Brazil’s Surprise Oil Tax Puts $20 Billion in Investment at Risk
Shell and other drillers have sued to block the levy, which effectively yanks the welcome mat for oil majors.
A production vessel deployed to the Sépia oil field in Brazil, in which France’s TotalEnergies is a minority partner.
Photographer: Dado Galdieri/Bloomberg
When Shell Plc’s new chief executive officer, Wael Sawan, landed in Brazil last month on his first official trip abroad, the reception was warm. He received assurances that the country’s new leftist leadership would respect the status quo in the oil industry, people familiar with the visit said, and he left confident that business would keep chugging along.
The camaraderie was short-lived. Two weeks later, Brazil surprised drillers by enacting a temporary tax on oil exports. In response, Shell and a group of foreign oil companies filed an injunction against the levy, risking a public legal battle with President Luiz Inácio Lula da Silva’s administration. The clash could damage Brazil’s hard-won reputation as Latin America’s rare petroleum-rich nation that welcomes foreign oil producers and respects its contracts with them.