VENEZUELA - The Venezuelan Oil Refining Sector.

The state-owned Petroleos de Venezuela (PDVSA) controls one of the biggest oil refining systems in the world. A major expansion of this was achieved in 1996, when the $2.7 bn Cardon Refinery Upgrading Project (PARC) and new units in other refineries began operations.

There are six refineries in Venezuela with a total capacity exceeding 1.3m barrels per day (b/d). In addition, the state of Venezuela (PDVSA) has almost of 3m b/d of refining capacity abroad, mostly owned by PDVSA and some being in partnership with foreign companies (see Venezuela's trans-national system in OMT No. 21).

Update For GMT 19 - Total & Statoil To Pay Back-Tax: APS was informed on Nov. 5 that Total of France and Statoil of Norway, partners in the Sincor extra-heavy oil venture in Venezuela's Orinoco Tar Belt (see its profile in Gas Market Trends No. 19), had agreed to negotiate and partially pay a back-tax bill of US$1 bn to the state's tax agency Seniat (see the taxation background in OMT No. 19). However, Total's Chief Financial Officer Robert Castaigne said the company still thought that the back-tax claim did not apply, and made the pledge of payment "with protest".

Total said the French major and its partner Statoil did not want the tax dispute to hamper talks on Sincor II, a proposed $5 bn project designed to double Sincor's present capacity of 200,000 b/d of synthetic crude oil which had already been approved by the Venezuelan government. A Total spokeswoman said the French major and Statoil had agreed to pay an increased royalty of 30% on volumes of synthetic crude exceeding 114,000 b/d in the third quarter of 2005, rather than the standard 16.6% tax foreseen in the original Sincor JV contract. She said the extra payment by Total amounted to US$20m. Last month during a visit of Venezuela's President Hugo Chavez to France, he said Total's participation in his country's oil and natural gas production was "very important for us". Total has a 47% stake in Sincor, with Statoil, holding 15% and PDVSA having 38%.