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Multinational Invests in New Oil Areas in Brazil and Discusses Fiscal, Regulatory Challenges and Global Competitiveness of the Sector.
The billion-dollar investment scenario of Shell in Brazil is gaining new contours in light of the multinational’s growing concern with the increasing tax burden on the oil and gas industry.
At the same time that the company celebrates strategic bets in new exploratory frontiers, the fear of possible fiscal and regulatory changes challenges long-term stability, fundamental for the energy sector.
The warning was made by the president of Shell in Brazil, Cristiano Pinto da Costa, according to a report by CNN Brazil. He emphasized that “in an industry with such a long cycle, we need regulatory stability”.
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Shell Invests Billions in Brazil and Points Out Tax Concerns
According to Costa, Shell considers the Brazilian regulatory environment one of the critical points for decision-making on high-value projects with extended maturation, which can exceed three decades between the start of investment and financial return.
The executive highlighted that currently, the tax burden on oil in Brazil is already considered high: “For every three barrels of oil, two are consumed by taxes, royalties, and special participations. In the United States, this ratio is one barrel for every three extracted,” he stated.
Shell’s apprehension gained new elements after the Ministry of Mines and Energy (MME) presented a set of proposals to President Luiz Inácio Lula da Silva aimed at increasing federal revenues starting in 2025.
Among the measures under evaluation are changes in the collection of special participations – a tax applied to high productivity fields under a concession regime – and possible revisions in the reference prices of oil, a factor that could result in increased royalty collection.
Although he acknowledges the debate within the government, Costa notes that different areas of the Executive maintain distinct views on the topic, indicating that there is still no definitive decision.
Debate on Tax Incentives and Regulatory Stability
The president of Shell Brazil also expressed concern about the future of Repetro, a special customs regime that exempts the import of sector equipment from tariffs, federal taxes, and additional fees like AFRMM (Additional Freight for the Renewal of the Merchant Navy).
Recently, both the Ministry of Finance and the National Congress have discussed cuts in tax incentives as a strategy to reduce public deficits, a scenario that could directly affect the oil business environment.
“I view the discussions on reducing [tax spending] positively”, stated Costa.
However, he emphasizes that any changes should only apply to new contracts and not affect existing agreements: “If you want to change the rule [tax], change it going forward. Don’t change the past”.
In justifying the need for regulatory predictability, Costa argues that Brazil competes for global investments with other large producers, where less burdensome tax policies end up attracting more foreign capital.
“Any movement that increases the tax burden negatively impacts Brazil’s competitiveness”, highlighted the Shell executive to CNN Brazil.
New Bets and Growing Production of Shell in the Country
Even in the face of uncertainties, Shell continues to make significant bets on new projects in the country.
One of the main ongoing initiatives is the development of the Gato do Mato field, located in the pre-salt layer of the Santos Basin.
With production expected to begin in 2029, the field could reach up to 120 thousand barrels of oil per day.
Shell leads the consortium with a 50% stake, with partners Ecopetrol from Colombia (30%), and the French Total (20%).
Currently, Shell holds the position of the second-largest oil producer in Brazil, behind only Petrobras, with a daily production ranging between 400 thousand and 450 thousand barrels of oil equivalent.
The company’s annual investment in the country fluctuates between US$ 1 billion and US$ 1.5 billion, demonstrating a long-term commitment to the development of the national energy sector.
Consolidation in New Frontiers: Southern Santos Basin
The quest for new opportunities led Shell to invest heavily in the last auction conducted by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), held in June 2025.
The company secured four blocks in the Southern Santos Basin, consolidating its presence in a region with potential reserves that are still underexplored.
“In this last auction, we had a very well-defined strategy that was very successful”, explained Costa.
The executive detailed that, since 2022, Shell has been acquiring areas in the same basin, with the now objective of expanding the portfolio by purchasing adjacent blocks.
Shell expects that the geological formation of the Southern Santos Basin, which extends between the coastline of São Paulo and Santa Catarina, may present similar characteristics to those recorded off the coast of Namibia, Africa.
Namibia recently stood out with the discovery of significant offshore fields, attracting international interest.
The first seismic works in the newly acquired blocks will still be carried out, but the comparison raises expectations about Brazilian potential.
Oil and Gas Sector in Transformation
Additionally, Costa highlighted that traditional basins, such as Santos and Campos, are showing signs of declining productivity, reinforcing the need to invest in new exploratory frontiers.
Other promising regions, such as the Equatorial Margin, are also on the radar of Shell and other major oil companies.
Shell’s agenda for the coming months also includes interest in two relevant events for the Brazilian oil market: the 3rd cycle of permanent offering under the sharing regime, which includes pre-salt areas and is scheduled for October 22, 2025, and the upcoming oil auction in areas close to fields already in production, still pending final approval by the National Congress.
The discussion on tax incentives, regulatory stability, and portfolio diversification strategies keeps the oil and gas sector at the center of the Brazilian economic debate.
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