Petrobas is paying the Brazilian government 42.5 billion dollars to harvest 5 billion barrels of oil in government held areas, or approximately 8.51 a barrel for the rights to produce it.
This should not drastically effect the price per barrel for Petrobas because Petrobas wont have to pay special participation taxes on this oil.
Petrobas will use some of this profit to invest in a 4 year plan to double its oil output to 3.9 billion barrels a day. Most of the 224 billion dollar investment will be for drilling off Brazil's south-central coast. This would make Brazil the 5th largest producer of oil and would place Brazil in the top 10 producers of exports.
This increase in the supply of crude oil will help to keep the price at a controlled level over the next few years. While Portubas doubles its daily output of crude oil it could potentially become an important trader with the United States. Aside from the obvious benefits of trade this would also relieve U.S. dependence on Middle Eastern oil.
Thomas Langevin
This is very interesting. The post and the article it refers to talk about taxes and government as related to the energy industry in Brazil. What does this article tell us about government regulation in the energy industry in Brazil? Is this same type of government interference present in other areas of the world?
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