Venezuela Won't Negotiate Tax Increase

[bemildred]

Venezuela is not willing to negotiate a tax increase on a heavy crude upgrading project involving ExxonMobil, Venezuelan Oil Minister Rafael Ramirez said Thursday.

"No, that is not negotiable," Ramirez said when asked whether he would discuss rolling back the tax increase on ExxonMobil's Cerro Negro project in eastern Venezuela that was implemented last October.

The royalty taxes for Cerro Negro, as well as three other heavy crude upgrading projects in Venezuela, were increased from 1 percent to 16.6 percent.

The projects were designed to include low taxes during the initial stages of production to compensate for high capital investments by the companies involved.

Forbes

[JanMichael]

1. Good on them! 1% for their resources?

Hell, 16.6% sounds low to me.'

Especially since the profits are now largely being spent on the mass majority of Venezuelans that have be left to languish by the previous Oligarchal governments.

[bemildred]

2. It is. nt

[oasis]

3. They made plenty on Bush's tax break. No double dipping you freeloaders.

[BadGimp]

4. well that spells invasion to me

WASS

[AP]

5. I believe that about 15% is the norm-I think I read that in a Greg Pallast

article a long time ago.

[bemildred]

6. I've seen in the thirties, but it seems to vary widely.

Here is one I googled up:

Royalty expense consists of royalties paid to provincial governments,
freehold landowners and overriding royalty owners. Royalties increased
141 percent to $53.4 million in 2004 from $22.6 million in 2003 due to
increased revenue primarily as a result of the Cequel acquisition and
successful drilling in British Columbia. The Trust's average royalty rate in
2004 was 24.5 percent (before the impact of hedging charges) compared to
22.6 percent in 2003. The higher royalty rate in 2004 is attributable to the
increase gas weighting of the Trust's production, as the Trust's effective
royalty rate on natural gas (26.1 percent) is higher than crude oil
(17.9 percent).

The higher rate is for gas, and it appears these guys sell more gas than oil.

Edit: http://www.cnw.ca/fr/releases/archive/February2005/22/c6376.html

[bemildred]

8. Nah, I think you are in the right ballpark.

What I can google up is in the high teens.
I think the 30% number came from the stuff Say_What posted below.

[Say_What]

7. 16.6% figure dates back decades--under Venezuela’s new Hydrocarbons Law

Venezuela now benefits from the oil profits and the multinationals are no longer getting a free ride.

From Merco Press:

<clips>

Venezuela increase oil royalties.

...Mr. Chavez said that the provisions of the 1943 Hydrocarbons Bill will be extensive to all contracts. Apparently the law set the production tax at 16.6% but contemplated exceptions that currently, "enable these partners of ours to get away with paying a mere 1% - almost nothing".

"The days of giving oil away for free belong to the past ... There's no reason for them to continue benefiting" from the loophole, which is supposed to apply in special cases and "for reasons that don't exist here - if, in fact, they ever existed" emphasized president Chavez during his Sunday radio and television program "Hello, President!"

The law also states that the provision is to apply strictly "to prolong" pumping oil from operating wells, yet it has also been applied to new fields, stressed Mr. Chavez.

The 2001 Hydrocarbons Law, which amended the 1943 measure, requires the state-run oil company Petroleos de Venezuela SA (PDVSA) to pay the Treasury a 30% tax, Chavez said.

"To those benefiting multinationals I say, 'It's nice you could benefit from and enjoy these near-zero royalties', but now we're putting the house in order".

http://www.mercopress.com/Detalle.asp?NUM=4405