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California and the West

Chevron Agrees to Venezuela's Demand

April 06, 2006|From Reuters

CARACAS, Venezuela — Chevron Corp. will pay $75 million in back taxes, interest and fines to Venezuela, the South American country's tax chief said Wednesday.

Leftist President Hugo Chavez's government has issued assessments for millions of dollars in back taxes in an effort to increase revenue from oil operations. Venezuela is the world's fifth-largest exporter of crude.

Jose Vielma, superintendent of the tax agency known as SENIAT, said Chevron was scheduled to make the $74.9-million payment Wednesday.

Vielma had said Friday that the California oil company would pay $50.2 million, but Chevron's debt was increased by $26.3 million because it failed to make the payment as scheduled, Vielma said. After Wednesday's payment, Chevron will still owe about $1.6 million.

"Chevron has reviewed and resolved the 2001 to 2004 tax assessment prepared by SENIAT. It is Chevron's policy not to discuss the details of the assessment and its resolution," a spokeswoman for the oil company said.

Venezuela's tax actions, begun last year, have focused largely on 32 operating service agreements, a series of oil deals signed during the 1990s that produced close to 500,000 barrels per day.

The deals originally were signed at a 34% tax rate, but tax authorities later ruled these operations should have paid 50% between 2001 and 2004.

Also last year, Venezuela declared the operating service agreements illegal, and this week completed a process of converting them to state-controlled joint ventures.

Chevron agreed to convert its LL-652 operating agreement to a joint venture with PDVSA holding a 75% stake. Norway's Statoil sold its 27% stake in the operation to PDVSA.

Chavez is moving to increase state control over the oil operations to boost government income to fund social programs.

Shares of San Ramon, Calif.-based Chevron rose 59 cents Wednesday to $59.50.

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