April 26, 2011 / 6:03 PM / in 6 years

UPDATE 1-Venezuela may see $16 bln annual windfall income

2 Min Read

* Windfall tax hike unveiled last week by Chavez

* New production and Orinoco projects are exempt (Adds details, background)

CARACAS, April 26 (Reuters) - Venezuela's stiff new windfall tax rates could net the OPEC nation $16 billion a year if a current global oil price rally continues, the energy minister said Tuesday.

The South American country's socialist President Hugo Chavez announced a steep tax last week on "exorbitant" income when crude goes above $70 a barrel. [ID:nN22122750]

Energy Minister Rafael Ramirez told reporters the new rate could bring the nation $16 billion annually in extra revenue if oil prices stay around the $110 per barrel level.

Analysts have cautioned the new charges could have a chilling effect on investment by foreign firms and limit state oil company PDVSA's ability to fund more production.

Ramirez told Reuters on Monday the new windfall tax rate will not apply to new crude output by joint ventures between private firms and the PDVSA until they have recovered their investments. [ID:nN25223989] (Reporting by Marianna Parraga; Writing by Daniel Wallis; Editing by Frank Jack Daniel)

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