Venezuela’s Congress has given initial approval to a windfall oil tax that extends President Hugo Chavez’s campaign to increase government revenue from the oil industry.
The tax will tap into private company profits amid record oil prices above $100 per barrel, and will step up his confrontation with the global energy giants, like BP.
A statement on the legislature’s Web site said the measure will “readjust the excessive benefits of foreign investors that are above the reasonable levels of profitability.”
The legislation, called the Tax on Extraordinary Hydrocarbons Prices Law, taxes 50 percent of oil revenues between $70 per barrel and $100 per barrel and 60 percent of revenues above $100 per barrel.
The tax will apply to private companies and state oil company PDVSA, which controls the vast majority of Venezuela’s oil production.
Under the current version of the law, the largest tax burden would fall on private partners of four Orinoco heavy oil belt projects including BP , Chevron Norway’s StatoilHydro , and France’s Total.