Petrobras Concerned About US Tax Bill
Brazil's federal energy company Petrobras (NYSE: PBR) could face a lower-than-expected return on the US$1.4bn it invested in the US if congress in Washington approves a bill to cut subsidies for oil companies and end certain tax breaks, newspapers reported.
The papers quoted company CEO José Gabrielli, who was speaking at the World Economic Forum in Davos, Switzerland.
The legislation, which was approved in the lower house on January 18 and now goes to the senate, would also affect royalty and fee payments and is designed to provide incentives to biofuel, renewable energy sources and conservation.
Petrobras has interests in upstream activities in the Gulf of Mexico and in 2006 bought a 50% share of a refinery in Texas and announced plans to increase plant capacity.
BENEFITS FROM BIOFUEL DRIVE
Brazil could benefit from the US government's intention to remove a surtax on imported ethanol, local press reported, citing Brazilian and international industry observers at the forum.
US energy secretary Samuel Bodman has said the government could reduce import duties on biofuels in two or three years as part of the US government's drive to reduce dependence on fossil fuels.
Brazil is a leading world ethanol producer with projected output of 16Bl in the 2006-07 harvest, of which some 3Bl are exported.
Petrobras has plans to invest in ethanol production, transport infrastructure and exports.
Gabrielli said Brazil's sugarcane-based ethanol industry is more competitive than the mostly corn-based industry in the US, local press reported.
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