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Venezuela to pass new extraction tax and income tax rate on oil companies
By Elio Ohep
Petroleumworld
CARACAS
Petroleumworld.com 05 09 06
Rafael Ramírez, the oil and energy minister said to reporters Monday, the Venezuelan government would submit for approval by the country's National Assembly, two new tax bills, one to impose in addition to the present oil royalty tax, a new oil extraction tax to be levy on all oil extracted from the ground and to be paid in money not in crude or products, and a second to increase the income rate to 50% in the tax law, to be paid by all oil companies.The minister explanation came after Venezuelan president Chavez announced Sunday that the government would create a new royalties tax for oil companies and raise the income tax on heavy crude oil producers in the Faja region.
"We are going to create a new oil tax, called an extraction tax," raising state income by 885 million dollars, Chavez said in his weekly program "Alo, Presidente".
Mr Chávez has full and unalloyed support in National Assembly, and the approval of the new bills is virtually guaranteed.In practice the oil companies that have oil projects in the extra heavy oil fields of Orinoco Faja will get have to paid an additional 16.66 % of the new extraction tax, they can deduct the 16.66% they are paying at present as royalty tax, but will have to paid the difference in money, not in crude or oil products.
Also, venezuela's oil company PDVSA and its mix joint ventures companies will have to paid the additional difference of 3% of extraction tax, after the deduction of the 30% royalty tax they already paid.
The new income tax rate rate of 50% will affect the Orinoco Faja projects; Sincor (Total, Statoil, and PDVSA), Hamaca (ConocoPhillips, Chevron, PDVSA), Cerro Negro (Exxon, BP, PDVSA), and Petrozuata (ConocoPhillips, PDVSA), that at present pay only 34% of income tax rate.
The four joint ventures produce 600,000 barrels a day of extra-heavy crude oil in Orinoco Faja, out of country-wide total oil production of more that 2.5 millions barrels a day.
Ramirez said that they are working on new regulations for the Orinoco Faja oil companies and added, that will like for the Faja oil companies to migrate to new mix joint ventures under PDVSA control, in the near future.
- Elio Ohep, editor@petroleumworld.com, 58 412 996 3730, Caracas.
Petroleumworld News 05 08 06
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