Venezuela's mercurial President, Hugo Chávez, took foreign oil companies by surprise on Oct. 10 by decreeing a tax hike from 1% to 16.7% on heavy crude oil projects in the Orinoco Belt. The decision, effective immediately, means the Venezuelan government will raise close to $800 million in royalties annually from projects controlled by ConocoPhillips (COP
), ChevronTexaco (CVX
), ExxonMobil (XOM
), Total (TOT
), BP (BP
), and Statoil, officials say.
With oil prices at record highs, the government says the projects no longer need the tax holiday they were granted in the 1990s. And after consolidating his power in an August referendum, Chávez is looking to deepen his populist revolution during his two remaining years in power -- with the oil industry footing the bill.
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