Venezuela windfall oil tax to hit private firms
April 10th, 2008 | by admin |CARACAS (Reuters) - Venezuela’s planned windfall oil tax will be levied on all private companies operating in the country and will bring in several billion dollars a year, Venezuela’s oil minister said on Wednesday.
The government of leftist President Hugo Chavez last week announced that the new tax will take 50 percent of oil revenues above $70 per barrel and 60 percent of revenues above $100 per barrel in efforts to boost government income.
A group of joint ventures between PDVSA and private operators that do not directly export oil originally appeared exempt from the tax, which only applies to exported barrels.
“All the hydrocarbons operators in this country are subject to this extraordinary tax,” Oil Minister Rafael Ramirez told reporters. “We are talking about several billion dollars” that could be raised, Ramirez said.
He said the tax would only apply to exports in order to avoid creating losses on oil consumed within Venezuela, where heavy fuel subsidies leave the price of gasoline at around $0.12 per gallon.
But a group of joint ventures between PDVSA and companies such as Royal Dutch/Shell (RDSa.L: Quote, Profile, Research) that produce around 300,000 barrels per day will have to pay the tax because they export indirectly via PDVSA, Ramirez said.
The tax will also hit four multibillion-dollar heavy crude upgraders that Venezuela took over last year.
Exxon Mobil (XOM.N: Quote, Profile, Research) and ConocoPhillips (COP.N: Quote, Profile, Research) quit the nation as a result, though companies including Chevron (CVX.N: Quote, Profile, Research) and Britain’s BP (BP.L: Quote, Profile, Research) stayed on as minority partners.
Venezuela’s Congress is expected to give final approval to the new law in the coming days.
(Reporting by Brian Ellsworth)
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