Skip to comments.DJ Venezuela To Charge Oil Majors 50% Tax On Orinoco Crude
Posted on 03/14/2006 2:27:09 PM PST by antaresequity
14/03/2006 23:16 >>
DJ Venezuela To Charge Oil Majors 50% Tax On Orinoco Crude
CARACAS (Dow Jones)--
Venezuela will hike the tax rate on international oil firms operating in the Orinoco river basin to 50% after pushing a legal reform through the National Assembly, Oil Minister Rafael Ramirez said Tuesday. "There is no doubt that the oil companies in the Orinoco oil belt have to pay 50% income tax," said Ramirez on the sidelines of meeting between President Hugo Chavez and his Uruguayan counterpart, Tabare Vazquez. "A reform to the existing law is justified," he added. Chavez''s ruling coalition controls all 167 seats in the National Assembly, guaranteeing swift approval of any legislation presented by his economic cabinet.
Ramirez first announced plans to hike the income tax on Orinoco projects in mid-2005, but the Oil Ministry still hasn''t drafted the legal reforms that must go through Congress toimplement the tax increase. In 2004 Venezuela hiked the royalty on Orinoco production to 16.67% from 1%, arguing that the 1% tax holiday was granted during a period of low world oil prices.
Oil majors Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), BP PLC (BP), ConocoPhillips (COP), Total (TOT) and Statoil (STO) have stakes in Orinoco ventures. The projects, four in total, collectively pump around 600,000 barrels a day of tar oil, which is converted into synthetic crude at special upgrading facilities, accounting for around a fifth of Venezuela''s total oil production. The projects were designed under low oil price scenarios in the 1990s, and the price boom in recent years prompted the Chavez administration to hike royalties in 2004.
PdVSA has teamed up with foreign companies from Iran, Spain, Russia and other countries to calculate oil reserves in the Orinoco, the first step toward launching new projects. Venezuela says it currently holds over 200 billion barrels of reserves in the area. Concerning a possible income tax increase on natural gas production, Ramirez said the ministry has not taken a decision yet.
Natural gas producers currently pay a 34% income tax rate, but tax officials have said this could be lifted to 50%. "We have to see," said Ramirez. "It''s a public service." Companies such as Chevron and Statoil have begun massive offshore natural gas development projects in Venezuela under the assumption they would be paying a 34% tax rate.
-Peter Millard, Dow Jones Newswires; 58-212-564-1339; email@example.com (END) Dow Jones Newswires 14-03-06 2216GMT Copyright (c) 2006 Dow Jones & Company, Inc.
In other news today...
Crude climbs over 2% to close above $63 Tuesday, March 14, 2006 8:31:45 PM http://www.afxpress.com
SAN FRANCISCO (AFX) -- April crude climbed $1.33 to close at $63.10 a barrel. That's its highest closing level since March 3. April unleaded gasoline rose 7% to close at $1.866 a gallon to mark its loftiest level since Feb. 1 and April natural gas closed at $7.167 per million British thermal units, up 16 cents, or 2.3%, at a level not seen since Feb. 24. Energy traders looked ahead to this week's updates on U.S. supplies as well as ongoing tension surrounding Iran's nuclear program and a lower oil-demand forecast from the International Energy Agency
This story was supplied by MarketWatch. For further information see www.marketwatch.com
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
If Chavez wants an oil war we should make sure that Venezuela gets no food, medicine or financial assistance - other countries would take notice.
Thanks for the links to oil news.
Chavez just last week was saying to Chevron they have capacity and technology to boost their Venezuelan output 16%, that it would be a real good deal for both.
Wonder what Chevron thinks now? I think Chavez is mentally unstable thinking he can bully oil companies, especially trying to leverage with tar, not crude.
Looks like Chavez wants to drive his country to his knees.
I expect the anti-american leftist media/press to lick it's boots.
This appeared on the local paper website late today:
Refinery snag may send gasoline prices up
WASHINGTON Gasoline futures surged nearly 7 percent today on word of a large refinery snag, marking an almost 50-cent-per-gallon increase over the past month that is sure to send pump prices higher.
"We are looking at retail prices that will soon be above $2.50 gallon nationally, and could perhaps eclipse the $2.60 per gallon" level, said analyst Tom Kloza at Wall, N.J.-based Oil Price Information Service.
And they will, they will.
This little git is a sparrow who thinks he is an eagle.
we have pulled that with Fidel and gotten us nowhere. If you want to get rid of Chavez, then get rid of Chavez.
Oil is how the commies will get us. When will we start drilling for oil in the Gulf etc.
I expect all the classic follies, including nationalization of oil company assets and expropriation of ALL profits. After that, the decline, increasing anti-U.S. hysteria, nationalization of the banks, widespread unemployment, inflation...
And to think that we could tell these disgusting countries to go fly a kite if our stupid politicians weren't such cowards and would face the environazis down in order to develop our own energy sourses off the Pacific and Atlantic coasts and Alaska. Californians and Floridians should have to pay at least a $3/gal. gas tax just for being energy leeches. Do they really think they'll have a tourist industry if gas gets to the $5/gal. mark?
"The projects, four in total, collectively pump around 600,000 barrels a day of tar oil, which is converted into synthetic crude at special upgrading facilities,..."
This is not crude oil, but highly refined tar into synthetic crude, a very costly upgrade. This process is licensed by Chevron. If we pull out (I work for Chevron)they can't run the plant. Guess they get 100% of no profit.
By the way, 50 % of what? This garbage oil no one else wants isn't worth anything unless upgraded.
While the market moguls drive up the trading price of the good stuff, these guys make big bucks cooking the crap crude along with the books.
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