Oil Producers Could Sue Brazil

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Oil producers conducting business in Brazil could sue the government there if a presidential veto of an oil royalty bill is overturned, according to various press reports. The legislation raises royalties on all current and future concessions to 15% from the current rate of 10%.

Former Brazilian President Luis Inacio Lula da Sivla vetoed the bill in December before Dilma Rousseff took office, according to Reuters. The comments about the potential lawsuits were made in a Brazilian press interview with Petrobras CEO Jose Sergio Gabrielli.

Some Brazilian politicians are looking to distribute Brazil's oil revenue more evenly among the country's 27 states. Currently, most royalties go to Rio de Janeiro, the state where the bulk of Brazil's oil is produced, Reuters reported. Brazil is South America's second-largest oil producer behind Venezuela.

Petrobras (PBR), Brazil's state-run oil producer, Chevron (CVX), the second-largest U.S. oil company, and Royal Dutch Shell (RDS-A) and BP (BP), Europe's two largest oil companies, are among the oil majors with operations in Brazil.

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