President BNDES President IBP President Oil, Natural Gas and Renewable Fuels Secretariat Executive Committee Executive Coordinator MME Oil, Natural Gas and Renewable Fuels Secretariat MDIC Development, Industry and International Trade Secretariat BNDES - Director PETROBRAS Engineering Executive Manager PROMINP Executive Coordinator ONIP Director IBP Director Associations President / Director (ABCE, ABDIB, ABEMI, ABIMAQ, ABINEE, ABITAM SINAVAL e CNI) Exploration & Production Sectorial Committee Maritime Transportation P&G IND G&P and Pipelines Downstream PETROBRAS IBP BNDES

Strategic Subjects CHALLENGE Maximize Local Content Strategic Subjects Qualification Industrial Policy Industry Performance Technological Qualification Industrial Capacity Financing Regulation Sustainability Competitiveness Professional Qualification Tax Policy Foster micro and small companies Safety, Environment and Health Prominp Projects Portfolio E&P MT Downstream GP&Pipelines O&G IND Environment Technology

Examples of Results Qualification Instrumentos de Política Industrial Desempenho Empresarial Technological Qualification Industrial Capacity Financiamento Regulação Sustentabilidade Competitividade Professional Qualification Política Tributária Fomento à Pequena e Média Empresa SMS Suppliers Development

Suppliers Development Objective Develop domestic suppliers in a competitive and sustainable way, for the manufacture of equipment and materials that are not provided by the national market. Competitive Substitution of Imports Cases of success (examples) Lifeboats nationalization (E&P-11) Offshore cranes nationalization (E&P-11)

Examples of Results Qualification Industrial Policy Industry Enterprise Performance Technological Qualification Industrial Capacity Financing Regulation Sustainability Competitiveness Professional Qualification Tributary Policy Tributary Policy Foster Foster micro Small and and Medium small companies Enterprise Safety, Environment and Health Professional Qualification Plan

Establishment of the National Professional Qualification Plan PNQP PROFESSIONAL GAPS IDENTIFICATION BOTTLENECK Lack of qualified professionals to respond competitively Establishment of PNQP (2006) ACTION Provide skilled professionals in the country to operate in different links of the supply chain for the categories and quantities necessary for the oil and gas projects implementation. EXAMPLES OF DEMANDED PROFESSIONAL CATEGORIES Level of the Professional Category Structuring of professional Careers High Specialization Advanced Regular Examples: Production operators, etc.; High investments in infrastructure for the viability of professional qualification; Only experienced professionals. Examples: Cargo Operator, inspectors etc.; Only experienced professionals. Examples: Engineer, Technician, Electrician, etc; Professionals with or without experience.

Results Instrumentos Capacitação de Política Industrial Instruments of Industrial Policy Desempenho Empresarial Capacitação Financiamento Tecnológica Capacitação Regulação Industrial Financing Regulation Sustentabilidade Competitividade Qualificação Política Profissional Tributária Fomento à Pequena e Média Empresa Tax Policy Foster micro and small companies SMS Funding mechanisms for working capital

Financing Mechanisms Support the structuring of new mechanisms for financing and capitalization of the production chain. FIDCs Investment Funds in Receivables PROGREDIR FIPs Private equity funds Fund to anticipate major receivable credits; 9 Funds in operation: 1.528 contracts; Over 300 financed suppliers; R$ 3.8 billion in anticipation of receivables. Financing the supply chain; 10 participating banks; Over R$ 5.8 billion granted in loans; Over 1.152 transactions involving 491 companies of 21 states in all regions of Brazil; Reduction of 20% to 50% in interest rates. Fund of Private Equity 1 Operating Fund - net worth of U.S. $ 500 million.

Examples of Results Instrumentos Capacitação de Política Industrial Industrial Policy Desempenho Empresarial Capacitação Financiamento Tecnológica Capacitação Regulação Industrial Financing Regulation Sustentabilidade Competitividade Qualificação Política Profissional Tributária Fomento à Pequena e Média Empresa Tax Policy Foster micro and small companies SMS Local Content Booklet

Local Content Booklet ( Cartilha ) Main Concept The Cartilha (booklet) is the official methodology for measuring local content, published by the ANP in 2005; It aims to identify the source of manufacture of components that make up each piece of equipment and service; The calculation is separated into: Local Content of goods Local Content of Services Local Content of goods for temporal use, Local Content of systems and sub -systems For the booklet, an item is not simply "national, but has "x%" Local Content. Goods (%) = 1- cost imported inputs x 100 selling price of good without taxes Services (%) = cost of skilled local labor force x 100 total cost of manpower

Examples of Results Instrumentos de Política Industrial Instrumentos de Política Industrial Industry Performance Financiamento Regulação Financiamento Regulação Sustainability Competitiveness Política Tributária ria Fostero à Pequena e Média Empresa Política Tributária ria Fostero à Pequena e Média Empresa Safety, Environment and Health Competitiveness Study of Goods and Services for Oil and Gas Market

Competitiveness Study of Goods and Services Supplier Industry of Oil and Gas Market Competitiveness Study 2008 Competitiveness World Class Industrial Sectors 18 industrial sub-sectors 2 perspectives: Technical-Industrial Qualification Tax and labor legislation, financing and guarantees

National Industry Competitiveness Diagnosis General Competitiveness Roadmap Sources: UFRJ Economy Institute and Petrobras

National Industry Competitiveness Diagnosis Medium Level Competitiveness Sectors Expansion of Production Capacity Technology update / Association with foreign companies Sources: UFRJ Economy Institute and Petrobras