Seniat Could Hike Taxes on Orinoco Projects to 50%

Map of Venezuela - Orinoco Belt
(Click to Enlarge)
Venezuela's tax authority Seniat could increase the tax rate for Orinoco oil projects producing some 600,000 barrels a day of synthetic crude to 50% from the current 34%, according to an article in Tuesday's edition of Caracas daily El Universal.

The article adds that natural gas E&P projects could also see their tax rates increased to 34% from the current 20%. The increases, if Seniat decides to implement them, will be included in an upcoming reform of the tax law. However, any changes to that law would require approval by the national assembly.

There is already a proposal being studied to increase the royalty rate on the Orinoco heavy crude projects to 30% from 16.7%, which would bring the projects squarely into the "80:20" formula, meaning 80% of profits for the host country and the remaining 20% for the company.

In early 2005, the royalty rate for the four existing Orinoco projects was increased to the current 16.7% from 1%. The rate was set at 1% in the mid-1990s to attract fresh investment in the then new field of extra-heavy crude upgrading.

State oil firm PDVSA has a sizable stake in each of the four projects: Ameriven, where it partners with US oil majors ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX); Cerro Negro, where it partners with ExxonMobil (NYSE: XOM) and the UK's BP; Sincor where it partners with France's Total (NYSE: TOT) and Norway's Statoil: and Petrozuata, again with ConocoPhillips.

In the 1940s during the brief revolutionary government of writer Romulo Gallegos, Venezuela became the first oil country to institute the 50:50 ratio for profit sharing between the state and private companies, which stood for almost half a century as a watermark in the economic relations between oil companies and host countries.

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: Exxon Mobil Corporationmore info

 - ExxonMobil Finds Potential 1 Billion Barrel Oil Field Offshore Nigeria (Oct 27)
 - Exxon CEO Doesn't See Supply Shortage Pushing Up Oil Prices (Oct 19)
 - ExxonMobil To Start Drilling First Liberia Well In November (Oct 19)
 Company: Statoilmore info

 - Statoil Misses Q3 Forecasts, Cuts Capex Again (Oct 27)
 - PSA Asks Statoil Whether Recent Incidents Related To Cost Cutting (Oct 26)
 - Statoil Says Restarts Output At Statfjord A Platform After Fire (Oct 24)
 Company: ConocoPhillipsmore info

 - ConocoPhillips Sees APLNG Hitting Full Tilt In Q2 2017 (Oct 28)
 - ConocoPhillips Reports $1B 3Q Loss (Oct 27)
 - ConocoPhillips Sues Venezuela's PDVSA, Calls Bond Swap 'Fraudulent' (Oct 7)
 Company: Chevron Corporationmore info
 - Chevron Confirms Is In Discussions For Potential Bangladesh Sale (Oct 13)
 - Kidnapped Romanian Oil Engineer in Niger Delta Released (Oct 13)
 - Jefferies: OPEC Output Cut Unlikely (Oct 11)
 Company: PDVSAmore info

 - US Said to Be Closing In on PDVSA-Linked Seizures, Charges (Oct 25)
 - Venezuela PDVSA Swaps $2.8B 2017 Bonds, Gains Financial Breather (Oct 24)
 - Ex-Venezuela PDVSA Boss Denies $11B Corruption Allegations (Oct 20)
 Company: Petrozuatamore info
 - PDVSA Underscores Pricing of Tender Offer for Petrozuata Project Bonds (Sep 12)
 - Ramirez: Cerro Negro, Sincor Resisting Nationalization (Jan 17)
 - Orinoco Projects Ordered to Cut Shipments (Jan 17)

Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Regulatory Compliance Specialist
Expertise: HSE Manager / Advisor|Offshore Position Surveying|Regulatory Compliance
Location: Houston, TX
Shipping and Receiving Specialist
Expertise: Logistics Management|Port Operations
Location: College Station, TX
Safety and Environmental Management System Specialist (SEMS)
Expertise: Environmental, Safety & Training|Regulatory Compliance|Safety Engineering
Location: Houston, TX
search for more jobs

Brent Crude Oil : $50.47/BBL 0.98%
Light Crude Oil : $49.72/BBL 1.09%
Natural Gas : $2.76/MMBtu 1.09%
Updated in last 24 hours