SAO PAULO: Brazil’s President Dilma Rousseff approved a resolution to maintain the current system for establishing the minimum price of oil on which royalty payments are paid by state-run oil company Petroleo Brasileiro SA to local governments.
The so-called “Brent Dated” index, based on a seven-day rolling average price for crude, will be used up to the price level of $50 a barrel, the National Energy Policy Council said in the official government gazette on Friday.
Brent crude has fallen by more than half to $31.29 per barrel, from a 2015 peak of $67 per barrel. The plunge has dried up government revenues in many oil exporting countries. Although not a major oil exporter, Brazil is struggling to curb growth in federal and state spending in the face of falling revenues. For states such as Rio de Janeiro, oil revenues are vital to funding public services.