Analysis of the Petroleum Fiscal Framework of Venezuela
This report follows a series of regional analyses carried out by the Inter-American Development Bank on the performance regions fiscal frameworks for mining and hydrocarbons. Particularly, this study compares the performance of Venezuelas present tax regime for hydrocarbon projects to alternative regimes. It is focused on spending across a diverse set of model projects, including greenfield oil and gas projects, a brownfield oil project, and an Orinoco heavy oil belt project. The projects that form the basis of our conclusions are realistic but hypothetical, meaning that we have based the analysis of each project on typical capital and operating expenditures, investment lead times, proved reserves, and recovery factors. The analysis finds that the existing fiscal regime in Venezuela severely discourages investment in exploration, development, and enhanced recovery operations. This results in reduced levels of Government revenue, potential oil and gas reserves being left in the ground, and lost profits for oil companies.