Venezuela Could Increase Tax on NatGas Output to 50%



A proposed reform to Venezuela's tax law would increase the tax paid by private companies on natural gas production to 50% from the current 34%, Caracas daily El Universal quoted an official with the Seniat tax authority as saying.

The 34% tax rate, however, will remain for projects pertaining to downstream activities such as refining, transport and commercialization, the article quoted Seniat national tax director Noel Gonzalez as saying.

The reform would also limit the amount of tax-deductible expenses that private companies can claim, Gonzalez said.

E&P gas projects also pay a royalty rate of 20%.

Seniat press officials contacted by BNamericas declined to give additional details.

The proposed change in the law comes just months after the government awarded five new E&P licenses to such high-profile concerns as US oil major Chevron (NYSE: CVX), Russian natural-gas giant Gazprom and joint ventures made up of Brazil's state energy firm Petrobras (NYSE: PBR) with Japanese energy firm Teikoku and another one including Italy's Eni (NYSE: E) with Spain's Repsol YPF (NYSE: REP).

Venezuela's energy and oil ministry plans to start a process to award seven new offshore licenses to explore and produce natural gas in eastern Venezuela in March. The government has repeatedly stated it wants to boost investment in natural gas E&P, citing a need to boost domestic thermal generation, refining and secondary crude recovery, as well as ambitious projects to export Venezuelan gas to Argentina, Brazil and Colombia through two separate proposed pipelines.

The impact on crude E&P could also be considerable as 70% of the almost 7 billion cubic feet a day of gas produced in Venezuela is used for secondary recovery and 90% of all Venezuelan gas is associated, meaning it shares deposits with crude.

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: OAO Gazprom more info
 - Ukraine And Russia Both Claim Victory In Gas Dispute (Dec 22)
 - Gazprom to Splurge on EU Gas Pipe as US Weighs Penalties (Dec 19)
 - Court Rejects PGniG's Attempt To Limit Gazprom's Use Of Opal Pipeline (Oct 13)
Company: Petrobras more info
Operates 34 Offshore Rigs
Manages 10 Offshore Rigs
 - Exxon, Petrobras Form Alliance To Develop Oil, Gas Projects (Dec 14)
 - Natural Gas In Petrobras Pipelines Up About 23% In 2017 (Dec 05)
 - Petrobras CEO Says To Discuss Refining Partnership With CNPC CEO (Nov 15)
Company: Chevron Corporation more info
 - CB&I, Chevron Lummus Global, Saudi Aramco Launch 'Crude-to-Chemical' JV (Jan 18)
 - Oil Producers Want New Hearing on Impact of Magellan Proposal (Jan 17)
 - Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
Company: PDVSA more info
Operates 14 Offshore Rigs
Manages 26 Offshore Rigs
 - Algeria Sends More Oil To Cuba As Venezuelan Supplies Fall (Jan 10)
 - Venezuela's PDVSA At Risk Of Losing Bonaire Terminal Over Maintenance Delay (Dec 19)
 - Paralysis At PDVSA: Venezuela's Oil Purge Cripples Company (Dec 15)
Company: Repsol more info
 - Exxon Mobil Bets on Brazil, Buys 10 Oil Blocks in Auction (Sep 28)
 - Repsol Says Drilling Suspended On Vietnam Oil Block Disputed By China (Aug 02)
 - China Urges Halt To Oil Drilling In Disputed South China Sea (Jul 25)
Company: Teikoku Oil more info
 - Petrobras: $535 Million In Ecuador Investments On Hold (Apr 08)
 - Teikoku Acquires 35% Stake in Block 31 Offshore Suriname (Aug 29)
 - Venezuela to Resume Offshore E&P Gas Licensing (Jan 25)