Venezuela Congress Approves New Oil Tax
CARACAS, Venezuela
Venezuela Congress Approves 33.3 Percent Extraction Tax on All Oil Operations
Venezuela's congress approved a new oil tax that will raise the amount of contributions companies like Chevron Corp. and ConocoPhillips will have to pay for their heavy oil operations in the country.
Congress approved on Tuesday a bill imposing a new 33.3 percent extraction tax on all oil operations.
The tax will largely impact foreign companies extracting heavy crude in Venezuela's Orinoco River basin: BP PLC, Exxon Mobil Corp., Chevron, ConocoPhillips, France's Total SA and Norway's Statoil ASA.
Those companies will have to pay the difference between the new tax and their current royalty of 16.6 percent, or an additional 16.7 percent.
The tax revisions allow for a royalty reduction to 20 percent if any operation becomes unprofitable, but experts say that is unlikely at current high oil prices.
Congress is also expected to shortly approve a separate bill that will hike the income tax rate for the Orinoco projects from 34 percent to 50 percent.
Private companies operating elsewhere in the country in joint ventures with the government already pay a 33.3 percent royalty, eliminating the need to pay the new tax.
The measures come as President Hugo Chavez's government seeks a larger share of industry profits amid soaring energy prices for the world's fifth-largest oil exporter.
Separately, state oil company Petroleos de Venezuela SA, or PDVSA, has released details showing its 2006 budget is based on lower oil output estimates than what the government says the country currently produces.
Venezuela says it produces an average of 3.3 million barrels a day of oil, but independent estimates regularly place actual production below official figures.
PDVSA has based its 2006 budget on average oil production of 2.9 million barrels a day, according to budget figures published this week.
The budget numbers don't necessarily reflect current output and are a conservative estimate, just like the oil price that is used, a PDVSA spokesman said Tuesday.
PDVSA estimated an average oil price in 2006 of US$26 (euro20.29) a barrel to calculate its budget. The average price to date is US$55.67 (euro43.43) per barrel.
The budget also expects nearly 90 percent of average daily output, or 2.55 million barrels, to go to exports with the remaining to be sold domestically.
Analysts have said that PDVSA overestimates its production figures by including products other than crude oil, like condensates and natural gas liquids, to argue that output hasn't declined.
Venezuela's production fell to a trickle during an extended strike in late 2002 and early 2003, and some estimates show it has never fully recovered.
The International Energy Agency calculated average Venezuelan crude oil production at 2.7 million barrels a day in 2005, lower than 2.8 million in 2001, the year before the strike.
Peter Millard is a correspondent of Dow Jones Newswires.
Venezuela Congress Approves 33.3 Percent Extraction Tax on All Oil Operations
Venezuela's congress approved a new oil tax that will raise the amount of contributions companies like Chevron Corp. and ConocoPhillips will have to pay for their heavy oil operations in the country.
Congress approved on Tuesday a bill imposing a new 33.3 percent extraction tax on all oil operations.
The tax will largely impact foreign companies extracting heavy crude in Venezuela's Orinoco River basin: BP PLC, Exxon Mobil Corp., Chevron, ConocoPhillips, France's Total SA and Norway's Statoil ASA.
Those companies will have to pay the difference between the new tax and their current royalty of 16.6 percent, or an additional 16.7 percent.
The tax revisions allow for a royalty reduction to 20 percent if any operation becomes unprofitable, but experts say that is unlikely at current high oil prices.
Congress is also expected to shortly approve a separate bill that will hike the income tax rate for the Orinoco projects from 34 percent to 50 percent.
Private companies operating elsewhere in the country in joint ventures with the government already pay a 33.3 percent royalty, eliminating the need to pay the new tax.
The measures come as President Hugo Chavez's government seeks a larger share of industry profits amid soaring energy prices for the world's fifth-largest oil exporter.
Separately, state oil company Petroleos de Venezuela SA, or PDVSA, has released details showing its 2006 budget is based on lower oil output estimates than what the government says the country currently produces.
Venezuela says it produces an average of 3.3 million barrels a day of oil, but independent estimates regularly place actual production below official figures.
PDVSA has based its 2006 budget on average oil production of 2.9 million barrels a day, according to budget figures published this week.
The budget numbers don't necessarily reflect current output and are a conservative estimate, just like the oil price that is used, a PDVSA spokesman said Tuesday.
PDVSA estimated an average oil price in 2006 of US$26 (euro20.29) a barrel to calculate its budget. The average price to date is US$55.67 (euro43.43) per barrel.
The budget also expects nearly 90 percent of average daily output, or 2.55 million barrels, to go to exports with the remaining to be sold domestically.
Analysts have said that PDVSA overestimates its production figures by including products other than crude oil, like condensates and natural gas liquids, to argue that output hasn't declined.
Venezuela's production fell to a trickle during an extended strike in late 2002 and early 2003, and some estimates show it has never fully recovered.
The International Energy Agency calculated average Venezuelan crude oil production at 2.7 million barrels a day in 2005, lower than 2.8 million in 2001, the year before the strike.
Peter Millard is a correspondent of Dow Jones Newswires.
posted by Alice at
Wednesday, May 17, 2006
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home