The USA accounts for 65 % of Venezuela´s oil exports, so far...
Hugo Chavez - a double agent, who sold Venezuela for a Condominium at Fourth Avenue in New York, where they enjoy life and amenities...
Germany´s Automotor Emission´s scandal is a distraction - compared with Venezuela´s scandal that disturbs president Barack Obama Climate Change Control Plan and even the recent signed TPP (TransPacific Plan)- excluding Venezuela and Colombia.
The FMI reunion in Peru is another distractor since Venezuela´s Banks are monitored by the FMI and the World Bank.
Crimea´s annexation by Russia is a crime- as Venezuela´s invasion by Communist Cuba.
The USA is obliged by Law, to help Venezuela to expel communist Cuba as is acting regarding Germany´s Corruption Scandal.
Carlos E Mijares, MD, former resdident and fellow, University of Kansas, School of Medicine, Kansas City, Kansas. USA.
www.centromedicodecaracas.com.ve, www.worldallergy.org
carlosmixares@gmail.com
History of the Venezuelan oil industry
From Wikipedia, the free encyclopedia
The Real and Nominal price of oil from 1968 to 2006.[1]
Contents
Pre-discovery years—1907
The Indigenous peoples in Venezuela, like many ancient societies already utilized crude oils and asphalts from petroleum seeps, which ooze through the ground to the surface, in the years before the Spanish conquistadors. The thick black liquid, known to the locals as mene, was primarily used for medical purposes, as an illumination source, and for the caulking of canoes.[3]Upon arrival in the early 16th century, the Spanish conquerors learned from the indigenous people to use the naturally occurring bitumen for caulking their ships as well, and for treating their weapons. The first documented shipment of petroleum from Venezuela was in 1539 when a single barrel of oil was sent to Spain to alleviate the gout of Emperor Charles V.[3]
1908–1940—The birth of the Venezuelan oil industry
Juan Vicente Gómez
Ancient office of Mene Grande Oil Company
From 1914 to 1917, several more oil fields were discovered across the country include the emblematic Bolivar Coastal Field; however World War I slowed significant development of the industry. Due to the difficulty in purchasing and transporting the necessary tools and machinery, some oil companies were forced to forego drilling until after the war. By the end of 1917, the first refining operations began at the San Lorenzo refinery to process the Mene Grande field production, and the first significant exports of Venezuelan oil by Caribbean Petroleum left from the San Lorenzo terminal. By the end of 1918, petroleum appeared for the first time on the Venezuelan export statistics at 21,194 metric tons.[3]
It was the blowout of the Barroso No. 2 well in Cabimas in 1922[5] that marked the beginning of Venezuela's modern history as a major producer. This discovery captured the attention of the nation and the world. Soon dozens of foreign companies acquired vast tracts of territory in the hope of striking it rich, and by 1928 Venezuela became the world's leading oil exporter.[6] Oil ended Venezuela's relative anonymity in the eyes of world powers, making it a linchpin of an ever-expanding international oil industry and a new consideration in global policymaking.[7] Venezuela's oil production became a major factor in policy making in Washington before the Second World War.[8]
Cabimas still plays an important role in production from the nation's largest oil fields, which are located around and beneath Lake Maracaibo. Other fields are increasing in importance, mainly in eastern Venezuela.[9] About twenty years after the installation of the first oil drill, Venezuela had become the largest oil exporter in the world and, after the United States, the second largest oil producer. Exports of oil boomed from 1.9% to 91.2% between 1920 and 1935.[10] By the end of the 1930s, Venezuela had become the third-leading oil producer in the world, behind the United States and the Soviet Union, as well as the leading exporter.[11]
Dutch Disease
By 1929, the dramatic development of the Venezuela oil industry had begun to dominate all other economic sectors in the country, however, agricultural production began to decrease dramatically.[12][13] This sudden increase of attention to oil and neglect of the agrarian sector caused the Venezuelan economy to suffer from a phenomenon known as the Dutch Disease. This "disease" occurs when a commodity brings a substantial increase of income in one sector of the economy, causing a strengthening of currency which in turn harms exports of manufacturing and other sectors.[12]Agriculture accounted for about one-third of economic production in the 1920s, but by the 1950s this fraction dramatically reduced to one-tenth. This sudden increase of oil production restricted Venezuela's overall ability to create and maintain other industries. The government had ignored serious social problems, including education, health, infrastructure, agriculture, and domestic industries, causing Venezuela to fall well behind other industrialized countries.[citation needed]
Xenophobia
With a large influx of foreign "invaders", the effects of a xenophobia that had not been seen before became apparent. Novelist Jose Rafael Pocaterra described the oilmen as "the new Spaniards". He wrote in 1918:One day some Spaniards mounted a dark apparatus on three legs, a grotesque stork with crystal eyes. They drew something (on a piece of paper) and opened their way through the forest. Other new Spaniards would open roads…would drill the earth from the top of fantastic towers, producing the fetid fluid…the liquid gold converted into petroleum.Popular resentment of the foreign oil companies was also evident and expressed in several ways. Rufino Blanco Fombona, a Venezuelan writer and politician, accounts for the conflict between Venezuelan workers and their foreign bosses in his 1927 novel, La Bella y la Fiera:
The workers asked for a miserable salary increase and those blond, blue-eyed men who own millions of dollars, pounds and gulden in European and U.S. banks, refused.
