VIO News Blog

August 28, 2008

Oil Windfall Tax is Good News for Venezuela

Filed under: Daily News Roundup — VenWorld @ 11:48 am
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Venezuela has earned $4.3 billion in taxes on windfall oil profits so far, according to AFP. Overall, the value of Venezuela’s oil exports have risen to $48.47 billion this year — an increase of 78 percent over last year. The windfall oil tax is a “mandatory contribution” made by all oil companies operating in the country when oil prices rise above $70 or $100 per barrel. The monies are likely to directed toward state-sponsored social programs that aim to reduce poverty and promote human development and citizen empowerment. Reuters reports that President Chavez said yesterday that oil is beginning to stabilize at a fair price of around $100 per barrel, and that Venezuela will closely monitor “the stability of prices and the security of supplies.”

In international news, former London Mayor Ken Livingstone (pictured at right) will advise Venezuelan mayors on urban issues. A deal signed with Venezuela while Livingstone was in office to exchange urban planning expertise for cheap bus fuel was recently canceled. The BBC and the Guardian report that Livingstone said he is “proud and honored” to help, and that he foresees that Caracas can be vastly improved in just two decades; “I believe that Caracas will become a first-world city in 20 years. I have a very extensive network of contacts both domestically and internationally which I will be calling on to assist in this.”

Nationalizations continue to be in the news today. Mexico’s Cemex has finally struck a deal with Venezuelan officials on the handover of cement plants, after compensation talks failed earlier this month. The AP reports that President Chavez said yesterday that a settlement was reached. Meanwhile, the Argentine- and Italian-owned steelmaker, Ternium Sidor, has just reached the end of its own period for negotiations with the Venezuelan government. A compensation amount of perhaps $1.65 billion was agreed upon, Reuters reports, but the pace of the repayment appears undecided.

Finally, Venezuela is set to collaborate on oil exploration with two more Latin American countries. The state-owned oil companies of Ecuador and Chile are expected to sign agreements for joint ventures with PDVSA to explore for crude in the lucrative Orinoco Belt. A deal with Ecuador is planned for tomorrow, according to the AP.

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