Petrobras and Rio de Janeiro state clash over proposed tax on oil production

June 13, 2003
Petroleo Brasileiro SA (Petrobras), Brazil's state-owned company, might suspend plans to build two platforms for use off Rio de Janeiro state if the state charges 18% sales tax on oil production, Petrobras Pres. José Eduardo Dutra said.

Peter Howard Wertheim
OGJ correspondent
RIO DE JANEIRO, June 13 -- Petroleo Brasileiro SA (Petrobras), Brazil's state-owned company, might suspend plans to build two platforms for use off Rio de Janeiro state if the state charges 18% sales tax on oil production, Petrobras Pres. José Eduardo Dutra said.

Rio de Janeiro state legislators recently passed such a bill, but Gov. Rosinha Mateus has yet to approve it. If approved, the legislation would become effective in July.

Dutra said that taxing oil at the origin would lead to double taxation because levies already are charged at the oil destination. The new tax would generate additional expenses of $1.93 billion annually for Petrobras. "With this tax, the platforms will become unviable," he said.

Petrobras issued a statement saying that it believes the measure is unconstitutional, and if necessary, it will pursue legal action.

The P-53 and P-54 semisubmersible platforms are considered vital for Brazil´s goal to become self-sufficient for its own oil supplies by Dec. 31, 2006. Tenders for these platforms were scheduled to be published this month. Petrobras planned to use the platforms in Campos basin.