1940–1976—The road to nationalization
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Venezuela production of crude oil, 1950-2012
In 1944, the Venezuelan government granted several new concessions encouraging the discovery of even more oil fields. This was mostly attributed to an increase in oil demand caused by an ongoing World War II, and by 1945, Venezuela was producing close to 1 million barrels per day (160,000 m3/d). Being an avid supplier of petroleum to the Allies of World War II, Venezuela had increased its production by 42 percent from 1943 to 1944 alone.[15] Even after the war, oil demand continued to rise due to the fact that there was an increase from twenty-six million to forty million cars in service in the United States from 1945 to 1950.[16] By the mid-1950s, however, Middle Eastern countries had started contributing significant amounts of oil to the international petroleum market, and the United States had implemented oil import quotas. The world experienced an over-supply of oil, and prices plummeted.[citation needed]
Creation of OPEC
Main article: OPEC
OPEC countries
Oil Embargo of 1973
Main article: 1973 oil crisis
In the early 1970s, oil producing countries of the Persian Gulf
began negotiations with oil companies in attempt to increase their
ownership participation. In 1972 they rapidly obtained a 25 percent
participation, and less than a year later they revised those agreements
to obtain up to 60 percent participation in the ownership of the
companies.[4]
By 1973, OPEC Persian Gulf states members decided to raise their prices
by 70 percent and to place an embargo on countries friendly to Israel (the United States and the Netherlands).
This event became known as the 1973 oil crisis. Following a culmination
of conflicts in the Middle East and the oil producing countries of the Persian Gulf
no longer exporting to the United States and oil prices rising steeply,
Venezuela experienced a significant increase in oil production profits.
Between 1972 and 1974, the Venezuelan government revenues had
quadrupled.[12] With a new sense of confidence, Venezuelan president Carlos Andrés Pérez pledged that Venezuela would develop significantly within a few years.[12]
By substituting imports, subsidies, and protective tariffs, he planned
to use oil profits to increase employment, fight poverty, increase
income, and diversify the economy. However, OPEC members had been
violating production quotas, and oil prices fell drastically again in
the 1980s, pushing Venezuela deeper into debt.Nationalization
Petroleum map of Venezuela, 1972
Nationalization become official when the presidency of Carlos Andrés Pérez, whose economic plan, "La Gran Venezuela", called for the nationalization of the oil industry and diversification of the economy via import substitution. The country officially nationalized its oil industry on 1 January 1976 at the site of Zumaque oilwell 1 (Mene Grande), and along with it came the birth of Petróleos de Venezuela S.A. (PDVSA) which is the Venezuelan state-owned petroleum company. All foreign oil companies that once did business in Venezuela were replaced by Venezuelan companies. Each of the former concessionaires was simply substituted by a new 'national' oil company, which maintained the structures and functions of its MNC-predecessor.[17] All the new companies are owned by a holding company-Peteroven or PDV- and in its turned owned by the State.[18] Ultimately not much had changed in this regard, as all Venezuelans with leading positions in the MNCs took over the leading positions of the respective new companies,[18] and therefore still securing their interests in Venezuela's oil. PDVSA controls activity involving oil and natural gas in Venezuela. In 1980, in an aggressive internationalization plan, PDVSA bought refineries in USA and Europe as the American Citgo that catapultated it to the third-largest oil company in the world.[12]
1977–1998
After the 1973 oil crisis, the brief period of economic prosperity for Venezuela was relatively short lived. This especially was the case during the "1980s oil glut". OPEC member countries were not strictly adhering to their assigned quotas, and once again oil prices plummeted. During the mid-1980s, Venezuela's oil production steadily began to rise.[19] By the 1990s, symptoms of the Dutch Disease were once again becoming apparent. Between 1990 and 1999, Venezuela's industrial production declined from 50 percent to 24 percent of the country's gross domestic product compared to a decrease of 36 percent to 29 percent for the rest of Latin America,[20] but production levels continued to rise until 1998.[19]However, the efficiency of PDVSA was brought into question over these years. From 1976-92, the amount of PDVSA’s income that went towards the company's costs was on average 29 percent leaving a remainder of 71 percent for the government. From 1993 to 2000, however, that distribution almost completely reversed, to where 64 percent of PDVSA's income were kept by PDVSA, leaving a remainder of only 36 percent for the government.[21]
1999–today
Former Venezuelan President Hugo Chávez.
