Brazil - 01

Brazil: Royalty Changes: Is a Decision Nearing?

According to a report published this week by daily newspaper Folha de Sao Paulo, the Brazilian government is considering the possibility of gradually implementing a revision of oil sector royalties. The measure would be some form of compromise aimed at ending a long-winded battle over current charges. Over the last year and a half, the national government has faced off with oil-producing states, particularly Rio de Janeiro, over the issue. The oil-producing states argue that a change in the reference price, one of three parameters used to calculate royalties, is due. As of today, the minimum price is calculated using the Brent international price (US dollars/bbl), compounded by a factor that is based on the quality of the oil at the time the decree was signed.

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