Venezuela and ExxonMobil Begin Negotiations Over Tax Increase

Venezuela and ExxonMobil Begin Negotiations over Tax Increase

Wednesday, Mar 23, 2005
By: Jonah Gindin – Venezuelanalysis.com

Caracas, March 23, 2005—Exxon Mobil and the Venezuelan government have entered into negotiations regarding an increase in royalties on heavy crude projects announced last year.  The increase from 1% to 16.66%, applying to extra heavy crude projects in Veenzuela’s Orinoco oil belt, was justified, according to government officials, because of historically high oil prices.  The increase is estimated to raise the state’s oil revenues from the projects from $46 million to $750 million per year.

Royalties were initially low for projects in the Orinoco oil belt to compensate for the technically difficult and expensive process involved in extracting the extra heavy crude.  When contracts were signed with royalties at 1% in the mid-1990s, oil prices stood at $15.  Production along the Orinoco accounts for 500,000 barrels per day, or between one fifth and one sixth of Venezuela’s total daily production, estimated at between 2.6 and 3.1 million b/d.

Exxon Mobil has contested the royalty-hike, though, according to company spokespeople, they pay it “under protest.”  Other companies involved in the Orinoco oil belt such as ChevronTexaco (US), Total S.A (France), ConocoPhillips (US), and Statoil (Norway), said that they would not challenge the royalty increase.

http://www.venezuelanalysis.com/news.php?newsno=1556

in the world's blind spot. Sometimes you have to wonder how long Chavez is for this world. (see Peru, Chile, etc.)

They can absorb this tax and *still* be making record profits without raising the price of oil one penny. The same goes for the oil resource speculators, also.

you then develop a desire for more.



"The role of the inhabitants of the American hemisphere has for centuries been purely passive. Politically they were non-existent. We are still in a position lower than slavery, and therefore it is more difficult for us to rise to the enjoyment of freedom. We were removed from the world in relation to the science of government and administration of the state. We were never viceroys or governors, save in the rarest of instances; seldom archbishops; diplomats never; as military men, only subordinates; as nobles without royal privileges. - Simón Bolívar, 1815

These companies got away without paying anything to Venezuela for twenty years because they said they were "recouping their costs". As is clearly shown in their bottom lines, their costs have been recouped many times over.

About time Venezuela got something back for the oil giants robbing them of their natural resources.

Exxon's fourth-quarter earnings, at $8.42 billion, represented the highest quarterly income ever reported by an American firm.

Chavez turns out lights on people who don't.