NotiEn - A Newsletter on Energy Policy Issues in Latin America
August 12, 2010
Vol 1, Issue 9

A Retrospective on Venezuela's Oil Policy 


The election of Hugo Chávez as president of Venezuela in 1998 shepherded a new transition in the South American country's oil policies, bringing increased state control to policies governing the oil sector.  But despite perceptions, Chavez's efforts to bring the oil industry under greater state control are not that extreme, when compared with some of the actions taken by his predecessors. The Venezuelan president has merely followed up on steps taken in the 1970s. These included a decree during the administration of ex-President Rafael Caldera stipulating that all exploration, production, refining, and sales programs of foreign oil companies be approved by the Ministry of Mines and Hydrocarbon. Caldera's successor, President Carlos Andrés Pérez, officially nationalized the oil industry as part of his economic plan, "La Nueva Venezuela."  The nationalization included creating the state-run oil company Petroleos de Venezuela (PDVSA) in 1976.  PDVSA now controls activity involving oil and natural gas in Venezuela.


Under Chávez, Venezuela has also moved to consolidate government ownership of the oil sector, nationalizing properties that were once controlled by US- or European-based multinational oil companies. In 2007, the government took over the last of the country's private oil fields.  But the nationalization efforts sparked legal battles with powerful multinational corporations such as ExxonMobil, which attempted unsuccessfully to freeze PDVSA assets overseas.  Read more...

Carlos Navarro - Editor


Venezuela Increases Royalty Fees For Oil Drilling Greatly - Nov 08, 2004 

Venezuelan President Hugo Chavez announced that he would be increasing the royalties the government would charge for oil drilling along the Orinoco oil belt in the country's southeast. The move surprised corporate executives who had not received prior notice of the royalty increase.


A former director of the state petroleum corporation warned that oil multinationals might sue over the hike while Chavez boasted that it would add large amounts of revenue to his social-benefits programs. Orinoco project royalties go from 1% to 16.6% "There will be no more petroleum given away," announced Chavez on his weekly radio and television broadcast.


The increase would strip a tax holiday that had been established in the mid-1990s to encourage the development of heavy-crude projects along the Orinoco river corridor, dropping royalties companies would have to pay to between 0% and 1%. Chavez announced an increase to 16.6%, saying it was part of "the true nationalization of the petroleum industry." Read more...      


In This Issue...
A Note From the Editor
Venezuela Increases Royalty Fees For Oil Drilling Greatly
Venezuelan President Hugo Chavez Signs Multiple Regional Agreements
Bolivia and Venezuela Move Forward With Nationalization of Petroleum Industries
Exxon Claims US$12 Billions in PDVSA Assets in Lawsuit About Nationalized Oil Resources
ExxonMobil Loses Appeal in Effort to Freeze PDVSA Assets In Great Britain
Quick Links
A partnership of

Latin American and Iberian Institute - LAII

UNM Libraries


Join our Mailing List
Venezuelan President Hugo Chavez Signs Multiple Regional Agreements - August 24, 2007    

Venezuela's President Hugo Chavez toured Latin America in August signing energy and other cooperation agreements with several governments. Chavez made a similar tour of the region earlier in 2007 to counter US President George W. Bush's effort to show that the US was not neglecting Latin America  and to promote his Alternativa Bolivariana de las Americas (ALBA), a funding and integration effort that seeks to give governments of the region a development alternative to neoliberal financial institutions like the International Monetary Fund (IMF) and the World Bank.


Argentina: energy-security treaty Chavez sought to expand his petrodollar influence in South America as he launched a four-nation tour Aug. 6 to promote his country's entry into a regional trade block and to offer energy and financial deals to allies. Reporters describe Chavez's effort as one that would leverage Venezuela's vast oil reserves and create a "grand South American alliance" to counter US dominance. Chavez met with Argentine President Nestor Kirchner after signaling Venezuela's plans to acquire up to US$1 billion in Argentine bonds in installments the latest in a series of deals cementing ties between the allies. "This is an important deal, highly important for our political and geopolitical ties," Chavez said. Chavez later joined Kirchner for a televised ceremony in Buenos Aires in which the leaders agreed to a treaty on energy security. Read more...  


