Galp sees as much as EUR100m cash hit from Brazil oil export tax

Brazil’s recent adjustments to its oil taxation framework are expected to impact international energy firms, including Galp, which anticipates a potential cash outflow of up to EUR100 million due to the country’s temporary export levy and revised royalty calculations. The government introduced the measures to stabilize domestic fuel prices amid global oil price volatility and to bolster state revenues. Effective March 12, 2026, Brazil eliminated federal taxes on diesel while imposing a temporary export tax on crude oil, aiming to prioritize domestic refining and supply security.

Simultaneously, the government revised the methodology for setting the reference price of Brazilian crude, a move projected to increase royalty revenues by approximately $181 million, according to Energy Minister Alexandre Silveira. The updated pricing mechanism, effective from September 2025, alters how royalties are calculated, directly affecting companies like Galp, which operate in Brazil’s offshore oil fields. These changes align with broader efforts to extract an estimated $6.2 billion from the oil sector to strengthen state finances, particularly after President Luiz Inacio Lula da Silva’s approval ratings dipped earlier this year.

Industry stakeholders have expressed concerns over the revised tax structure, which they argue could reduce profitability and deter investment in Brazil’s energy sector. While the government emphasizes the temporary nature of the export tax, the combined impact of higher royalties and shifting fiscal policies underscores the evolving regulatory landscape for international oil producers operating in the country.