@PDVSA
Petróleos
de Venezuela
PDVSA
Petróleos
de Venezuela
PDVSA

HISTORY

 

PETRÓLEOS DE VENEZUELA

Barroso 2 well blows out

Petróleos de Venezuela, S.A. (PDVSA) and its subsidiaries is a corporation owned by the Bolivarian Republic of Venezuela and subordinated to the Venezuelan state. PDVSA is strongly committed to the ultimate owner of our oil resources – the Venezuelan people. Our operations are supervised and controlled by the People’s Power Ministry of Petroleum, which sets our national oil policy, under the guidelines of the Homeland Plan Act, Second Socialist Plan of Economic and Social Development of the Nation 2013-2019.

PDVSA plans, coordinates, supervises and controls activities carried out by its subsidiaries both domestically and internationally. We also promote and engage in activities aimed at the comprehensive, organic and sustainable development of Venezuela, including agricultural and industrial activities, manufacturing, processing and marketing of goods, and provision of services, in order to establish the right connection between resources derived from hydrocarbons and the Venezuelan economy. According to a comparative study published by Petroleum Intelligence Weekly, PDVSA is the fifth largest oil company in the world.

Strategic guidelines

The strategy of PDVSA is based on guidelines given by the Shareholder:

• To value our natural hydrocarbons resources for the benefit of the Nation.

• Support the geopolitical positioning of the country and key objectives of Venezuelan foreign policy, such as the promotion of comprehensive cooperation with strategic allies and Latin American regional integration in a context of transition to multipolarity.

•To be an instrument for the endogenous development of the country, supporting socio-economic development through industrialization and social equality policies.

 

HISTORY OF OIL IN VENEZUELA

Workers on the shores of Lake Maracaibo

The Origin of Venezuelan oil

In Venezuela, the earliest reports of oil go as far back as the time when the first settlers used aboveground natural oil seeps, called “mene” by the natives, for medicinal and utilitarian purposes.

1535: The first New World chronicler Captain Gonzalo Fernández de Oviedo y Valdés, in his work “Natural and General History of the Indies, Islands and Continental Lands of the Ocean Sea”, mentioned Venezuelan oil for the first time in Western literature.

September 3, 1536: The Spanish Queen ordered in a letter that all ships leaving Cubagua shall send her as much “petroleum oil” as possible, to alleviate the gout condition of her son Charles V.

April 30, 1539: The petroleum requested by the Spanish Queen was sent on the “Santa Cruz” ship in a cask trusted to Master Francisco Rodríguez de Covarrubia and to Captain Bernardino de Fuentes by Nueva Cadiz Treasurer Don Francisco de Castellanos. On October 18th, the Queen claimed her oil in a letter to the Trading House in Seville and finally, on October 31st, the cask left Seville for Madrid.

December 14, 1540: In the ” West Indies Archives ” in Seville, it is documented that a cask of Venezuelan petroleum exported to Spain arrived in the Trading House in Seville to be forwarded immediately to Queen Juana I, “under the care of a responsible person”. This was probably one of the last shipments through Cubagua.

June 15, 1579: Town Mayors, Gaspar de Párraga and Rodrigo de Argüelles reported a natural oil seep near Nueva Zamora City (Maracaibo) and four more on outskirts of the city. They also offered an extensive description of local uses for that substance.

1600: Conquistador Spaniard Alonso de Ojeda mentioned the use Maracaibo Lake inhabitants made of those "menes".

1799: Alexander von de Humboldt wrote the first scientific description of asphalt reservoirs in Venezuela. Humboldt described the ways natives, who lived near the natural oil seeps, took advantage of the tar and asphalt deposits. Humboldt also prepared the first catalogue of natural asphalt reservoirs and thermal fountains along the coastal region from Trinidad to Maracaibo.

1825: Light oil was extracted from a natural oil seep located between Escuque and Betijoque. “Colombio”, as the product was called, was apparently distributed and traded in the region, and some samples were sent to the United Kingdom, France, and The United States.

1830: A group of people from El Moján (Zulia state) were scared while exploring the area of Socuy River in Sierra de Perijá when they confused a burning natural gas seep for a volcano.

