Brazil's state-run Petrobras must pay the government about 350 million reais ($112 million) more in royalties each quarter for oil produced in seven offshore fields under an arbitration ruling, the company said on Monday.
Brazil’s state-run Petrobras must pay the government about 350 million reais ($112 million) more in royalties each quarter for oil produced in seven offshore fields under an arbitration ruling, the company said on Monday.
The fields, 100 percent owned by Petroleo Brasileiro SA , as Petrobras is formally known, include three of Brazil’s 20 biggest-producing concessions. Those three fields produced 273,000 barrels of oil and natural gas equivalent a day in May, about 10 percent of Petrobras’ total Brazilian output.
The preliminary ruling by an arbitration panel is a precautionary measure and does not touch on the merit of a claim by Brazil’s oil regulator, the ANP, for another 2.2 billion reais in royalties dating back to the second quarter of 2014, Petrobras said in a statement.
The decision was made by the International Court of Arbitration on Thursday.
The extra tax will crimp the finances and profit at Petrobras as it struggles to boost production and pay down its more than $120 billion of debt, the largest of any oil company in the world. It will also help a Brazilian government seeking additional revenue as the general tax take slips along with a slowing economy.
The payments, a windfall-profits tax known in Brazil as “the special participation,” is an additional royalty paid to the government on large and especially productive fields above and beyond the standard 10 percent per barrel.
In some cases the special participation can raise the per-barrel royalty to 40 percent.
Petrobras sought the arbitration after the ANP said that the seven oil fields – Baleia Anã, Baleia Azul, Baleia Franca, Cachalote, Caxaréu, Jubarte e Pirambu – that make up the Parque das Baleias, or “Whale Park,” oil area should be considered a single production zone.
This made the area subject to the special-participation royalty.
Petrobras said it will continue its legal and administrative battles against ANP’s decision and the additional charges.
Whale Park is located in the north end of the Campos Basin about 120 kilometers south, southeast of Vitória, Brazil, the capital of Espirito Santo State.