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Oil producing cities will have to learn to live with 50% at less than royalties

Paulo Nogueira
23-08-2017 07:24:19
in Uncategorized
Oil producing cities will have to learn to live with 50% at less royalties

The ANP disclosed in the media that this measure is valid only for mature oil fields and will encourage investment and job creation.

[supsystic-social-sharing id='1′]Up to 6 months from now, to A Agência Nacional de Petroleum, Natural Gas and Biofuels, intends to link the resolution that will make it possible for municipalities that receive royalties from mature fields to now receive only half. Décio Oddone, to whom he is director, released this statement yesterday(22)

According to him, the intention today is to reduce the values of these rates from 10% to 5%, this is because these fields are in an ascending production phase, so the values currently practiced are unfeasible.

According to Addone, this resolution will bring effects almost instantly towards the revitalization of these mature fields. Large companies in the sector have already said that they will invest heavily and will compensate for the cut in rates, naturally the federative institutions will exponentially maximize their revenues.

“The average recovery factor [how much oil is extracted from the reserve] in the country today is 21%, in the Campos Basin it is 24%. When comparing to UK, Norway, this factor is 50% to 70%. Each 1% increase in the recovery factor of Brazilian oil reserves will demand US$ 18 billion in investments, generate US$ 11 billion in royalties and 2.2 billion barrels of reserves. It's a lot,” Oddone said.

With this measure in place, large companies must justify and show plans to increase productivity, in this way the incentive will be sanctioned. Petrobras has already said that it has already earmarked US$ 10 billion for revitalization investments until the year 2021.

Producing cities will have to work double

With the halving of their oil revenues, now the municipalities will have to learn to live with this new reality. The population of these cities expect other projects to create cash flow, because the lesson that this crisis has taught us is that oil is not forever and there are other industries to be explored as a source of revenue.

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Paulo Nogueira
With technical training, I worked in the offshore oil and gas market for a few years. Today, my team and I are dedicated to bringing information from the Brazilian energy sector and the world, always with credible and up-to-date sources.