Energy companies that want to produce crude oil in Venezuela will be paying local taxes and fees to the Venezuelan government, but royalty payments and federal taxes will go into a fund managed by the United States, the Treasury Department has said.
Citing a Frequently Asked Questions section yet to be published on the Treasury’s website, Reuters said the new tax regime follows the issuance of two so-called general licenses for operations in Venezuela. These licenses essentially amount to sanction relief, the first one concerning the export, sales, transport, and storage of Venezuelan crude, and the second one lifting restrictions on technology and equipment to be used in the development of oil and gas resources in Venezuela.
The royalties due for this development would go into a vehicle called the Foreign Government Deposit Funds, along with fixed taxes on a per-barrel basis and federal taxes, according to Reuters.
Since the capture of Venezuelan president Nicolas Maduro in early January, the U.S. administration has taken control of Venezuelan oil sales, which are being handled by top traders Vitol and Trafigura, and has started to ease some of the restrictions on the domestic industry. President Donald Trump has touted Venezuela’s oil as a creator of “tremendous wealth” for industry and “great wealth” for the American people.
President Trump has been eager for U.S. energy companies to flock to Venezuela and invest the billions necessary to revive its oil industry. The companies themselves, however, have been rather reluctant to do that, citing the size of the investments needed. Meanwhile, however, the U.S. is handling Venezuela’s oil exports, and over the next few months these could generate as much as $5 billion, Energy Secretary Chris Wright said earlier this month.
“Sales today are over a billion dollars, and in fact, we have sort of short-term agreements over the next few months that will bring in another $5 billion,” Wright said in the interview during a historic visit to Venezuela to meet with the interim President Delcy Rodríguez.
By Irina Slav for Oilprice.com
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