Brazil Seeks $6.2 Billion From Oil Industry In Push To Boost Finances

(Bloomberg) -- Brazil’s energy ministry has proposed measures to raise around 35 billion reais ($6.2 billion) from the oil industry over the next two years to help the government meet its fiscal targets.

On Monday, Mines and Energy Minister Alexandre Silveira presented measures to President Luiz Inacio Lula da Silva that include selling oil exploration licenses and a review of the reference prices used to calculate oil taxes, the ministry said in a message. If approved, it would be an alternative to a controversial increase in tax rates on some financial transactions.

Finance Minister Fernando Haddad has been struggling to deliver on promised fiscal goals due to lower-than-expected revenue and higher spending. Last week, Moody’s Ratings lowered Brazil’s credit outlook to stable from positive on expectations of larger fiscal deficits.

See also: Brazil to grant exploration rights for long sought-after offshore region

The change in reference prices could erode margins for oil companies and have a negative impact on the investment environment, adding to existing concerns about licensing delays and lackluster exploration results, said Marcelo de Assis, an energy consultant.

“These are heavy measures that could cause more problems in the medium and long term,” de Assis said.

The ministry is pushing for the country’s oil regulator, known as the ANP, to review the reference prices used to calculate taxes paid by oil producers, including state-controlled Petrobras, before the end of July.

The oil and gas measures include a bill to authorize the federal government to sell oil production rights in areas of the pre-salt, Brazil’s most prolific offshore oil region, that haven’t been licensed yet. It would include areas near the giant Tupi, Mero and Atapu fields, and could raise 15 billion reais this year if approved by Congress.