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Venezuela to hike tax rate to 50% on heavy oil upgrading projects
Faja's areas: Boyaca (Sincor), Junin (Petrozuata), Ayacucho (Hamaca-Ameriven), Carabobo ( Cerro Negro)
By Elio Ohep
Petroleumworld
Margarita Island, Venezuela
Petroleumworld.com 08 23 06
Rodrigo Cabezas, Venezuela's president of the National Assembly's finance committee told reporters on Monday, Venezuela's National Assembly or AN, expects to approve on August 29, an Energy Ministry proposal to raise income taxes on heavy oil upgrading projects in the Orinoco tar belt to 50% from 34%.The A.N. will hold a first debate on the proposal on Tuesday and a second debate on August 29, Cabezas said.
"Tomorrow will be the first discussion and next Tuesday the 29th will be the second discussion," Cabezas was quoted saying.
There is no doubt that the oil tax hike proposal will be swiftly approved by the A.N. who is 100 percent controlled by Chavez supporters.
With the propose new oil tax rate, oil companies with operations in Orinoco tar belt or Faja del Orinoco will pay a 50% income tax rate, effective January 1st. 2007, Cabezas said. They will continue to paid until Dec. 31st. 2006, 34% income tax, Cabezas added.
The new income will generate an extra income of $800-$875 million in 2007, Cabezas said.
The current oil income-tax law, provide by all oil projects in Venezuela must pay a 50% income tax, with the exception of extra heavy oil projects in the Orinoco Faja belt that only pay 34%. Until 2004, those projects only paid 16.33 % of oil income tax.
Chevron (Ameriven and Petrozuata faja projects), ConocoPhillips (Ameriven-Hamaca, Petrozuata) ExxonMobil (Cerro Negro), Total (SINCOR), BP (Petrozuata) and Statoil
(SINCOR) participate in the upgrading projects as majority partners with Venezuelan oil company PDVSA as its minority stake holder. However, a new proposal from the energy ministry and the A.N. aim for changing PDVSA's stake in the projects to a majority by the end of the year.
- Elio Ohep, editor@petroleumworld.com, 412 996 3730, Caracas, Venezuela.
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