By OGJ editors
HOUSTON, April 18 -- Venezuelan officials have instructed state oil firm Petroleos de Venezuela SA to review the accounting practices in 32 operating agreements that PDVSA signed with oil companies during 1992-97.
Energy and Petroleum Minister Rafael Ramirez, also PDVSA president, said the ministry has conducted a technical and legal study of the contracts. Venezuela President Hugo Chavez took office in 1999.
That study concluded that the contracts contain fee clauses based on the volume and price of oil and natural gas, which "contravenes" the nature of a service contract as outlined by Venezuelan law.
"The circumstances already referred lead us to issue specific instructions to PDVSA within the framework of the government's new strategies aimed at strict compliance with the legislation applicable to the development of the hydrocarbons sector," Ramirez said.
He called for the alleged defects to be rectified, adding that steps are to be taken to ensure that the total amount of payments accrued to each contractor during the calendar year does not exceed 66.67% of the value of the hydrocarbons produced.
PDVSA will work with Venezuelan customs and tax officials to ensure that income tax is paid in accordance with real net income "so as to put an end to situations existing among contractors in which for many years some of them have obtained substantial profits and not paid any income tax at all," Ramirez said.
Within 6 months, all measures should be taken to convert the existing operating agreements into joint ventures, he said.
On another subject, Ramirez told a television station in Caracas on Apr. 17 that the tax rate on oil company profits was raised to 50% from 34%, Bloomberg news service reported. Ramirez did not say when the increase would take effect.
