10 Years of Full Oil Sovereignty policy
Venezuela: From imperial partnerships and agreements to national companies
Puerto La Cruz May 2017.- Venezuela’s oil independence reaches a 10-year milestone. On May 1, 2007, partnerships operating in the Hugo Chávez Orinoco Belt (FPOHC) and the Shared Risks and Earnings Exploration Agreements were nationalized. Our nascent Full Oil Sovereignty policy was strengthened.
As Venezuela asserted its independence as a sovereign state, Decree No. 5200 was enacted and agreements under the former Apertura Petrolera (Oil Industry Opening-Up Policy) were migrated to Joint Ventures under the Hydrocarbons Law with Venezuela having a majority stake. Investment was encouraged through alliances with 20 international companies. Working with Venezuelan talent, the Bolivarian Government through Corporación Venezolana del Petróleo (CVP), a subsidiary of Petróleos de Venezuela SA, (PDVSA), engages in exploration, exploitation, production and upgrading of heavy and extra heavy crude oil, as well as gas and water compression at the Hugo Chávez Orinoco Belt, the largest hydrocarbon reservoir in the world.
Working with Venezuelan talent, the Bolivarian Government through Corporación Venezolana del Petróleo (CVP), a subsidiary of Petróleos de Venezuela SA, (PDVSA), engages in exploration, exploitation, production and upgrading of heavy and extra heavy crude oil, as well as gas and water compression at the Hugo Chávez Orinoco Belt, the largest hydrocarbon reservoir in the world. CVP was created to control and manage business with domestic and international third parties.
The main goal of this new legal framework is for the oil business to answer to the true owner of oil, the Venezuelan people. It eliminated the description of our hydrocarbons as bitumen which had decreased revenues for Venezuela from taxes and royalties as bitumen was priced as carbon and affected national development plans.
With the nationalization of the oil industry and the creation of joint ventures, the industry’s privatization process was halted. It was a strong action by the Venezuelan Government, which brought justice and fairness to the workers who were mostly outsourced. A new era begins with regard to hiring with the Employment Democratization System (SISDEM).
Our energy sovereignty was the result of the vision of Supreme Commander of the Bolivarian Revolution. Therefore in 2013 oil workers, in unison with the National Executive, renamed the Orinoco Oil Belt (FPO) as Hugo Chávez Orinoco Oil Belt. It was a well deserved tribute and recognition.
Corporación Venezolana del Petróleo (CVP) was created to control the operational and administrative activities that were managed by transnational companies. It ensured the operational, financial and commercial continuity of each of the businesses that came to be called Petropiar, Petromonagas, Petrocedeño, Petrolera Sinovensa and Petro San Félix.
This new scheme guarantees Venezuela a 60% majority stake managed by Petróleos de Venezuela and the remaining 40% for the joint venture partners. It marked the end of 10 years of harmful business practices that caused great economic and financial distortions for the industry and the country as there was little transparency before the National Treasury and PDVSA’s costs continued to grow.
A new series of tax terms and conditions bring benefits to Venezuela, such as a royalty and Income Tax (ISLR) increase, in addition to the creation of new taxes that improve the quality of life of the Venezuelan people through comprehensive social development projects.
CVP and its Joint Ventures
After the launch of this new legal framework, the working class of the joint ventures Petropiar, Petromonagas, Petrocedeño, Petrolera Sinovensa and Petro San Félix dedicated to oil production and upgrading, take on the challenge of exploiting major oil deposits in 55,000 square kilometers across Anzoátegui, Monagas, Guárico and Bolívar states, the largest oil reserve in the world.
Light, medium and heavy crude oil production companies located in Ayacucho, Junín, Carabobo and Boyacá areas, together with offshore companies, join in this human and technical force. They add up to 44 joint ventures throughout the country. Our oil sovereignty is being built for the benefit of the people.
Currently, the extra heavy crude oil of the Hugo Chávez Orinoco Oil Belt is upgraded and turned into medium crude, for which there is growing demand in the international market.
At the cutting edge. New markets
CVP plays a leading role in the implementation of energy projects that help Venezuela become a world energy power with a multipolar perspective in accordance with the new international business scheme and the strategic objectives of the Homeland Plan Act 2013- 2019. The Hugo Chávez Orinoco Oil Belt and mature fields will be developed to support the achievement of the planned goals.
Consistent with this aim, PDVSA seeks partners with financing capacity and technology transfer for the development of human talent and preservation of the environment.