Venezuela to introduce new tax on oil companies

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Venezuela plans to introduce a new tax on windfall profits from oil production to help pay for environmental damage and to fund social programs, Oil Minister Rafael Ramirez said on Tuesday.

Venezuela would move “very fast” to implement the new levy on oil profits while prices are high and would use proceeds for social programs, Ramirez said, speaking to reporters at a conference in Edmonton, Alberta. “We believe that the oil has to be used for the people in our country,” the minister said. “The international companies, with all the oil activity, have (done) a lot of damage.” The minister did not say how much he expected the new levy to raise in the country, the fourth-largest oil exporter to the United States.

 

Ramirez said rising oil prices justify the new levy. Profits on oil production have risen because the price of the natural resource has climbed beyond what was foreseen, when contracts were signed. “For that reason we are thinking of having new taxation for the extraordinary income,” he said. Ramirez said Venezuela was a poor country with a lot of problems, that needed funds for social programs, education and health. “It will resolve a lot of problems we have in Venezuela,” he said. Ramirez added that OPEC-member Venezuela was sending to China crude oil, that US oil giant Exxon Mobil did not want for its Chalmette, Louisiana, refinery.

Venezuela has been in a dispute Exxon Mobil over the country’s nationalization of a multibillion-dollar project in the Orinoco belt last year. Exxon Mobil won court rulings freezing some $12 billion in Venezuelan overseas oil assets in a move to secure compensation for the nationalized project. Venezuela responded by suspending sales to the top US oil company. Ramirez said all of the Venezuelan oil that was destined to be refined at Chalmette was being redirected. “We (decided) to send it to the Chinese market,” he said. (Reuters)


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