Bureau of Mines / Minerals yearbook: Area reports: international 1971
Year 1971, Volume 3 (1971)
Koelling, Gordon W.
Venezuela, pp. 887-898 PDF (1.3 MB)
887The Mineral Industry of Venezuela By Gordon W. Kodlling1 The value of Venezuela's crude minerals output was adversely effected in 1971 by the decreased production of crude oil and iron ore. Approximately 94 percent of crude minerals output value was accounted for by the petroleum industry (including natural gas) which also was responsible for approximately 25 percent of gross domestic product (GDP), provided about 67 percent of the Government's ordinary revenues, and was responsible for over 90 percent of the country's total export receipts. About 5 percent of the value of Venezuela's crude minerals output was accounted for by iron ore. Despite a 4 percent decline in crude oil output, Venezuela remained the world's third leading petroleum exporting country behind Saudi Arabia and Iran and retained fifth place among the world's crude oil producing nations. This drop in production reflected some of the basic problems of the Venezuelan petroleum industry. Reserves of crude oil declined for the sixth consecutive year and production costs remained high in comparison with those in other major petroleum exporting countries. In addition, rapidly declining tanker rates further eroded the advantage of Venezuela's geographic proximity to consumers in the Western Hemisphere. A number of actions taken by the Government to increase its income from and its control of the petroleum industry also resulted in a rise in the price of Venezuelan petroleum exports and tended to make additional investment in exploratory activity less attractive to most private companies. In accordance with the provisions of the Law for Partial Reform of the Income Tax Law enacted in December 1970, the Venezuelan Government revised the price of petroleum exports to be used for tax calculations (these arbitrarily determined prices are called Tax Reference Values) during 1971. These price revisions raised the tax price of petroleum products and crudes of differing gravities by amounts varying from 38.5 to 92.0 U.S. cents per barrel. A decree issued near the end of December 1971, further increased the Tax Reference Values of crudes and various petroleum products by amounts ranging from 9 to 84 U.S. cents per barrel. The above decree also established petroleum export controls which are to operate through a penalty clause that will apply whenever a company's exports during any quarter of 1972 fall more than 2 percent below that firm's shipments during the corresponding quarter of 1970. Penalties ranging from 1 to 10 percent of Tax RefeiTence Value are to be assessed against all petroleum exports of a company in any quarter during which its total shipments fall below the specified minimum with the maximum penalty rate applying in case of shortfalls exceeding 8.9 percent. Penalties are also to be assessed when any firm's quarterly export quantities exceed those of the corresponding quarter of 1970 by more than 4 percent. However, such penalties are to apply only to the incremental shipments during the quarter rather than to the total quantity exported. In July 1971, the Law Concerning Property Subject to Reversion in Hydrocarbons Concessions was signed by the President. This law declares that essentially all facilities for exploration, production, refining, or transportation within petroleum concessions, or existing for the fulfillment of the obligations derived from such concessions, are to revert to the Government upon the expiration of petroleum concession agreements. It also requires the maintenance of a guaranty fund to which concessionaires are to make contributions consisting of up to 10 percent of the cost accepted by the Income Tax Administration for the depre1 Geographer, Division of Fossil Fuels.
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