1839: José María Vargas, an exceptional Venezuelan scholar foresees the potential use of oil as a generator of wealth when commenting on an analysis of samples from Betijoque (Trujillo state) and Pedernales (Sucre state). He remarked that “The discovery of coal and asphalt mines in Venezuela is, according to present circumstances, more precious and worthy of congratulations for Venezuelans and its liberal governement than that of gold and silver mines.” José María Vargas’s analysis is regarded as a very important and visionary event as there was not an oil industry anywhere in the world yet.

1850: German geologist Hermann Karstwen published the first summary of the geology of Venezuela in the Bulletin of the German Geological Society. The following year, he wrote about a natural oil seep located between Escuque and Betijoque. Then, in 1852, he reported on the numerous oil seeps spread around Lake Maracaibo.

Research conducted by authors such as Arístides Rojas, Adolfo Ernst, Miguel Tejera, engineer and general Wescenlao Briceño Méndez, Wihelm Sievers, Bullman, Fortin, Eggers and Richardson as well as reports from the Ministry of Development greatly contributed to the awareness of the treasure of wealth in the Venezuelan subsoil.

MILESTONES

Standard Oil Company workers/
Cipriano Castro

THE PETROLIA DEL TÁCHIRA

1878: Oil activity started in Venezuela with the founding in 1878 of the Compañía Nacional Minera Petrolia del Táchira by a group of Venezuelans. Its production was barely sufficient for providing kerosene to neighboring cities. It is important not only for being the first oil enterprise, but also for developing all oil industry activities both downstream and upstream by extracting, processing and trading hydrocarbons in our country.

December 19, 1901: Banker Manuel Antonio Matos organizes the so-called Liberating Revolution against Cipriano Castro’s government. Multinational New York and Bermúdez Company (NY&BC) finances the uprising. Venezuelan asphalt was the unspoken reason. In 1890, production in both La Petrolia and the natural asphalt lake in Guanoco (Sucre State) by NY&BC took place long before the world realized about the huge commercial and strategic importance hydrocarbons would have in future. Even without envisioning the upcoming magnitude of this industry, world powers made Venezuela the target of their commercial activities through the exploitation of asphalt as early as that time.

 

August 14, 1905 : Cipriano Castro promulgated a Law of Mines that developed into the legal ground for oil concessions.

HYDROCARBONS LEGAL FRAMEWORK

OIL CONCESSIONS: SOVERIGNTY CONCESSIONS


The first concessions in Venezuela were governed by mining legislation in its broadest sense. Until 1920 there was not any oil legislation in the country. In the early years of industrial activity, the legal concept of oil concession was the instrument used by multinational companies to contract with the owner states for the exploration and exploitation of oil reservoirs discovered in their territories. In the course of time, obtaining concessions and control of the world oil market became a cause for dispute between not only the multinational oil companies, but also triggered wars between nations. As an oil country, Venezuela gained the interest of the international oil monopoly.

August 24, 1865: The first concession for oil exploitation in Venezuela was granted to Camilo Ferrand, North American citizen, by Jorge Surtherland, Constitutional President of the Sovereign State of Zulia on August 24, 1865 “to drill, extract and export petroleum or naphtha all over the state of Zulia”


1878: A concession was granted to Manuel Antonio Pulido Pulido to exploit the petroleum found in his farm “La Alquitrana”. He created the Compañía Minera Petrolia del Táchira in 1883.

 

1883: Another concession was granted, in this case, on the asphalt lake of Guanaco to Horatio Hamilton and Jorge Phillips. It was later on transferred to the New York and Bermudez Company.

 

August 14, 1905: Cipriano Castro promulgated a Law of Mines that developed into the legal ground for oil concessions. This law permitted the transfer of concessions and oil exploitation rights for a 50-year term, and tax benefits for the Venezuelan state of 2 bolivars per hectare of land transferred under concessions.

