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Petroleum News: Chavez: Venezuela will get $1.5 billion more

Additional income will come from return of 32 privately operated fields to state control; government has also audited companies
Natalie Obiko Pearson
Associated Press Business Writer
President Hugo Chavez said Jan. 20 that Venezuela expects to reap an additional US$1.5 billion this year in oil income with the return of 32 privately operated oil fields to state control.
This “shows how important it is that a country manages its strategic resources,” Chavez said in a nationally broadcast speech.
Chavez’s government has declared as illegal contracts under which foreign oil companies like Royal Dutch Shell PLC, Chevron Corp., BP PLC, and Brazil’s Petrobras S.A. independently pumped oil at the Venezuelan fields.
He said Jan. 20 that those contracts allowed foreign companies to extract oil at US$4 a barrel then sell it to the national oil company, Petroleos de Venezuela SA, or PDVSA, at US$20. The contracts also required PDVSA to pay the related royalties.
New state-controlled JVs required
The government recently made all companies sign agreements to give up those contracts and form new state-controlled joint ventures, known as “mixed companies,” with PDVSA.
“Now this perverse mechanism is over,” Chavez declared as he promised to divert the additional revenues from the mixed companies to social programs.
In its effort to squeeze more money from the industry amid high oil prices, the government conducted an audit of the companies and claimed they owe billions of dollars in unpaid taxes.
On Jan. 20, the tax agency, however, sharply revised downward its tax bill for Royal Dutch Shell, saying the company owed US$13 million instead of US$130 million for the tax period from 2001 to 2004 — a 90 percent cut.
The agency said in a statement that it reached the figure after reviewing tax documents that the company submitted following the original bill last year.
Chavez: foreign companies have looted Venezuela
Chavez, who accuses foreign oil companies of having looted Venezuela, has promised his socialist “revolution” is freeing the country from “imperialist” interests and restoring its sovereignty.
On Jan. 20 he also said that Venezuela plans to replace domestic fuel consumption with natural gas in order to export an extra US$9 billion worth of petroleum a year.
“We are consuming in fuel — gasoline, gas oil, fuel oil — about 50,000 barrels a day of petroleum. When there comes a point in the coming years that we are able to substitute that internal consumption with gas, we can export (that oil),” he said.
Venezuela would earn an extra US$25 million a day or US$9 billion a year with those sales, Chavez said.
Venezuela is the world’s fifth-largest exporter of oil. It has the largest proven oil reserves outside of the Mideast and the second-largest gas reserves in the Western Hemisphere.

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