Today, March 12, 2013, The Rio Times reported on the escalating fallout in the continuing battle between O&G producing States and the federal government of Brazil over the sharing of royalties. Recently, the Brazilian federal legislature enacted a law channeling a larger share of these royalties to non-producing States. President Dilma vetoed this legislation but the veto was overridden.
The State of Rio de Janeiro is Brazil's largest oil producing region and is threatening retaliation by revoking all environmental permits to operate oil production there. This would effectively force the shut down of all production in the State (about two thirds of all Brazil's oil production). At the very least, a significant new State tax to offset the lost royalty revenues will very likely be instituted.
I urge all of you that have any interests in Brazil's oil and gas industry, directly or through ETFs or Mutual Funds, to watch for and read my soon to be published article on this significant breaking news event.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.