Orinoco Projects to Pay 83.3% in Taxes, Royalties



Venezuela's authorities will increase taxes and royalties paid by Orinoco extra-heavy crude projects to total 83.3%, a small part of which can be paid in either cash or crude, energy and oil minister and state oil firm PDVSA president Rafael Ramirez said on Monday.

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.

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 plc more info
Operates 28 Offshore Rigs
 - BP Midstream Partners Seeks To Raise Up To $893MM In IPO (Oct 16)
 - BP, Azerbaijan's SOCAR To Sign Caspian Sea Exploration Deal In 2017 (Oct 12)
 - Increasing the World's Oil Reserves with Digitization (Oct 09)
Company: Exxon Mobil Corporation more info
Operates 13 Offshore Rigs
 - ExxonMobil Says Julia, Hadrian South Operations Back To Normal After Nate (Oct 10)
 - Iraq's Talks with Exxon on Southern Oilfields in Final Stages-Minister (Oct 09)
 - U.S. Gulf Oil Producers Start Evacuating Staff Ahead of Tropical Storm Nate (Oct 05)
Company: Statoil more info
Operates 1 Offshore Rigs
 - Statoil Takes First Bite Of Solar Market With Brazilian Joint Venture (Oct 04)
 - Statoil Charters Last of Largest Oil Tankers to Hold Crude for Asia Buyers (Sep 28)
 - Statoil And Partners Plan Output Capacity Expansion At Troll Gas Field (Sep 26)
Company: Total S.A. more info
 - Total CEO: US Shale Oil Industry To See Wave Of Investment (Oct 18)
 - Total's CEO Says Will Try To Move Ahead With Iran Gas Project (Oct 17)
 - Total Expands Presence in Mexico (Oct 12)
Company: ConocoPhillips more info
Operates 12 Offshore Rigs
 - Most US Gulf Oil Output Offline Ahead of Tropical Storm Nate (Oct 06)
 - U.S. Gulf Oil Producers Start Evacuating Staff Ahead of Tropical Storm Nate (Oct 05)
 - For ConocoPhillips, Harvey A Test Of Remote Operations (Sep 07)
Company: Chevron Corporation more info
 - Canada's Keyera Signs Pact With Chevron To Transport, Store NGL (Oct 10)
 - Chevron Starts LNG Output at Australia's Wheatstone (Oct 09)
 - Petrofac Extends North Sea Contract with Chevron (Oct 05)
Company: PDVSA more info
Operates 15 Offshore Rigs
Manages 26 Offshore Rigs
 - Venezuela Confirms Discussing Citgo Collateral Swap With Rosneft (Oct 04)
 - Venezuelans Face Growing Queues To Buy Gasoline (Sep 21)
 - Venezuela's Crude Supply To The United States Was Flat In August (Sep 13)
Company: Petrozuata more 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)