Venezuela Passes Oil Windfall Profit Law

CARACAS (Reuters) – Venezuela's parliament passed a law obliging oil
companies to give windfall earnings to the leftist government when
world prices are above $70 a barrel, a legislator said on Tuesday.

Oil Minister Rafael Ramirez said the new law would bring in an estimated $9 billion annually at today's prices.

President Hugo Chavez, who has for years squeezed more revenue from
oil companies operating in the OPEC nation and nationalized all
foreign-run oil fields, wants the funds to be spent immediately on
social programs in this election year.

Iroshima Bravo, a member of the parliament's finance commission,
told state television the law had been passed by majority on Tuesday
and would take effect this week.

The government will take in about 92 cents for every extra dollar
when world prices are above $70 a barrel and then 97 cents when they
are above $100 a barrel, his oil minister, Rafael Ramirez told

"Through the concept of this tax, there's going to be income around
$9 billion. That's $770 million a month and an average of $150-$200
million a week." Ramirez said after explaining the law to Congress
before it was passed.

World oil prices hit a record above $114 a barrel on Tuesday.

Chavez's new move against oil companies is part of a worldwide trend
where oil-producing nations have sought to extract more revenue from
foreign companies who are benefiting from high prices.

Still, oil sector analysts and industry officials have said they
fear Venezuela's law is so tough it could inhibit investment in a
country with some of the largest oil reserves outside the Middle East.

(Reporting by Enrique Andres Pretel; Writing by Saul Hudson; Editing by Frank Jack Daniel and Marguerita Choy)