by JIM KENNETT (Bloomberg)
ConocoPhillips, the third-largest U.S. oil company, said Friday that Venezuelan tax authorities are claiming its heavy-oil joint venture owes at least $415 million in back taxes.
The country's tax authorities have submitted a preliminary audit for 2002 claiming the Petrozuata joint venture owes $245 million in income taxes for 2002, plus interest and penalties, ConocoPhillips said in a regulatory filing with the U.S. Securities and Exchange Commission.
A second audit report claims the venture owes $170 million in municipal sales taxes and interest for 2000 through 2005, according to the filing.
"Petrozuata believes, in both cases, these audit findings are not supported in law and it therefore does not owe these taxes," ConocoPhillips said in the filing.
Venezuelan President Hugo Chavez has targeted the country's four foreign ventures that produce heavy oil, including Petrozuata, first by raising taxes on them and most recently threatening to take control. Chavez said Feb. 1 that his government intends to control "no less than 60 percent" of the ventures by May 1. The ventures in the country's eastern Orinoco Belt turn tarlike oil into about 600,000 barrels of synthetic oil a day.
"We take seriously our responsibility to adhere to the laws and regulations of every country where we operate," ConocoPhillips spokesman Charlie Rowton said in an e-mailed statement. "However, we do not comment on ongoing tax audit proceedings."
Chavez "keeps pushing the envelope on this thing," said Jim Halloran, who helps manage $35 billion at National City Private Client Group, including 2.7 million ConocoPhillips shares.
"He wants to keep them around; he just wants to find out what the minimum is he has to pay them without having them leave town," Halloran said.
ConocoPhillips holds a 50.1 percent stake in Petrozuata, with Venezuelan state-owned oil company Petroleos de Venezuela owning the rest. The company owns 40 percent of a second heavy-oil venture called Hamaca, with the Venezuelan oil company and San Ramon, Calif.-based Chevron Corp. each holding 30 percent.
Venezuelan tax officials have announced that they will accelerate audits of both Petrozuata and Hamaca for 2003 through 2006, ConocoPhillips said Friday. The company said that it "will continue to evaluate its options" under investment treaties, contracts and international law. ConocoPhillips valued its total assets in Venezuela at $2.5 billion at the end of last year.
The country's tax authorities have submitted a preliminary audit for 2002 claiming the Petrozuata joint venture owes $245 million in income taxes for 2002, plus interest and penalties, ConocoPhillips said in a regulatory filing with the U.S. Securities and Exchange Commission.
A second audit report claims the venture owes $170 million in municipal sales taxes and interest for 2000 through 2005, according to the filing.
"Petrozuata believes, in both cases, these audit findings are not supported in law and it therefore does not owe these taxes," ConocoPhillips said in the filing.
Venezuelan President Hugo Chavez has targeted the country's four foreign ventures that produce heavy oil, including Petrozuata, first by raising taxes on them and most recently threatening to take control. Chavez said Feb. 1 that his government intends to control "no less than 60 percent" of the ventures by May 1. The ventures in the country's eastern Orinoco Belt turn tarlike oil into about 600,000 barrels of synthetic oil a day.
"We take seriously our responsibility to adhere to the laws and regulations of every country where we operate," ConocoPhillips spokesman Charlie Rowton said in an e-mailed statement. "However, we do not comment on ongoing tax audit proceedings."
Chavez "keeps pushing the envelope on this thing," said Jim Halloran, who helps manage $35 billion at National City Private Client Group, including 2.7 million ConocoPhillips shares.
"He wants to keep them around; he just wants to find out what the minimum is he has to pay them without having them leave town," Halloran said.
ConocoPhillips holds a 50.1 percent stake in Petrozuata, with Venezuelan state-owned oil company Petroleos de Venezuela owning the rest. The company owns 40 percent of a second heavy-oil venture called Hamaca, with the Venezuelan oil company and San Ramon, Calif.-based Chevron Corp. each holding 30 percent.
Venezuelan tax officials have announced that they will accelerate audits of both Petrozuata and Hamaca for 2003 through 2006, ConocoPhillips said Friday. The company said that it "will continue to evaluate its options" under investment treaties, contracts and international law. ConocoPhillips valued its total assets in Venezuela at $2.5 billion at the end of last year.
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