October 10, 2004
Forbes
Venezuelan President Hugo Chavez said Sunday that taxes on foreign companies extracting heavy crudes from Venezuelan soil would be raised to 16.6 percent from less than 1 percent.
Venezuela has abundant reserves of heavy crude in the tar belt which runs along the Orinoco River in southeast Venezuela.
In the mid 1990's, foreign companies were charged a smaller tax than those extracting light crudes, as an incentive for foreign companies to develop the tar belt, which had only begun to be developed by the state oil company.
The tax raise will affect only companies working on the tar belt, but not those which extract other fuels like natural gas, or those that own gas stations around the country.
Also Sunday, Chavez said that this week's high oil prices were still far below what the fair price should be: $100 per barrel.
"If the price (of oil) in 1974 was projected until today ... the oil barrel should be at $100 today," Chavez said.
Light crude reached $53 a barrel this week on the New York Mercantile Exchange partly due to an oil strike in Nigeria and because output in the Gulf of Mexico has not recovered as expected after recent hurricanes.
Venezuela's barrel closed at $42.17 Friday, setting the 2004 average price at $32.83. The average price in 2003 was $25.76.
Venezuela, the world's fifth oil exporter, says it produces more than 3 million barrels of oil a day. Critics say it is closer to 2.5 million.
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