CARACAS (Dow Jones Newswires), June 13, 2008
Petroleos de Venezuela SA, or PdVSA, has transferred roughly $2.7 billion to a state-controlled development fund, its share of a recently approved windfall oil price tax, a local newspaper reported Friday.
The company has been paying an average of $300 million a week to the Fonden development fund, President Hugo Chavez's preferred spending mechanism, the El Universal daily reported, citing Oil Minister Rafael Ramirez.
Under Chavez, PdVSA has increased its funding of social spending initiatives popular with Venezuela's poor. The company's 2007 audited results showed that it allocated $14.1 billion to social spending initiatives that year, more than the $11 million it set aside for oil industry investments.
The paper reported that PdVSA, however, has yet to begin charging foreign oil companies for the new windfall oil tax, which becomes effective once Brent crude exceeds the $70 threshold. At that level, companies must pay 50% of the difference between the brent price and the sale price of the crude. The rate jumps to 60% of that when Brent prices exceed $100.
Chavez has touted the new tax as a matter of national sovereignty, arguing it is the means to gain a portion of the windfall profits that foreign companies make from oil operations in Venezuela.Copyright (c) 2008 Dow Jones & Company, Inc.
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