Venezuelan Oil Industry Research Articles

Письмо ученого-нефтяника Ф. А. Требина Л. П. Берии о состоянии нефтяной промышленности Венесуэлы. 1949 г.

The article is accompanied by publication of the report of oil scientist Foma Andreevich Trebin written during his tenure as Extraordinary and Plenipotentiary Ambassador of the USSR in Venezuela (1946–49) and addressed to the Deputy Chairman of the Council of Ministers of the USSR L.P. Beria. Appointment of F. A. Trebin to the post was connected to the "oil" factor, which became more significant in the foreign policy of the USSR with growing rivalry with the United States and the beginning Cold War. The Soviet government considered it strategically necessary to achieve a leading position in the oil industry, so one of the important tasks of the Soviet foreign policy was to study the experience of large oil-producing countries; especially attractive in this regard was Latin American region and, in particular, Venezuela, zone of geopolitical presence of England and the USA. The document found in the fond of the Council of Ministers of the USSR of the State Archive of the Russian Federation (GARF) in the file “On organization of geological exploration for oil and ... on changes in the oil industry of Venezuela in the first half of 1949” reflects main features of this foreign policy period. In addition to the published letter, there has been found F. A. Trebin’s report for 1948, based mostly on information taken from periodicals and thus of lesser information value than the letter. Dating identified documents allows the author to assess the delivery time of F. A. Trebin's reports to the secretariat of L. P. Beria. The reports are written in free form and differ in content: the 1948 document contains data on the export of Venezuelan oil and petroleum products to various countries, while the analytical report of 1949 is devoted to the changes in the Venezuelan oil industry in the first half of 1949. The documents differ in their informative value and style (of varying degrees of formality). After working with documents, the publisher concludes that the sources met the challenges of their time; they testify to well-established coordinating practices of the period. Thematically, the published source lies at the intersection of several topical problematic fields: history of science and technology in its "engineering" dimension and history of international relations in the period of intense competition between the USSR and "bourgeois" countries in the Latin American region in the late 1940s.

Venezuelan oil: is it possible to come back?

Fluctuations in the world oil market are reflected in the economic state of Venezuela, as well as in the domestic policy and foreign policy of the country. In the last decade, the country has been experiencing a severe crisis, which is largely the result of a collapse in oil production. The fall in world oil prices, Venezuela's loss of the status of the most reliable supplier of hydrocarbons to the US market, the introduction of US sanctions against the Venezuelan oil industry – these factors are the catalysts for negative trends in the economic and political life of Venezuela. A number of changes are brewing in world markets, which are caused by the systematic underfunding of the fuel and energy complex and sanctions by the United States. These changes open up a new window of opportunity for Venezuela and its oil industry. Venezuela's hydrocarbon resources may be in demand due to the growth in energy consumption in the process of global economic recovery after the coronavirus pandemic. Close economic ties with China and countries under sanctions could provide Venezuela with the investment it needs to rebuild its oil industry.

The collapse of the Venezuelan oil industry: The role of above-ground risks limiting foreign investment

This paper examines the role of foreign direct investment (FDI) in expanding the Venezuelan oil industry in the 1990s, the drivers leading to the expropriations the following decade, and the obstacles to attracting new investments afterward. We argue that operational control by private companies, an attractive fiscal regime, and investor protection clauses were crucial elements in fostering the expansion of the oil industry after the oil opening in the 1990s. However, a successful investment cycle adding production and reserves, combined with an oil price boom, provided strong incentives for the government to increase taxes and expropriate projects. Weak institutions, policy instability, and the lack of credible property rights for the sector generated high “above ground risks” inhibiting FDI during the oil boom, despite the massive resource base and the substantial number of deals signed. FDI underperformance contributed to the decline of the Venezuelan oil industry, even before the imposition of U.S. sanctions. Using project-level data, and industry indicators, we document how volatile fiscal terms, changes in contract governance, discretionary policies, poor operating conditions, and the lack of investor protection, explain the failure to attract FDI.

El nuevo proyecto de Ley Orgánica de Hidrocarburos presentado por la Comisión Permanente de Energía y Minas en septiembre de 2020 (The New Daft of the Organic Hydrocarbons Law Presented by the Permanente Commission of Energy and Mines in September 2020)

The Venezuelan oil sector is facing a dilemma. The destruction of the sector and the reduced window of opportunities offered by the international market require significant investments of about one hundred (100) billion dollars in eight (8) years. These investments must be provided, at least mainly, by private investment (as the Maduro regime itself recognizes). There are two institutional alternatives to achieve this objective: the constitutional anti-blockade law and the new Hydrocarbons Organic Law. The first option, offered by Maduro, does not provide any competitive advantage in terms of certainty and protection of economic rights; thus, it is not an appropriate institutional arrangement to promote private investment. On the contrary, this option follows the same institutional arrangements that, since 2016, have promoted only weak and unstable solutions. The second option, offered by the National Assembly, provides the appropriate institutional framework to promote private investment -considering the current conditions of the international oil market and the Venezuelan oil industry. The project of Hydrocarbons Organic Law presented by the National Assembly in September 2020, introduces reasonable institutional reforms that facilitate the implementation of the new oil public policies, although the paper recommends improving the quality of some institutional reforms.

