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ConocoPhillips' Venezuela projects hit with huge tax bills

Houston Business Journal - May 11, 2007

Two Venezuelan oil projects in which ConocoPhillips owns major stakes have been hit by huge tax bills.

The Houston-based oil giant is the only one of six international oil majors operating in the South American country not to recognize the country's May 1 nationalization of four massive projects in the Orinoco basin.

According to a report from Reuters on Friday, a $465 million tax claim -- the largest in Venezuela's history -- was imposed on the Petrozuata oil project, which is 50.1 percent owned by ConocoPhillips (NYSE: COP), while a $79.4 million tax claim was levied on the Hamaca project, which is 40 percent owned by ConocoPhillips and 30 percent owned by Chevron Corp.
The Venezuelan state oil company, PDVSA, took over the operation of the four projects earlier this month and is preparing to assume at least 60 percent ownership.

The government of President Hugo Chavez has given companies until June 26 to decide if they will continue as minority partners in the projects. The other four oil companies involved are Exxon Mobil Corp. (NYSE: XOM); Britains' BP PLC; France's Total SA; and Norway's Statoil ASA.

On May 3, Venezuelan officials vowed to boot ConocoPhillips out of their country if the Houston-based oil giant doesn't cooperate in nationalizing its multibillion-dollar assets in the Orinoco reserve.

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