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The study assesses the relevance of the recent local content policy (LCP) reforms for the oil sector in Brazil on the attractiveness of investments in exploration and production (E&P), and in terms of employment and income generation. For this, a cash flow of a typical E&P project was simulated in the Brazilian pre-salt environment in a field with reserves of 5 billion barrels of oil equivalent, under the regime of production sharing, adopting the assumptions of government participation of the tender protocol of the Libra field. In addition, in order to estimate the impact of the LCP on the generation of employment and income, the methodology of the Input–Output Model (IOM) was applied. The results indicated that high commitments of local content (LC), in contexts of restricted oil prices, compromise the profitability of E&P projects. In addition, the results showed that a greater volume of investments can more than offset the impact of higher levels of LC in generating employment and income for the country. Finally, the article concludes by arguing that the LCP reforms, undertaken since 2016, were necessary to guarantee the competitiveness of the Brazilian upstream in the current context of the international oil market.

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