The Future of the Oil and Gas Industry in Venezuela in the Years to Come amidst a Challenging Environment of Economic Sanctions, World Recession, a Pandemic, and the Energy Transition

This essay concisely explains the complex condition of the Venezuelan oil and gas industry and its legal, political, and financial hurdles, exploring what has been the history and context in which the COVID-19 pandemic arrived. Building on a complicated global situation surrounded by the pandemic, it asks and gives answers to: What could be expected to recover an economy dependent on the energy industry, based on an evaluation of legislation in force, its impact on private investments and an appraisal of bills and restructuring projects. Arguments were divided into the current situation, national and international actions for restructuring the oil industry, and the future of the national oil company. The analysis suggests that great changes are necessary for the future of the Venezuelan energy industry with a new public policy agenda mainly driven by private investments, while the energy transition has already started. The conclusion indicates that it is mandatory to assume the recovery of the traditional hydrocarbons sector in Venezuela to point the industry in the transition to decarbonized energy sources, in a world that is struggling with COVID-19.

PRODUCTIVITY, NATIONALIZATION, AND THE ROLE OF “NEWS”: LESSONS FROM THE 1970S

Occurrences of an old phenomenon, the expropriation of foreign-owned property, peaked in the 1970s when virtually every significant oil-producing developing country nationalized its oil. Nationalization was again on the rise in the 2000s. Using novel data, this paper quantitatively evaluates the effects of nationalization. First, the paper finds significant productivity losses associated with nationalization in a sample of oil-producing countries. Venezuela in particular experienced a striking decline in productivity. Second, the paper presents a new channel through which nationalization affects productivity: a long-term pre-announcement can shift the composition of the workforce with a huge decline in highly skilled foreign workers and result in higher extraction and lower exploration. Guided by a quantitative dynamic partial equilibrium framework disciplined by features of the Venezuelan data, this paper then evaluates the effects of nationalization. A comparison of the simulated and time series data shows that the model can explain about 80% of the productivity pattern over 1961–1980 in the Venezuelan oil industry. Counterfactual experiments suggest that the shift in the composition of the workforce is important in accounting for the productivity pattern. Furthermore, if nationalization had been sudden, long-run losses would have been lower.

Identification of the seismogenic source of the 1875 Cucuta earthquake on the basis of a combination of neotectonic, paleoseismologic and historic seismicity studies

An interesting variety of field evidence that collectively cover the three branches of Earthquake Geology: Neotectonics, Paleoseismology and Historical seismicity, has been collected in the border area between Venezuela and Colombia, near the town of San José de Cúcuta, as part of a study aimed at establishing the seismic source of the great Cucuta Earthquake, that occurred on May 18th, 1875, and that caused heavy losses of life and destruction on both sides of the border, between the Department of Norte de Santander in Colombia and Táchira state in Venezuela. This region is affected by the activity of several cross-border fault systems that converge in the zone of the so-called Pamplona Indenter. Among these seismic sources, the potential candidates of this destructive seismic event in 1875 are those related to the Boconó Fault System, of the northwestern foothills of the Mérida Andes and in particular it's most northwestern expression, the Aguas Calientes Fault System, as suggested by previous research carried out by FUNVISIS for the Venezuelan oil industry in the late 80s. In order to confirm whether this was the responsible system for the earthquake or not, the following studies were carried out: 1) In Neotectonics, a detailed binational surface mapping of the active faults of this system was carried out. This system consists of three branches referred to in this paper as: the North, Central and South branch respectively; 2) In Paleoseismology, two trenches were excavated. The first trench was excavated across the South branch and the second one across the North branch, which confirmed fault activity during the Holocene epoch; 3) In historical seismicity the direct coseismic surface effects that occurred in the epicentral area of the earthquake were assessed. All evidence collected and integrated in these three lines of research, made it possible to conclude that the Central branch of the Aguas Calientes fault system is the most likely candidate to have been the cause of this seismic event.

