- The Washington Times - Sunday, May 7, 2006

CARACAS, Venezuela (AP) — President Hugo Chavez said yesterday that Venezuela would impose a new tax on companies that extract oil as part of a plan to increase revenues from its petroleum industry.

Mr. Chavez, who made the announcement during his weekly television and radio program, said the measure would create more than $1 billion in revenue next year. He said details of the new tax would be revealed in coming days.

“We are going to create a new oil tax, called the tax on extraction. The companies that are pumping oil in Venezuela are making a lot of money,” Mr. Chavez said.

Mr. Chavez said Venezuela also plans to raise income taxes to 50 percent from 34 percent for oil companies operating along the Orinoco River and boost taxes on natural-gas businesses operating in this oil-rich South American country.

Companies affected by the changes include Exxon Mobil Corp., Chevron Corp., ConocoPhillips, Total, BP PLC and Norway’s Statoil ASA.

Mr. Chavez, a critic of capitalism, has accused foreign oil companies of exploiting his country’s vast petroleum reserves without paying sufficient taxes and has taken steps to increase revenues from the industry.

Mr. Chavez applauded Bolivian President Evo Morales’ decision to nationalize his country’s natural-gas industry, a move that has rattled foreign investors and other countries in the region.

“Hopefully, all Bolivians will understand that this is vital for Bolivia’s future, just like what we are doing is vital for the future of Venezuela,” Mr. Chavez said.

Last month, Venezuela voided oil-pumping contracts with private companies at 32 fields and replaced them with a mixed-company model that gave Venezuela’s state-owned Petroleos de Venezuela SA a minimum 60 percent stake, sharply raised royalties and taxes, and reduced potential drilling acreage by almost two-thirds.

Venezuela — the world’s fifth largest oil exporter — has left foreign oil companies little leeway for negotiating the new contracts.

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