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Use of a DA Process to Develop a Petroleum Upstream Fiscal and Regulatory Regime

Presenter: Tony Kenck, ChevronTexaco

Presented at the 2003 DAAG Conference in Houston, Texas.

Abstract: Brazil opened its oil sector to international oil companies in the late 90s. The Brazilian tax system was not designed with the oil industry in mind, and was a labyrinth of fees, taxes, special interest representation, and fuzziness regarding division of tax authority between state, federal, and local government. The petroleum industry representative group, the IBP, tried to influence taxing authorities as the original law solidified into the actual regulations, and was somewhat successful. However, some huge hurdles remained, including potentially a 60% "investment tax.”


Through the IBP, we developed a process, based loosely on ChevronTexaco’s DA and business processes and proposed a joint industry-government workshop—essentially a framing session. Although the workshop never materialized, it was supported in several industry and government circles.

On the surface, this seemed like a useful approach to develop a joint understanding of the drivers of the involved parties, yet it never happened. What went wrong? Lessons learned include having a more permanent person on the ground trying to lay the groundwork as well as a stronger effort to educate the parties involved to facilitate progress with this approach.

Keywords: framing framestruc, negotiations gtnegot,

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