Brazil gets to keep $4 billion in taxes after partial victory in Tupi field dispute

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BRASILIA/SAO PAULO, Oct 22 (Reuters) – Brazil won a partial victory in an international dispute about the Tupi oilfield against a consortium formed by Petrobras (PETR3.SA), opens new tab, Shell (SHEL.L), opens new tab and Petrogal, allowing the country to keep 22.2 billion reais ($4.11 billion) in tax payments, the Solicitor General’s Office said on Wednesday.

The dispute with Brazil’s oil regulator ANP over tax regulations governing the field’s size is being mediated by the arbitration court at the International Chamber of Commerce.

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In a small defeat for Brazil, the court also decided that future compensation by the consortium can be made in other ways besides cash payments if the amount is 30% higher than the quarterly deposits made since 2019 when a federal court ruled in favor of the government.

Shell declined to comment, while Petrobras, which has a 65% stake in the consortium, did not immediately respond to a request for comment.

Tupi has for years been Brazil’s highest producing field, with over 1 million barrels of oil equivalent per day.

However, since 2014, the consortium has asserted that Tupi actually includes the Cernambi field as well, but the government considers them as one big field, whose oil production revenue is subject to a higher tax rate.

($1 = 5.4039 reais)

Reporting by Ricardo Brito in Brasilia and Roberto Samora in Sao Paulo; Writing by Fernando Cardoso; Editing by Richard Chang

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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