Oil companies go to court against oil export tax – 03/08/2023 – Market

Five oil companies with operations in the pre-salt layer decided to go to court to try to suspend the tax on oil exports instituted by the government last week to compensate for the loss of revenue from the sale of fuel.

They are: the British Shell, the Norwegian Equinor, the Spanish Repsol, the French TotalEnergies and the Portuguese Petrogal Brasil (the last two also have Chinese partners). Together, they accounted for just over a fifth of national oil production in January.

They asked the Federal Court of Rio de Janeiro for an injunction this Wednesday (8). In a note, Shell said that the taxation set by the government, of 9.2%, “grows uncertainty over new investment decisions, affecting Brazil’s competitiveness”.

The company said that the measure will have a financial impact on its operations in the country, but that “it is still too early to speculate on its social impacts”. He also recalls that Congress may choose to stop charging or renew it beyond the four months defined by MP (Provisional Measure).

Petrobras’ partner in the first pre-salt projects, Shell is the second largest oil producer in the country. In January, it was entitled to an average of 377.3 thousand barrels per day,

The export tax was announced last week, when the government defined the new PIS/Cofins rates for gasoline and ethanol, which were exempted from federal taxes by the Jair Bolsonaro government in May 2022.

The rates, which came into force on March 1, are lower than those in force until the exemption. To compensate for the loss of revenue, the government decided to tax oil companies for a period of four months.

“[O Imposto de Exportação] it is a transitional solution. Companies are making extraordinary profits because of rising oil prices. Exorbitant profits. They pay few taxes, in my opinion”, justified the Minister of Finance, Fernando Haddad, in an interview with the UOL portal.

In fact, driven by the rise in international oil prices after the start of the war in Ukraine, the sector celebrated record profits in 2022. Petrobras, for example, announced BRL 188 billion, 76% above the 2021 record and the highest ever registered by a Brazilian company.