Brazilian state threatens new oil tax over royalty dispute
By Rodrigo Viga Gaier
RIO DE JANEIRO Dec 14 (Reuters) - Brazil's state of Rio de Janeiro, home to the bulk of the country's oil production, threatened on Monday to impose a new tax on oil and natural gas in the state if the country's oil regulator ANP does not adjust its royalty calculation.
The state, whose budget has been hurt by a nearly 40 percent decline in the price of Benchmark Brent crude oil in the last year, has been pressuring the regulator to change the way it determines the so-called oil reference price.
If the calculation is not changed, the government plans to apply a 2.71 real (69.8-cent) per barrel tax on each barrel of oil or natural gas equivalent produced in fields located in state waters.
That would raise about 1.8 billion reais ($464 million) in 2016, slightly more than the 1.6 billion reais it is losing because of the current calculation, state officials told Reuters on Monday.
Rio de Janeiro produces 67 percent of Brazil's oil and 40 percent of its natural gas. Among the state's main producers are state-run oil company Petroleo Brasileiro SA, BG Group Plc, Royal Dutch Shell Plc.
The state's financial crisis has reached the point where the government is intentionally delaying payments and universities and hospitals have seen their services reduced. Some public servants are still waiting to receive their full November salaries.
Local organizers of the Rio de Janeiro 2016 Olympic Games have been forced to make cuts to their remaining budgets.
Royalty payments are paid as a percentage of the reference price for each barrel of oil produced. The reference price has typically been far below the Brent price because the bulk of Brazilian crude has been low-grade, low-price heavy crude. Continuación...