[progchat_action] Venezuela's Congress OKs "windfall" oil tax
 
Date: Fri, 4 Apr 2008 08:33:22 -0500 (CDT)


Venezuela's Congress OKs "windfall" oil tax

Reuters
Thursday April 3 2008,

CARACAS = Venezuela's Congress on Thursday gave initial approval to a
windfall oil tax that extends leftist President Hugo Chavez's campaign to
increase government revenue from the OPEC nation's oil industry.

The tax will tap into private company profits amid record oil prices above
$100 per barrel, giving Chavez additional funds to shore up his self-styled
socialist revolution and stepping up his confrontation with global energy
giants.

A statement on the legislature's Web site said the measure will "readjust
the excessive benefits of foreign investors that are above the reasonable
levels of profitability."

The legislation, called the Tax on Extraordinary Hydrocarbons Prices Law,
taxes 50 percent of oil revenues between $70 per barrel and $100 per barrel
and 60 percent of revenues above $100 per barrel.

The tax will be levied on oil and refined product exports based on average
monthly prices of benchmark Brent crude. The Chavez-controlled Congress is
all but certain to give final approval to the legislation, most likely by
next week.It will apply to private companies and state oil company PDVSA,
which controls the vast majority of Venezuela's oil production.

But the draft law would allow PDVSA, the financial engine of Chavez's social
development efforts, to deduct billions of dollars in certain social
spending contributions from the payment of the tax.

Companies will be able to deduct windfall tax payments from their income
taxes.

A group of joint ventures between PDVSA and minority partners such as Royal
Dutch Shell that produce around 350,000 barrels per day appear to be exempt
from the tax because they sell oil to PDVSA rather than exporting directly.

Under the current version of the law, the largest tax burden would fall on
private partners of four Orinoco heavy oil belt projects including BP ,
Chevron Norway's StatoilHydro , and France's Total . (Reporting by Brian
Ellsworth and Deisy Buitrago)

http://www.guardian.co.uk/feedarticle?id=7435275

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