More ominously for oil companies, Russian legislators are discussing whether to limit foreign participation in certain large-scale projects.
NEW LAW
Kazakhstan, a former Soviet republic, is also toughening terms, with a new law calling for a 90 percent minimum government share of all profits when oil is selling above US$27 a barrel and at least a 50 percent state participation in projects.
In Nigeria, Africa's largest exporter, the government is levying new royalties, and its new offshore contracts are expected to be far more restrictive than past agreements.
No country's energy policies has attracted as much attention as those of Venezuela, whose government has turned the state oil company, Petroleos de Venezuela, into an engine for social change, while increasing taxes and royalties and changing long-term contracts with foreign multinationals.
Venezuela's government, led by leftist President Hugo Chavez, is planning to spend up to US$4 billion of the state oil company's budget this year on a range of programs, from clinics to literacy programs to subsidized markets. Foreign companies, which produce 1.1 million barrels a day out of a total daily production of 2.6 million, are needed to help generate those revenues.
The shift could not be in sharper contrast to the early 1990s, when the government opened up the energy sector to foreign investment and offered sweet deals to companies like ConocoPhillips, ChevronTexaco, Total of France and Statoil of Norway. In the vast Orinoco Belt, companies paid only a 1 percent royalty, a level designed to overcome concerns about drilling for heavy, poor quality oil.
That all changed last October, when Chavez's government increased the royalties in the Orinoco to 16.6 percent, ending a virtual tax holiday. Venezuela is now hoping to raise the income-tax rate on the projects in the Orinoco from 34 percent to 50 percent, the country's energy and oil minister, Rafael Ramirez, told reporters last month.
In other parts of the country, the government has also toughened terms, seeking as much as US$3 billion in back taxes, raising taxes and requiring majority state ownership. Companies are still welcome, the government says, but it is making clear that the state is in charge.
"The higher prices permit countries to have the higher revenues for development," said Nicolas Maduro, president of the National Assembly in Venezuela. "Even with the higher royalties and taxes, the oil company earnings are still enormous."
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