 

1909: During Juan Vicente Gomez’s government, concessionary rights were restored to NY&BC. After this decision, John Allen Tregelles and N.G. Burch, British enterprise agents of the Venezuelan Development Co., received a 27-million hectare concession that included the states of Sucre, Delta Amacuro, Monagas, Anzoátegui, Carabobo, Zulia, Falcón, Táchira, Mérida, Lara, Trujillo and Yaracuy.

 

1911: The Tregelles-Burch concession was cancelled.

 

1912: - Venezuelan banker Max Valladares was awarded a concession over the same territory, only to transfer it to the Caribbean Petroleum, a General Asphalt subsidiary. During the government of Cipriano Castro, oil exploitation in Venezuela was left in the hands of the Anglo-Dutch Royal Dutch Shell, and US Standard Oil. By the end of 1912, Caribbean Petroleum came under the control of Royal Dutch Shell which began the asphalt business and explorations in search of oil.

 

FIRST LAWS AND DECREES



October 24, 1829: The Liberator Simón Bolívar promulgates in Quito (Ecuador) his famous Decree that secures and guarantees national ownership of "mines of any kind", including hydrocarbons, establishing the formal legal bond that would allow Venezuela to maintain sovereignty of the resources of the subsoil. This principle has been the cornerstone of state ownership of hydrocarbons and the concept of sovereignty over natural resources.

 

1918: First Regulatory Decree of Coal, Petroleum and Similar Substances. It sets the royalty between 8% and 15%. It establishes, also for the first time, that at the end of the concession, the mines should revert to the nation - with all its buildings, machinery and annexed works - without payment from the government.

 

1920: First Hydrocarbons Law. It sets the minimum for the royalty in 15%. It also establishes the figure of national reserves, a concept according to which, once the initial exploration period has ended, half of the area surveyed reverts to the nation. The area of the concessions was also reduced and state ownership of the deposits was unequivocally reaffirmed. These measures displeased foreign companies. For that reason their national lackeys, the dealers of concessions, pressed the government of Gómez until defeating Minister Torres in his incipient nationalistic attempts.

 

1943: The most important of the hydrocarbons laws prior to the Hydrocarbons Law of 2001 was the one promulgated by the National Congress in March 1943, after a great national referendum. It was created having as a precedent the Mexican nationalization of 1938, in the midst of World War II. The law not only standardized, but also increased taxes and royalties. Royalties increased to a minimum of 16.66% of what was produced measured at the mouth of the well. They could only be reduced in exceptional cases when the productive capacity of the reservoir starts to decline in order to preserve the commercial value of the exploitation. Venezuela’s fiscal sovereignty was established, granting to Venezuela the power to modify taxes through income tax laws.

 

• OIL PRODUCTION

 

1913: The first oil field in Venezuela is discovered - Guanoco, the successful completion of the Barbabui well 1 drilling. Caribbean Petroleum, majority owner of NY & BC and a subsidiary of Royal Dutch Shell, intensifies geological exploration throughout the national territory.


1914: Caribbean Petroleum successfully drilled the Zumaque I well (East Coast of Lake Maracaibo) with initial production of about 200 barrels per day (b / d), which allowed the discovery of the first Venezuelan field of world importance: Mene Grande field.

 

December 14, 1922: The country's oil potential was fully confirmed with the blowout of the Barroso 2 well (East Coast of Lake Maracaibo) that uncontrollably dumped 100,000 b/d for nine days. At that moment they produced little more than 6,000 b/d in the country.

 

1928: Venezuela produces more than 290,000 b/d, exporting about 275,000 b/d, placing the country as the second largest oil producer in the world and the leading exporter. Venezuela’s production levels increased sharply with the passage of time, until 1970, when it reached its maximum ceiling of 3,780,000 b/d. Venezuela was from 1928 to 1970 the first oil exporting country in the world.



December 1902 / February 1903 : English, German and Italian warships blockaded the Venezuelan coasts under the argument that President Castro was not respecting his “international commitments”. When facing this aggression to national sovereignty, Cipriano Castro pronounced his celebrated phrase: “Venezuela, the insolent sole of the foreigner has desecrated our sacred homeland”.

 

Copyright © 2016 PDVSA. Todos los derechos reservados.