Survey Shows Sharp Drop in Global Oil Demand and Reveals Impacts on Revenues for the Country, States, and Municipalities
The drop in global oil demand and plummeting international prices have led to a significant decline in the country’s revenue from royalties and special participations in recent months. This decrease is an additional shock to the revenues of the Union and governments of producing states and municipalities in 2020, whose budgets are also pressured by the prospect of lower economic growth and additional expenses to tackle the Covid-19 pandemic.
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According to G1, a survey conducted by the Brazilian Center for Infrastructure (CBIE), based on data from the National Agency for Petroleum, Natural Gas and Biofuels (ANP), shows that revenue from royalties fell by 30.8% in May compared to April. Year-over-year, the retraction was even greater at 35%.
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The last available data regarding special participations is from the 1st quarter, when the amount collected for public coffers decreased by 23.5% compared to the same period in 2019.
In light of the new scenario for oil barrel prices and production in Brazil, CBIE estimates that revenue from royalties and special participations will shrink by more than 20% in 2020. The consultancy projects a total collection for the year of R$ 43.55 billion, compared to R$ 55.95 billion collected last year. That is, R$ 12.4 billion less.
The CBIE projection takes into account an average price of US$ 38 for the barrel of oil for the year (a 40.9% drop compared to 2019), an average exchange rate of R$ 5.20, and oil production at the same level as 2019 (below 3 million barrels of oil per day).
ANP estimates that revenue will shrink by around R$ 11 billion this year. The agency’s current estimate is a total value of R$ 45.1 billion in 2020.

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