Brazil’s government is looking to extract some $6.2 billion from the country’s oil industry in a bid to shore up state finances, Bloomberg has reported, saying one way to get more money out of oil producers was by “reviewing” the reference prices used to set oil taxes.
Another way to raise money from the oil industry that the government is considering is the sale of more exploration licenses, Bloomberg also wrote. Brazil has been struggling to achieve its stated goals, confronted with a combination of higher spending and lower income.
The new license sale move is safe enough: Brazil still has untapped and unexplored areas of the presalt zone to offer, some of them close to giant producing fields, including Mero, Tupi, and Atapu. New exploration licensing this year alone could raise some $2.64 billion, if Brazil’s Congress approves it.
On the other hand, there have been some underwhelming results from earlier exploration in the presalt zone, Bloomberg cited one local energy consultant as saying.
Changing the reference price for oil tax calculation could be trickier, leading to lower income for oil producers and consequently dampening the appetite for expansion in Brazil’s oil sector.
The efforts to ramp up the economy come as President Luiz Inacio Lula da Silva’s approval ratings have slumped to a record low, with approval of Brazil’s government as a whole down to 24% as of February.
To tackle this, the government in March said it would tap Brazil’s oil fund. The fund, created in 2010 to collect royalties from oil, has accumulated some $3.5 billion to date. The Lula government set up a committee tasked with deciding how to spend the money. Yet that $3.5 billion will, it seems, not be enough, so the government is looking for more money from the country’s oil and gas producers.
By Irina Slav for Oilprice.com
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