History of the Venezuelan oil industry
[5] 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.
[6] 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.
[7] One such concession was granted to Rafael Max Valladares who contracted to General Asphalt for exploration and development of oil fields.
On 15 April 1914, upon the completion of the Zumaque-I (now called MG-I) oil well, the first Venezuelan oilfield of importance, Mene Grande, was discovered by Caribbean Petroleum in the Maracaibo Basin.
[6] This major discovery encouraged a massive wave of foreign oil companies to Venezuela in an attempt to gain a foothold in the burgeoning market.
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.
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.
[citation needed] Cabimas still plays an important role in production from the nation's largest oil fields, which are located around and beneath Lake Maracaibo.
[11] 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.
[citation needed] By 1940 Venezuela was the third largest producer of crude oil in the world with more than 27 million tonnes per year - just slightly less than the production in the USSR.
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.
[citation needed] In response to the chronically low oil prices of the mid and late 1950s, the Venezuelan hydrocarbons and mines minister Juan Pablo Pérez Alfonzo proposes to the oil producing countries Iran, Saudi Arabia, Iraq, and Kuwait met in Baghdad in September 1960 to form the Organization of the Petroleum Exporting Countries (OPEC).
With a new sense of confidence, Venezuelan president Carlos Andrés Pérez pledged that Venezuela would develop significantly within a few years.
Decree 832 stipulated that all exploration, production, refining, and sales programs of the oil companies had to be approved in advance by the Ministry of Mines and Hydrocarbons.
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.
In 1980s, in an aggressive internationalization plan, PDVSA bought refineries in USA and Europe as the American Citgo that catapulted it to the third-largest oil company in the world.
After Hugo Chávez officially took office in February 1999, several policy changes involving the country's oil industry were made to explicitly tie it to the state under his Bolivarian Revolution.
[36] In 2000, the pro-Chávez National Assembly granted Chávez the ability to rule by decree due to the poor economic conditions.
[37] Chávez began setting goals of reinstating quotas, such as ten percent of PDVSA's annual investment budget was to be spent on social programs.
[37] In April 2002, mass demonstrations occurred in Caracas and Chávez was temporarily overthrown by the military, during the 2002 Venezuelan coup d'état attempt.
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.
[citation needed] In 2005, PDVSA opened its first office in China, and announced plans to nearly triple its fleet of oil tankers in that region.
[citation needed] The Chávez administration used high oil prices in the 2000s on his populist policies and to gain support from voters.
[49] By 2017, PDVSA could not even afford to export oil through international water, which requires safety inspections and cleaning under maritime law, with a fleet of tankers stranded in the Caribbean Sea due to the issue.
[53] In April 2017, a controversial Venezuelan Supreme Court ruling granted Maduro executive powers over PDVSA, which allow him act autonomously in selling shares or make international agreements of the oil company.
