Lawmakers Recommend Hiking Royalty for Orinoco Projects to 30%


Map of Venezuela - Orinoco Belt
(Click to Enlarge)
A special committee of lawmakers from Venezuela's national assembly will recommend the executive power increase the royalty rate on four extra-heavy upgrading projects in the Orinoco oil belt to 30% from 16.7%, Caracas daily El Universal reported.

Energy and oil minister and state oil firm PDVSA president Rafael Ramirez said late last year that pushing such a royalty hike was going to be one of this year's priorities for his office.

PDVSA has also proposed to the national assembly increasing the tax rate for the projects to 50% from the current 34%, Ramirez has said.

The four such projects currently operating in the Orinoco produce 660,000 barrels a day (b/d) of extra-heavy crude that is upgraded into some 600,000b/d of synthetic crude. PDVSA is partners in all four projects with such high-profile oil majors as US oil firms ExxonMobil (NYSE: XOM), ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX), France's Total (NYSE: TOT), UK firm BP (NYSE: BP) and Norway's Statoil (NYSE: STO).

In 2004 the royalty rate was increased dramatically to 16.66% from 1%, eliminating what was envisaged in the 1990s during the administrations of Carlos Andres Perez and Rafael Caldera as the key fiscal incentive to attract investment in the then-untried Orinoco projects.

The incentive was considered necessary because such projects are traditionally more expensive than standard E&P projects since the extra-heavy crude needs to be upgraded before it can be refined.

However, the Chavez administration argues companies can still make a profit with higher royalties today given current high oil prices in the international market.

The committee is headed by leading pro-government lawmaker Rodrigo Cabeza, who says the proposal for a higher royalty rate stands a good chance of passing because the national assembly is mostly composed of pro-government lawmakers.

Opposition political parties refused to take part in the December 4, 2005, legislative elections and have denounced the assembly as "illegitimate" since the abstention rate in the vote neared 80%.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.

Related Companies
 Company: BP plcmore info


 - Big Oil Back On The Acquisition Trail As Outlook Brightens (Jan 19)
 - Canada Rules Out Arctic Oil Drilling Extensions for ExxonMobil, BP (Jan 6)
 - Samsung Wins Mad Dog 2 Fabrication Contract (Jan 5)
 Company: Exxon Mobil Corporationmore info


 - ExxonMobil's $5.6B Acquisition Validates Permian as Core Operator Strategy (Jan 17)
 - Petrovietnam, Exxon Mobil Sign Deal On Gas Generation (Jan 13)
 - ExxonMobil Strikes More Oil Offshore Guyana (Jan 12)
 Company: Statoilmore info


 - Statoil Says Mistakes, Lack Of Maintenance Led To Troll, Mongstad Accidents (Jan 20)
 - Big Oil Back On The Acquisition Trail As Outlook Brightens (Jan 19)
 - Oil, Gas Firms Make Global 100 Most Sustainable Corporations List (Jan 19)
 Company: Total S.A.more info
 - Big Oil Back On The Acquisition Trail As Outlook Brightens (Jan 19)
 - Oil, Gas Firms Make Global 100 Most Sustainable Corporations List (Jan 19)
 - Norway Awards 56 Oil And Gas Licences In Mature Areas (Jan 17)
 Company: ConocoPhillipsmore info


 - Startup Of Malikai Oil Field To Boost Malaysia's Kimanis Exports (Dec 13)
 - US Shale Firms Go Back To Work Buoyed By OPEC Deal, Trump Victory (Nov 14)
 - ConocoPhillips Aims To Sell Up To $8 Billion In Gas Assets (Nov 10)
 Company: Chevron Corporationmore info
 - Argentina Clinches Deal to Attract Investment in Vaca Muerta Shale (Jan 11)
 - Oil, Gas Conflicts throughout Africa in 2016 (Jan 4)
 - SOCAR, AIOC Agree to Develop ACG Field (Dec 23)
 Company: PDVSAmore info


 - Venezuela PDVSA Says In Grace Period For 2035 Bond (Nov 22)
 - Venezuela's PDVSA Reaches $1.45B In Finance Deals With Oil Firms (Nov 4)
 - US Said to Be Closing In on PDVSA-Linked Seizures, Charges (Oct 25)
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Attorney I
Expertise: Contracts Administration|Legal
Location: Houston, 
 
US Houston: Sr. EDI Logistics Specialist (Electronic Data Interchange)
Expertise: Logistics Management
Location: Houston, TX
 
Community Relations Manager Job
Expertise: Legal|PR / Corporate Communications|Project Management
Location: Red Wing, MN
 
search for more jobs

Brent Crude Oil : $55.49/BBL 2.45%
Light Crude Oil : $52.42/BBL 2.04%
Natural Gas : $3.2/MMBtu 5.04%
Updated in last 24 hours