Oil & Gas Industry: Galp Energia Considers Disputing New Portugal Tax On Oil Production

The government of the state of Rio de Janeiro has recently announced a series of extra taxes on the state´s industrial sector aimed at increasing revenues.

One of the taxes, known as “Tax on Oil Services Oversight”, has upset the entire industry, which is already overloaded by a huge tax burden. The state´s industry federation, FIRJAN, has promptly announced that it would dispute such tax.

Galp Energia, a Portuguese energy company, is playing a significant role in the Brazilian pre-salt exploration. The company is considering disputing this newly announced tax package individually, in addition to the class action launched by the industry federation.

Officials at Galp have said that the announced tax hikes will strongly impact the company´s bottom line in the operations of the pre-salt blocks of Lula and Iracema in the Santos basin area, where the Portuguese major has partnered up with Petrobras.

Carlos Gomes da Silva, the CEO of Galp, has confirmed the company´s plan for a possible stand-alone dispute.

The new tax package was announced by the state government last month, adding an extra fiscal load on industrial production. The so-called tax on oil services oversight is R$ 2.71 (approximately US$ 0.68) per barrel of oil produced.

The state government has announced a projected increase in revenue of about R$ 22 billion (approximately US$ 5.5 billion) with the extra taxes if they are passed.

Galp Energia shares optimistic views for Brazil. Investments by the company have resulted in a production increase of 81%, with an output of 36K boe per day in theIracema and Lula pre-salt oilfields in 2015.

The origin of this post can be found here.