U.S. oil firms pay about $3 billion a year in royalties to the Venezuelan government, a number that dwarfs the $200 million they'd be paying if previous Venezuelan administrations remained in charge, President Hugo Chavez said.
U.S.
oil
firms pay about $3 billion a year in royalties to the Venezuelan government, a
number that dwarfs the $200 million they'd be paying if previous Venezuelan
administrations remained in charge, President Hugo Chavez said.
"They used to hand out the oil for free here," said Chavez during a speech
Monday night that culminated
Venezuela
's
Independence Day celebrations. "This has now ended and we are free."
The left-wing leader has been in power for 11 years and one of his key moves
has been to take oil-drilling profits away from foreign oil companies and give
more to the state for social, infrastructure and other projects.
Around 2005, Chavez ripped up contracts between the government and big oil
companies, including Exxon Mobil Corp. (XOM), and re-wrote them to give
state-owned Petroleos de Venezuela, or PDVSA, a majority stake.
Most companies, including California-based Chevron (CVX), the
U.K.
's BP
PLC (BP), Royal Dutch Shell PLC (RDSA) and
France
's
Total (TOT), reluctantly agreed to the changes.
Others such as Exxon and ConocoPhillips (COP) called Chavez' changes illegal,
left the country and continue to pursue their cases in international courts.
Chavez called the previous
Venezuela
administrations and their supporters "mini-Yankees" that essentially
worked for
U.S.
corporate interests and did nothing for the
Venezuela
people. He said
Venezuela
only
charged foreign oil companies a 1% royalty rate before he arrived in 1999.
The Chavez government has steadily increased that royalty rate, bumping it up
to 16% in 2004, and bringing it to as high as 33%.
But such high rates have caused many companies to reduce their involvement in
Venezuela
or
forego new investments. Overall oil production - sales of which are the
country's main revenue source - has dropped to 3.0 million barrels a day from
about 3.4 million barrels a day a decade ago.
In the Carabobo heavy oil auction in February for drilling rights in the
Orinoco region, the government was forced to reduce royalty rates to as low as
20% because foreign firms showed little interest in paying more.
Chavez comments late Monday also came at the start of a conference in
Caracas
of
the left-leaning regional trade group Alba, which includes countries such as
Venezuela
,
Bolivia
,
Cuba
,
Ecuador
,
Nicaragua
, and
others.
Fellow Alba members were told by Chavez that
Venezuela
feels
a historical obligation to share its oil wealth with brother nations.
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