ExxonMobil to meet with Venezuelan officials

First of five international oil companies operating in Orinoco tar belt to challenge royalty tax increase; Conoco puts offshore project on hold

The Associated Press

ExxonMobil, the world’s largest oil firm, said March 3 that it plans to meet with Venezuelan officials to discuss a royalty tax hike imposed by President Hugo Chavez’s government.

The royalty rate for ExxonMobil’s Cerro Negro heavy crude upgrading project, along with three other projects operating in the country’s eastern Orinoco tar belt, was increased to 16.6 percent from 1 percent last October without prior notice.

“The ministry of energy has agreed to meet with us to discuss our concerns on the royalty rate change,” said the company in a statement.

“We reiterate that we wish to achieve an amicable solution to the issue. We hope to begin the discussions very soon,” it added.

Ramierez not open to negotiations

“We don’t have anything to negotiate,” Ramirez said.

ExxonMobil’s partners in Cerro Negro include British Petroleum and Petroleos de Venezuela S.A., Venezuela’s state-run oil company. Officials at Petroleos de Venezuela, also known as PDVSA, and British Petroleum were not immediately available for comment.

ExxonMobil is the first of five international oil companies operating in the Orinoco tar belt to publicly challenge the tax increase. Norway’s Statoil, Houston-based ConocoPhillips and France’s Total are also involved in projects to upgrade Venezuela’s heavy tar oil into marketable synthetic crude.

The four upgrading projects produce more than 500,000 barrels of oil a day, according to PDVSA.

The Chavez administration has been pushing for tougher tax terms on oil projects involving foreign companies. ConocoPhillips had development plans for an offshore oil project put on hold earlier this year amid a dispute with the government over the project’s budget.

Venezuela, the world’s fifth largest oil exporter, is a major supplier of crude and gasoline to the United States.