Chávez's role in the reinforcement of OPEC
At the time of Chávez's election, OPEC had lost much of its influence compared to when it was first created. A combination of OPEC members, including Venezuela, regularly ignoring quotas and non-OPEC countries such as Mexico and Russia beginning to expand on their own petroleum industries resulted in record low oil prices to which hurt the Venezuelan economy. One of Chávez's main goals as president was to combat this problem by re-strengthening OPEC and getting countries to once again abide by their quotas. Chávez personally visited many of the leaders of oil producing nations around the world, and in 2000, he hosted the first summit of the heads-of-state of OPEC in 25 years (the 2nd ever).[12] Goals of this meeting, held in Caracas, included recuperating the credibility of Venezuela in OPEC, defending oil prices, consolidating relations between Venezuela and the Arab/Islamic world, and to strengthen OPEC in general.[citation needed]The meeting could be considered a success given the record high oil prices of the following years, but much of that is also a consequence of the 11 September 2001 attacks against the United States, the Iraq War, and the significant increase in demand for oil from developing economies like China and India, which helped prompt a surge in oil prices to levels far higher than those targeted by OPEC during the preceding period. In addition to these events, the December 2002 oil strike in Venezuela, which resulted in a loss of almost 3mmbpd of crude oil production, brought a sharp increase in world prices of crude.[22]
2001 Hydrocarbons Law
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Tension between Chávez and PDVSA
Chávez began setting goals of reinstating quotas, such as ten percent of PDVSA’s annual investment budget was to be spent on social programs.[23] He also changed tax policies and the oil revenue collection process.[12] Chavez initiated many of these major changes to exert more control over PDVSA and efficiently deal with the problems he and his supporters had over PDVSA’s small revenue contributions to the government.In December 2002, PDVSA officially went on strike creating a near-complete halt on oil production in Venezuela. The aim of the Venezuelan general strike of 2002-2003 was to pressure Chávez into resigning and calling early elections. The strike lasted approximately two months, and the government ended up firing 19,000 PDVSA employees and replacing them with workers loyal to the Chávez government.[24] When the strike ended, substantial macroeconomic damage had been done with unemployment up by 5 percent. This increase brought the country to a national unemployment peak of over 20 percent in March 2003.[25]
"Re-nationalization" and tax reform
Following the December 2002 to February 2003 oil strike, Chávez referred to regaining control of the industry as "re-nationalization". He aimed at improving the efficiency of PDVSA in the context of distributing a greater amount of its revenues to the government and also by certain changes in taxation. Certain tax reforms had already been implemented earlier in Chávez's first term. As of 2001, royalty payments were nearly doubled to 30 percent of the price at which every barrel is sold compared to before when it was 16.67 percent. Also in 2001, the government lowered the income tax levied on oil extraction from 67.6 percent to 50 percent.[12]In April 2002, the opposition took advantage of mass demonstrations in Caracas and attempted to overthrow Chavez. A few months after the failure of the coup and the return of Chavez, a combination of labor unions and business groups called for an "indefinite national strike" which, in many places, turned out to be a forced 'bosses lock out' where the employees were prevented from working.
In 2006, the government had a 40 percent share which was announced to be increased by 20 percent. Some believe this move could potentially burden PDVSA with investment costs, but Chavez created several new subsidiaries of PDVSA to try to prevent unwanted costs from happening. These subsidiaries include agriculture, shipbuilding, construction, and industry.
Different media and spokespersons have reported that Hugo Chávez nationalized oil when referring to these reforms. However, oil was nationalized in 1976.
Today and the future
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In 2005, PDVSA opened its first office in China, and announced plans to nearly triple its fleet of oil tankers in that region. Chávez had long stated that he would like to sell more Venezuelan oil to China so his country can become more independent of the United States. The United States currently accounts for 65 percent of Venezuela's exports.[26]
In 2007, Chávez struck a deal with Brazilian oil company Petrobras to build an oil refinery in northeastern Brazil where crude oil will be sent from both Brazil and Argentina. A similar deal was struck with Ecuador where Venezuela agreed to refine 100,000 barrels (16,000 m3) of crude oil from Ecuador at discount prices. Cuba agreed to let thousands of Venezuelans be received for medical treatment and health programs, and in turn, Venezuela agreed to sell several thousands of barrels to Cuba at a 40% discount under Petrocaribe program.[citation needed]
As of March 2010, PDVSA’s current strategic plan forecasts 5 million barrels per day (790,000 m3/d) for 2015 and 6.5 million barrels per day (1,030,000 m3/d) for 2020[27] PDVSA's goal to produce 6.5 million barrels per day (1,030,000 m3/d) by 2020 will likely be harder under Chavez’s policies, which hinder the potential increase of private investment.[27]
The Chávez government used PDVSA resources to fund social programmes, treating it like a "piggybank",[28] and PDVSA staff were required to support Hugo Chávez. Experts reported that systematic underinvestment in the Venezuelan oil industry caused the August 2012 explosion at Amuay; Chávez called these reports "irresponsible".[29][30] The "string of accidents, outages and unplanned stoppages" then continued with a fire started by lightning at the El Palito refinery a month later.[31]
See also
Notes
- "Crews extinguish fire at Venezuela's El Palito refinery", reuters.com; accessed 12 September 2015.
References
- Painter, David S. (2012). "Oil and the American Century" (PDF). The Journal of American History 99 (1): 24–39. doi:10.1093/jahist/jas073.
- Randall, Laura (1987). The Political Economy of Venezuelan Oil. New York, NY: Praeger. ISBN 978-0-275-92823-0.
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