CARACAS - Latin American energy producers are unlikely to ease taxes on foreign oil companies in the near term, despite tumbling crude prices, in an attempt to keep government coffers full.
Leaders such as Venezuela's Hugo Chavez -- at the fore of a charge for resource nationalism during a six-year oil rally -- and Ecuador's Rafael Correa are facing budget shortfalls as prices tumble from records over $147 a barrel to near $50.
The price drop has prompted Canada to ease back on a proposed royalty hike, but left-wing Latin American leaders will maintain high taxes on their vast oil reserves to ensure a steady flow of cash for social programs, analysts said.
"A lot of these national oil companies and their governments are in a short-term bind for revenue and therefore I don't see them cutting their taxes and royalties back," said Jorge Pinon, an energy expert at the Center for Hemispheric Policy at the University of Miami.
Canada's Alberta province, where energy companies extract oil from tar sands, last week said it would offer companies lower royalties for new oil and gas wells over the next five years -- a move that may cost that state $410 million.
It was one of the first signs of a backtracking from the wave of resource nationalism that swept from Ecuador to Kazakhstan as governments sought to lock in windfall profits as oil prices soared.
The nationalism drive has helped push down production in some countries, including Venezuela, as funds are pushed from oil field investment into popular social programs.
"If production was falling, until now it didn't matter as long as the price increase offset the decline in production," said Antoine Halff, analyst for Newedge in New York, adding a longer-term decline in both oil production and prices could force Chavez to ease up on terms.
The OPEC nation has raised taxes and royalties four times since 2004, nearly doubling since the 1990s the gross revenues the government receives from oil operations, and officials insist no reversal is coming.
"If we hadn't taken these measures we would be in a very difficult position today," said Energy Minister Rafael Ramirez, who says despite the price fall, oil majors have expressed interest in a recent tender for extra-heavy oil fields.
"We are prepared for any level of prices," he said.
Ecuadorean President Rafael Correa -- who also tightened terms over recent years -- is expected to keep fiscal terms tight as he faces a possible 2009 budget shortfall.
MEXICO, BRAZIL
Mexico, one of the top crude suppliers to the United States, has restricted access to its oil sector for 70 years. Foreign oil firms have sought to tap the nation's giant reserves located right next to the U.S. market.
While new legislation passed this year allows state oil company Pemex to offer cash-based bonuses to contractors, it strictly prohibits linking payments to oil prices or volumes.
In Brazil, where leftist voices have urged higher taxes and greater state involvement in deep-water reserves, the government has postponed presenting a restructuring of private participation as it waits to see how the financial crisis affects commodities prices.
"The current instability could play into the hands of the free market voices involved in the debate" over how to handle the massive sub-salt reserves, said Matthew Shaw, Senior Latin America analyst with consultancy Wood Mackenzie.
Leaders such as Venezuela's Hugo Chavez -- at the fore of a charge for resource nationalism during a six-year oil rally -- and Ecuador's Rafael Correa are facing budget shortfalls as prices tumble from records over $147 a barrel to near $50.
The price drop has prompted Canada to ease back on a proposed royalty hike, but left-wing Latin American leaders will maintain high taxes on their vast oil reserves to ensure a steady flow of cash for social programs, analysts said.
"A lot of these national oil companies and their governments are in a short-term bind for revenue and therefore I don't see them cutting their taxes and royalties back," said Jorge Pinon, an energy expert at the Center for Hemispheric Policy at the University of Miami.
Canada's Alberta province, where energy companies extract oil from tar sands, last week said it would offer companies lower royalties for new oil and gas wells over the next five years -- a move that may cost that state $410 million.
It was one of the first signs of a backtracking from the wave of resource nationalism that swept from Ecuador to Kazakhstan as governments sought to lock in windfall profits as oil prices soared.
The nationalism drive has helped push down production in some countries, including Venezuela, as funds are pushed from oil field investment into popular social programs.
"If production was falling, until now it didn't matter as long as the price increase offset the decline in production," said Antoine Halff, analyst for Newedge in New York, adding a longer-term decline in both oil production and prices could force Chavez to ease up on terms.
The OPEC nation has raised taxes and royalties four times since 2004, nearly doubling since the 1990s the gross revenues the government receives from oil operations, and officials insist no reversal is coming.
"If we hadn't taken these measures we would be in a very difficult position today," said Energy Minister Rafael Ramirez, who says despite the price fall, oil majors have expressed interest in a recent tender for extra-heavy oil fields.
"We are prepared for any level of prices," he said.
Ecuadorean President Rafael Correa -- who also tightened terms over recent years -- is expected to keep fiscal terms tight as he faces a possible 2009 budget shortfall.
MEXICO, BRAZIL
Mexico, one of the top crude suppliers to the United States, has restricted access to its oil sector for 70 years. Foreign oil firms have sought to tap the nation's giant reserves located right next to the U.S. market.
While new legislation passed this year allows state oil company Pemex to offer cash-based bonuses to contractors, it strictly prohibits linking payments to oil prices or volumes.
In Brazil, where leftist voices have urged higher taxes and greater state involvement in deep-water reserves, the government has postponed presenting a restructuring of private participation as it waits to see how the financial crisis affects commodities prices.
"The current instability could play into the hands of the free market voices involved in the debate" over how to handle the massive sub-salt reserves, said Matthew Shaw, Senior Latin America analyst with consultancy Wood Mackenzie.
