From: Associated Press
Published February 24, 2005 12:00 AM

Venezuela Unwilling to Negotiate Tax Increase on a Heavy Crude Upgrading Project Involving ExxonMobil

CARACAS, Venezuela — Venezuela is not willing to negotiate a tax increase on a heavy crude upgrading project involving ExxonMobil, Venezuelan Oil Minister Rafael Ramirez said Thursday.

"No, that is not negotiable," Ramirez said when asked whether he would discuss rolling back the tax increase on ExxonMobil's Cerro Negro project in eastern Venezuela that was implemented last October.

The royalty taxes for Cerro Negro, as well as three other heavy crude upgrading projects in Venezuela, were increased from 1 percent to 16.6 percent.

The projects were designed to include low taxes during the initial stages of production to compensate for high capital investments by the companies involved.

President Hugo Chavez's government raised the tax last year arguing that high global oil prices justified the increase.

ExxonMobil announced earlier this week the company was seeking talks with the energy ministry to find a solution to the tax problem.

Source: Associated Press

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