Bolivia and Venezuela Move Forward With Nationalization of Petroleum Industries - May 18, 2007 

On International Workers Day, May 1, the governments of Bolivia and Venezuela announced that the nationalization of their respective petroleum industries was moving forward or had been completed.


In Venezuela's case, the government took over the last of the country's private oil fields on May 1, while Bolivia has been continuing its effort to take control of its large-scale natural-gas reserves and gasoline refineries from foreign companies. Additionally, the government of Venezuelan President Hugo Chavez made moves to nationalize the telecommunications and electric systems. Chavez also threatened to nationalize banks if they did not offer optimal loans to infrastructure-development projects in Venezuela.


Venezuelan troops accompany oil nationalizations Chavez said on April 12 that soldiers would accompany government officials when they took over oil projects in the Orinoco river basin in May. Chavez has decreed that Petroleos de Venezuela SA (PDVSA) will take a minimum 60% stake in four heavy-oil projects in the Rio Orinoco region, and he invited the six private companies operating there to stay on as minority partners.


"On May 1, we are going to take control of the oil fields," Chavez said. "I'm sure no transnational company is going to draw a shotgun, but we will go with the armed forces and the people." The projects run by BP PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips, France's Total SA, and Norway's Statoil ASA upgrade heavy, tar-like crude into more marketable oils and are considered Venezuela's most promising. Read more...  


Exxon Claims US$12 Billions in PDVSA Assets in Lawsuit About Nationalized Oil Resources
February 29, 2008

A British court order on Feb. 7 supposedly froze up to US$12 billion in assets belonging to Petroleos de Venezuela S.A. (PDVSA), Venezuela's state-owned oil company, in a case brought by oil giant ExxonMobil Corporation. The case stemmed from losses ExxonMobil alleged to have suffered when Venezuelan President Hugo Chavez nationalized his country's petroleum resources. Chavez's government rejected the court decision, calling it "judicial terrorism," and denied that PDVSA assets were frozen.


Venezuela: court case "a bluff," "judicial terrorism" The court finding came ahead of a multibillion-dollar arbitration case regarding the state's nationalization of a major oil project. The order said PDVSA must not remove asssets up to the value of US$12 billion from England or Wales. The company could not dispose of, deal with, or diminish the value of any of its assets up to the same value, the document said, according to papers filed in a US court on Feb. 7. The order also froze assets in the US, United Kingdom, and the Netherlands. ExxonMobil sought the freeze because of its concern that PDVSA would shift assets to other nations, putting them out of reach of an international arbitration commission. Read more... 

ExxonMobil Loses Appeal in Effort to Freeze PDVSA Assets In Great Britain - April 04, 2008

On March 18, a British judge rejected a previous ruling that froze US$12 billion of assets belonging to Venezuela's state-owned oil-company Petroleos de Venezuela S.A. (PDVSA). The ruling was a reversal for Exxon Mobil Corporation (see NotiSur, 2008-02-29), which has been seeking to freeze PDVSA assets in Europe prior to an arbitration process regarding Exxon claims the Venezuelan government failed to compensate the company adequately when President Hugo Chavez nationalized the country's large oil resources.


Judge: No suggestion of fraud by PDVSA, no British jurisdiction Judge Paul Walker of the High Court tossed out the order to freeze US$12 billion in assets belonging to Venezuela's state oil company in a case that stemmed from the nationalization of a project in 2007. Walker noted that such freezing orders are rare and occur in cases where there is "usually compelling evidence of serious international fraud." "In the present case there is no suggestion whatever of fraud on the part of PDVSA or any entity or person associated with it," Walker said in a summary of conclusions released by the court. During the court case, Walker also signaled that he agreed with PDVSA's argument that the case didn't fall under British jurisdiction since it isn't a British company and has no assets, businesses, or bank accounts there.


"Today we have a firm decision 100% in our favor," Energy and Oil Minister Rafael Ramirez told state television. "We've defeated ExxonMobil." The case pits Texas-based ExxonMobil, the world's largest corporation both in revenue and market capitalization, which is also the world's largest multinational, nonstate-owned oil company, against the populist Chavez government, which has made oil nationalization a central plank in its governing strategy. Read more...   


Energy Policy, Regulation and Dialogue in Latin America


NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program