The government and the oil industry are preparing further measures to develop the supply chain. The focus is on financing research and innovation to replace imports or have large-scale manufacturing of more complex products. The effort is gathering strength as Petrobras demands faster delivery from the industry, a process that includes domestic-content rules for oil production and exploration.

The new actions and existing initiatives, such as traditional credit lines from the Brazilian Development Bank (BNDES), aim at accelerating the nationalization of oil equipment production, in order to meet the rules set for National Oil Agency (ANP) auctions. This effort is growing, but there is still no agreement among different market players on the results obtained so far. BNDES, for instance, sees a positive effect from the domestic-content rules, which it says led several multinational firms to move to Brazil and conduct applied research in oil and gas.

But some trade groups disagree. The Brazilian Association of the Electrical and Electronic Industry (Abinee) says the share of oil and gas in its sector continues to be small. “The industry is at the top [of the chain],” says Paulo Sério Galvão, Abinee's regional manager in Rio de Janeiro and Espirito Santo states. Alberto Machado, executive director of the Brazilian Association of Machinery and Equipment (Abimaq), says growth in the oil and gas capital-goods industry was far below the Petrobras investment expansion of the last decade.

Petrobras CEO Graça Foster demanded last week more results from domestic suppliers: “No project hiring that threatens our production curve is priority to us,” she said, adding that “absolutely nothing on the table today justifies delaying our oil curve.” The executive argued the government must only hire feasible projects and asked companies to bolster efforts to deliver projects.

To tackle that, BNDES, the Studies and Project Financing Agency (Finep) and ANP are preparing Inova Fornecedores, a new program budgeted at R$2.5 billion. If confirmed, the amount increases financing support to the industry to R$5.5 billion, also considering another program, Inova Petro, which already offered R$3 billion to the market.

Valor has learned that Inova Fornecedores will complement Inova Petro, another joint BNDES-Finep effort with Petrobras technical support. The new program will finance different R&D lines from the ones supported by Inova Petro and is likely to support smaller companies. The three bodies are finalizing the technical cooperation agreement for the new program, expected to be launched in the second half.

But before that ANP will still conduct public hearings to review the R&D clause of exploration block concessions. The clause is included in all contracts since 1998. It sets aside 1% of gross revenue to R&D in highly profitable fields or that produce significant volumes, where special participation (PE, a bonus royalty) is due.

ANP is in charge of accrediting the recipients and managing their activities. The agency calculates the R&D clause could generate R$8.7 billion in mandatory investments over the next four years. In 2013, despite low oil production, the clause still directed R$1.3 billion to R&D, 2.7% more than in 2012.

Today 17 concessionaires of oil blocks contribute to the investment, with Petrobras holding 96.3% of the total. But the state-run oil company's share is expected to gradually decline as other companies expand activities.

The changes proposed by ANP for the R&D clause could allow, for instance, production operators to invest directly in research companies. The capital could happen through a private-equity fund (FIP) where BNDES and Finep also could be investors. Valor has learned the fund is in the early stages of discussion and could have a budget of up to R$200 million.

ANP issued a statement confirming the launch of a new program to support innovation in the oil, gas and naval sectors. “In the program, ANP will support R&D and non-routine engineering efforts, developed by national companies through the authorization of the application of proceeds from the R&D clause,” the agency said, adding it will “support R&D projects, the development of innovative prototypes and even support to production in pioneering wells. The innovation cycle will continue with the injection of venture capital in innovation companies through the private-equity fund created by Finep and BNDES.”

A person familiar with the plans says ANP could direct the R&D money to different technologies than those promoted by Inova Petro. This same person says Inova Fornecedores aims at attracting other operators beyond Petrobras.

Inova Petro was created with the core notion of developing domestically goods that are imported or have few local suppliers. The program's first tender process had demand for R$2.8 billion from 38 letters of interest, the first selection stage. Approval was granted to 11 business plans totaling R$308 million. Six of them, budgeted at R$252 million, already are in the hiring stages.

Of the R$3 billion made available to foster innovative projects by Inova Petro, R$2.7 billion are still available. The program was launched in 2012 and continues until 2017. Interested companies have until April 24 to deliver letters of interest to the second Inova Petro tender process. The first deadline was March 20.

Inova Petro also allows grants, something not expected in Inova Fornecedores. In addition, BNDES and Finep can be equity investors in R&D companies.

Maurício Syrio, head of the oil, gas and naval industries at Finep, says the results of the industry's innovation programs will take time to become evident. “Once you invest in an innovation plan, it could take two to three years to finish it.”

The end goal is strengthening the oil-and-gas supply chain, now overloaded due to enormous demands from Petrobras. An investment-prospects survey for the industry in the next four years, made by the economic research department of BNDES, indicates R$458 billion could be invested from 2014 to 2017, of which 60% (R$271 billion) have to be procured from domestic producers.

The investments also have a significant indirect effect of R$277 billion. It could be even bigger, since the studies didn't include exploration investments for the Libra field of the pre-salt area of the Santos basin, auctioned in October. If all the projections are realized, the share of oil and gas investments in gross fixed capital formation (GFCF) in 2017 will be the highest in the century, at 14.1% from the current 10%.

Rodrigo Bacellar, oil and gas superintendent at BNDES, says the BNDES Petróleo e Gás program, commenced in 2011, already approved R$2.3 billion to the industry's production chain. “We have 35 companies mapped now, of which 13 already are bank clients and we think we can increase that.”