Colombia wants to raise oil taxes

Colombia currently taxes oil companies 30 percent of production when oil is above $30 a barrel, but with oil now around $140, the government is working on a formula to raise the tax rate to reflect higher prices in all new contracts for companies looking to produce oil. Martinez said the formula had not been decided, but could mean companies paying around 35 percent with oil at $90 a barrel, 40 percent with oil above $120. “We are going to go up to 50 percent,” he said, adding that the government would not take more than half of oil revenue regardless of how high crude price went. “We want it to be negotiated with the industry, not imposed on them,” he said. Although all companies will have to pay more for each barrel of oil they produce in the country, they will pay less for exploration licenses, Martinez said. “In the end the effect on the company is going to be very small,” he said.Martinez said Colombia was not interested in taking control of foreign-owned energy assets and wants more investors in the country’s energy sector. Venezuela and Bolivia have tightened their grip on oil and gas resources as the prices have soared. Colombia produced 581,000 barrels of oil per day (bpd) in May, Martinez said, which is already above its target of 570,000 bpd by the end of 2008 and hopes to nearly double output wthin seven years. “The objective is to reach 1 million bpd of oil by 2015,” he said.Foreign oil companies operating in Colombia include British oil major BP and U.S. producer Occidental Petroleum Corp.Martinez said that although attacks on Colombian oil pipelines and coal export routes had not stopped they had fallen dramaticaly from about 160 in 1998 to just one a year. (Reuters)

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