The hikes increase could mean US$2.1bn in extra revenue for Venezuela if the present prices hold the minister said.
A 16.7% "extraction tax" will be added to the existing 16.7% royalty, which can be paid in kind, while the tax rate will be hiked to 50% from 34%, Ramirez said.
The new extraction tax has to be approved by the national assembly, but Ramirez said the approval process would be speedy so "we will start charging it as soon as the increase appears in the official gazette," he said, referring to the government's federal register equivalent. The energy and oil ministry and not tax office Seniat, will collect the extraction tax, Ramirez said.
The new higher tax does not need legislative approval, but will be submitted to the council of ministers on May 9 and possibly approved.
Thus the Orinoco projects, devised almost two decades ago with especially low tax and royalty rates to attract investors, will now pay the same in taxes and royalties that standard E&P projects pay. Less than a year ago the royalty was increased from 1%, the lowest of any kind for an E&P project in Venezuela, to the current 16.66%, a move that drew protest from several high profile firms.
When in full swing, Orinoco projects produce some 660,000 barrels a day (b/d) of extra heavy crude in turn used to manufacture 600,000b/d of synthetic crude. PDVSA has a sizable stake in each of the 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 (NYSE: BP); Sincor, where it partners with France's Total (NYSE: TOT) and Norway's Statoil (NYSE: STO): and Petrozuata, again with ConocoPhillips.
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