Venezuelan President Hugo Chavez's cabinet has given initial support to a tax hike on heavy crude oil operations in the Orinoco river basin, a legislator said on Sunday.

Rodrigo Cabezas, president of the National Assembly's Finance Commission, said that under the proposed tax reform, companies extracting heavy crude in Orinoco would now be required to pay a tax amounting to 50 percent of the company's earnings (similar to other oil operations) instead of the current 34 percent.

The heavy oil produced by companies operating in Orinoco projects is upgraded to a lighter and more marketable crude, at the rate of around 600,000 barrels a day.

Cabezas added that the proposal will now be sent to the National Assembly for approval.

Venezuela is the world's fifth largest crude oil exporter, and has the largest proven oil reserves outside of the Middle East, estimated at 80 billion barrels.

Source: Xinhua