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THE NEW YORK TIMES: Shell, Chevron in Venezuelan Tax Probe

THE NEW YORK TIMES: Shell, Chevron in Venezuelan Tax Probe

“Venezuela on Thursday ordered international oil major Shell to pay nearly $131 million in back taxes, and also confiscated financial data from U.S.-based Chevron Corp. in a tax crackdown.

Posted Friday 15 July 2005

By REUTERS

CARACAS, Venezuela (Reuters) – Venezuela on Thursday ordered international oil major Shell (RD.AS)(SHEL.L) to pay nearly $131 million in back taxes, and also confiscated financial data from U.S.-based Chevron Corp. (CVX.N) in a tax crackdown.

The actions announced by national tax authority SENIAT against the two foreign oil companies formed part of a campaign by left-wing President Hugo Chavez’s government to tighten control over Venezuela’s strategic oil sector.

“Anglo-Dutch Shell was given notification that it should pay $281 billion bolivars ($130.7 million) relating to income tax dues that were not paid in the period 2001-2004,” SENIAT said in a statement.

The statement added that if Shell complied with the payment demand within the 15 days established by law, it would only have to pay 10 percent in interest and fines. If it failed to do this, the penalties could increase to up to 250 percent.

SENIAT said its inspectors also temporarily confiscated data from Chevron Corp. from its offices in the western oil city of Maracaibo because the U.S. company had failed to produce it on request. The tax authority was seeking financial and accounting information from the company.

“We intervened in their administrative section to take information from their systems. This is an administrative measure to gain information because they weren’t giving it to us,” Jose Cedillo, SENIAT manager for special tax contributors, told Reuters by telephone.

Cedillo said the tax authority would advise two more foreign oil companies next week that they owed back taxes but he declined to identify them or give details.

“The investigation is moving forward,” he added.

Cedillo said SENIAT inspectors had requested the presence of a state prosecutor to gain entry to the Chevron offices and were downloading data from the company’s computers.

The intervention only affected Chevron’s administrative offices and not its oil operations, Cedillo added.

A Chevron spokeswoman confirmed that SENIAT inspectors were carrying out what she called “an audit” at the company’s Maracaibo offices.

CHEVRON SAYS “COOPERATING”

“As is our custom, we are cooperating with the requirements made,” she told Reuters, without elaborating.

Shell officials in Venezuela did not immediately respond to the tax demand made public by SENIAT.

Foreign companies pump around 1.1 million barrels per day (bpd) of the total oil output of the world’s No. 5 oil exporter. Venezuela’s government puts total national production at more than 3 million bpd, but most foreign analysts say it is really closer to 2.6 million bpd.

Following angry assertions by populist Chavez that foreign oil contracts have “robbed” Venezuela for years, Venezuela’s energy ministry and tax authorities have launched an exhaustive probe into international projects in the energy sector.

They have ordered tax hikes for 32 oil field operating agreements involving foreign partners and also demanded that these contracts be converted into joint ventures under a 2001 oil law that gives the state a majority share. The 2001 legislation also includes higher royalty rates.

Some analysts say they fear these unilateral measures, at a time when Venezuela is enjoying an oil income bonanza thanks to high world petroleum prices, may dampen future foreign oil investment in the South American nation.

But, for the most part, the overseas companies have said they are cooperating with the authorities.

As part of the campaign, SENIAT has been auditing the international companies, which it says may owe up to a total of $3 billion in unpaid taxes.

Of this total, officials estimate a joint venture between French Total (TOTF.PA), Norwegian Statoil (STAT.O) and Venezuelan state oil company PDVSA could owe $1 billion in unpaid royalties.

The foreign companies involved in this joint venture have said they have not violated any laws.

( Posted here by John Donovan of http://royaldutchshellplc.com/ )

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

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