Petroleum Holding politics en Venezuela

According to the Oil and Gas Journal (OGJ), Venezuela has 77.2 billion barrels of proven conventional oil reserves, the largest of any country in the Western Hemisphere. In addition it has non-conventional oil deposits similar in size to Canada’s – at 1,200 billion barrels approximately equal to the world’s reserves of conventional oil. About 267 billion barrels of this may be producible at current prices using current technology.[14] Venezuela’s Orinoco tar sands are less viscous than Canada’s Athabasca oil sands – meaning they can be produced by more conventional means, but are buried deeper – meaning they cannot be extracted by surface mining. In an attempt to have these extra heavy oil reserves recognized by the international community, Venezuela has moved to add them to its conventional reserves to give nearly 350 billion barrels of total oil reserves. This would give it the largest oil reserves in the world, even ahead of Saudi Arabia.

Venezuela nationalized its oil industry in 1975-1976, creating Petróleos de Venezuela S.A. (PdVSA), the country’s state-run oil and natural gas company. Along with being Venezuela’s largest employer, PdVSA accounts for about one-third of the country’s GDP, 50 percent of the government’s revenue and 80 percent of Venezuela’s exports earnings. In recent years, under the influence of President Chavez, the Venezuelan government has reduced PdVSA’s previous autonomy and amended the rules regulating the country’s hydrocarbons sector.[15]

In the 1990s, Venezuela opened its upstream oil sector to private investment. This collection of policies, called apertura, facilitated the creation of 32 operating service agreements (OSA) with 22 separate foreign oil companies, including international oil majors like Chevron, BP, Total, and Repsol-YPF.

Estimates of Venezuelan oil production vary. Venezuela claims its oil production is over 3 million barrels per day, but oil industry analysts and the U.S. Energy Information Administration believe it to be much lower. In addition to other reporting irregularities, much of its production is extra-heavy oil, which may or may not be included with conventional oil in the various production estimates. The U.S. Energy Information Agency estimated Venezuela’s oil production in December 2006 was only 2.5 million barrels per day, a 24% decline from its peak of 3.3 million in 1997.[16]

Hugo Chávez, the President of Venezuela sharply diverged from previous administrations’ economic policies, terminating their practice of extensively privatizing Venezuela’s state-owned holdings, such as the oil sector.[17] Chávez also worked to reduce Venezuelan oil extraction in the hopes of garnering elevated oil prices and, at least theoretically, elevated total oil revenues, thereby boosting Venezuela’s severely deflated foreign exchange reserves. He extensively lobbied other OPEC countries to cut their production rates as well. As a result of these actions, Chávez became known as a “price hawk” in his dealings with the oil industry and OPEC. Chávez also attempted a comprehensive renegotiation of 60-year-old royalty payment agreements with oil giants Philips Petroleum and ExxonMobil.[18] These agreements had allowed the corporations to pay in taxes as little as 1% of the tens of billions of dollars in revenues they were earning from the Venezuelan oil they were extracting. Afterwards, a frustrated Chávez stated his intention to complete the nationalization of Venezuela’s oil resources. Although unsuccessful in his attempts to renegotiate with the oil corporations, Chávez succeeded in improving both the fairness and efficiency of Venezuela’s formerly lax tax collection and auditing system, especially for major corporations and landholders.

Recently, Venezuela has pushed the creation of regional oil initiatives for the Caribbean (Petrocaribe), the Andean region (Petroandino), and South America (Petrosur), and Latin America (Petroamerica). The initiatives include assistance for oil developments, investments in refining capacity, and preferential oil pricing. The most developed of these three is the Petrocaribe initiative, with 13 nations signing a preliminary agreement in 2005. Under Petrocaribe, Venezuela will offer crude oil and petroleum products to Caribbean nations under preferential terms and prices, with Jamaica as the first nation to sign on in August 2005.