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</font><font face="georgia" size=5 color="#A80000">Energy & Mines
Minister explains decision to end heavy-crude tax break<br><br>
</font><font face="Arial, Helvetica" size=4><a href="http://www.vheadline.com/readnews.asp?id=23100">http://www.vheadline.com/readnews.asp?id=23100</a><br><br>
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</font><font face="georgia" size=2>Energy & Mines (MEM) Minister
Rafael Ramirez has been explaining a Venezuelan government decision to
end a tax holiday on four heavy-crude upgrading projects in the Orinoco
Heavy Oil Belt.<br><br>
<b>In an interview with New York Times correspondent Brian Ellsworth,
Ramirez says the move to regulate the payment schedule of royalties and
taxes will not drive companies away.<br><br>
</b>President Hugo Chavez Frias had announced this weekend that he the
royalties would immediately be raised to 16.6% from a measly
1%. The move, of course, sent Venezuelan opposition
disinformers howling all the way to their paymasters in Washington D.C.
but Ramirez defends the decision saying that it is justified by
record-high oil prices and that the companies involved would understand.
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"It's absurd that with oil prices at US$53 per barrel anyone is
paying royalties of just 1%," he said "the oil market has
changed fundamentally ... the era of cheap oil is over." <br><br>
Orinoco Heavy Oil Belt projects produce 500,000 barrels per day (bpd) out
of Venezuela's daily output of 3.1 million bpd although some analysts
claim production is closer to 2.5 million bpd ... updated royalties are
expected to raise US$766 million a year; up from $46 million. <br><br>
The Orinoco projects were initiated years ago when Venezuelan oil was
fetching around US$10 a barrel, and Ramirez says a 1943 Hydrocarbons Law
allowed the government to raise royalties based on market
conditions. ChevronTexaco, Exxon Mobil, ConocoPhillips, BP,
France's Total and Norway's Statoil have declined comment on the
increase. <br><br>
Chavez Frias says the decision is part of a plan for true nationalization
of Venezuela's oil industry to increase the government's $42.6 billion
oil revenues. He has already set aside $3.7 billion to finance
social programs across the nation. <br><br>
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