By OGJ editors
HOUSTON, Apr. 4 -- Harvest Vinccler, a unit of Harvest Natural Resources Inc. (HNR), signed a memorandum of understanding with Corporacion Venezolana del Petroleo SA (CVP) to form a mixed company.
The mixed firm will jointly develop and operate South Monagas Unit oil fields in Venezuela. Harvest Vinccler will own 40% of the mixed company, and CVP will own 60%. Previously, Harvest Vinccler operated South Monagas.
Mixed companies are being formed as Venezuela moves to change the operating arrangements with international oil companies as it increases the corporate income tax (OGJ, Apr. 25, 2005, p. 48).
After formation, the mixed company will receive a 20-year license to operate and develop the fields. Oil will be sold to state-owned Petroleos de Venezuela SA (PDVSA).
The mixed company plans to pay 33.33% royalty to the Venezuelan government. The income tax rate will be 50%.
HNR Pres. and Chief Executive Officer James A. Edmiston, said, "We expect to finalize our agreements soon and look forward to working with our partner, CVP, to increase oil and gas production in Venezuela. We will also continue our work with Seniat to resolve the tax claims."
Seniat, the Venezuelan tax authority, said last year that HNR owed $94 million in back taxes for the 2001-04 period (OGJ, Aug. 15, 2005, p. 30).
