Venezuela to make 32 oil pacts comply with new law

Apr 14, 2005 02:00 AM

Private oil firms operating 32 oil production contracts in Venezuela will have to switch the contracts to a new law that includes majority participation from state oil company Petroleos de Venezuela, or PdVSA, President Rafael Ramirez said.
"Within six months, the operating agreements will be converted to mixed companies under the new law," Ramirez said.

Ramirez said that under the new law, the projects will pay a 30 % royalty tax, and PdVSA will hold a 51 % stake in each project. Ramirez didn't specify the amount of current royalty rates but said many of the projects declare losses and pay no taxes.
He said PdVSA will have enough money to invest in the projects and maintain output.

The operating contracts currently produce 500,000 bpd of oil in Venezuela a day, and Ramirez said the companies aren't paying enough in income taxes, causing losses to the state oil company.
Venezuela President Hugo Chavez said that some of the operating contracts may have to pay back taxes, if a tax review reveals they underpaid.

Source: Dow Jones
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