Towards a holistic framework of MNE–state bargaining: A formal model and case-based analysis

In this paper, we develop a holistic framework for MNE–state bargaining based on power-dependence theory. We contribute to IB theory by moving beyond a static, bilateral conceptualization of MNE–state bargaining towards a dynamic, multi-party framework. MNEs can shift the power balance in their favor by (a) reducing sunk costs from the investment, (b) improving access to alternative investments, (c) increasing the host government’s sunk costs, or (d) impeding the host government’s access to alternative investors and buyers. Subsequently, we apply our framework to the Venezuelan oil industry, identifying 12 MNE micro-strategies to achieve a sustainable power balance.

Apocalypse Now: Venezuela, Oil and Reconstruction

The outlook for the Venezuelan oil industry and the broader economic and political challenges facing the country are intrinsically linked. This report summarizes possible political and economic scenarios, as well as potential next steps for the country, discussed during a workshop convened by Columbia University's Center on Global Energy Policy.

Productivity, Nationalization, and the Role of 'News': Lessons from the 1970s

Occurrences of an old phenomenon, the expropriation of foreign-owned property, peaked in the 1970s when virtually every significant oil-producing developing country nationalized its oil. Nationalization was again on the rise in the 2000s. Using novel data, this paper quantitatively evaluates the effects of nationalization. First, the paper finds significant productivity losses associated with nationalization in a sample of oil-producing countries. Venezuela in particular experienced a striking decline in productivity. Second, the paper presents a new channel through which nationalization affects productivity: specifically, it finds a long-term pre-announcement can result in higher extraction, lower exploration, and a shift in the composition of the workforce with a huge decline in highly skilled foreign workers. Guided by a quantitative dynamic partial equilibrium framework disciplined by features of the Venezuelan data, this paper then evaluates the effects of nationalization. A comparison of the simulated and time series data shows that the model can explain 80 percent of the productivity pattern over 1961-1980 in the Venezuelan oil industry. Counterfactual experiments suggest that the shift in the composition of the workforce is important in accounting for the productivity pattern. Furthermore, if nationalization had been sudden, long-run losses would have been lower.

Uso de Técnicas de Análisis Multivariante para la Caracterización de Fluidos de los Yacimientos de la Faja Petrolífera del Orinoco

The Orinoco Oil Belt (OOB) is one of the largest heavy and extra-heavy crude oil reserves in the world, with its weakly consolidated formations, low temperatures and reservoirs close to saturation conditions all representing a challenge for the characterisation of fluid properties (PVT analysis). Obtaining PVT information of an experimental nature requires high investment due to the complexity of operational procedures in the field, sampling tools and the technology needed for reliable laboratory analyses. As a consequence of the above, common practice in the Venezuelan oil industry has been based on the use of correlations or on establishing analogies with neighbouring fields to estimate PVT parameters, although these methods do have some limitations. In this regard, the purpose of this research lies in evaluating the reliability of the use of information from contiguous areas, assuming that they reproduce behaviour similar to the properties of the fluids. Through analysis of the main components (AMC), inter-associations between six of the most important variables were analysed for the characterisation of fluids, allowing the construction of a factorial design with axes describing saturation indices and the heaviness of the crude. The directions of the axes are defined by the eigenvectors associated with the eigenvalues which capture the largest portion of total variability, thereby allowing a reduction in the scalability of the study. By including in the AMC the geographic area from which the sample was taken as an illustrative categorical variable, it emerged that the nearby PVT data may behave completely differently, which means that proximity does not determine the characteristics of the fluids, and they therefore must be differentiated through proper characterisation of the oil reservoirs, allowing correlations to be established or reliable analogies to be carried out in addition to the optimisation of acquisition plans and analysis of PVT information. Another important finding refers to the relationship between the variables involved in the PVT characteristation; if easy-to-measure variables are known, such as pressure, temperature or API gravity, then any well may be located wthin the factorial designs generated, which can then be analysed according to saturation and heaviness profiles, and then compared with samples showing similar behavour.

First Evidence of Fungal Strains Isolated and Identified from Naphtha Storage Tanks and Transporting Pipelines in Venezuelan Oil Facilities

Biocorrosion, as well as the biodeterioration of crude oil and its derivatives, is one of the major environmental, operational and economic problems in the Venezuelan oil industry. Fungal contaminants are able to produce large quantities of biomass and synthesize peroxides and organic acids, causing severe damage on metal surfaces and promoting the contamination and biodeterioration of fuels. No evidences regarding fungal strains have been reported to be associated to petroleum naphtha, widely used as a diluent of extra heavy crude oil (EHCO) in the exploitation processes of the Orinoco Oil Belt, the biggest proven reserve of EHCO worldwide. The aims of this paper were to isolate and identify fungal strains from the naphtha storage tank and the naphtha distribution network from an oil field operator in Venezuela. The results showed the isolation of four different fungal strains. The molecular identification by 28S rRNA sequencing and phylogenetic tree analysis allowed us to identify the presence of: 1) a new uncultured Ascomycota fungus species BM-103, with high identity to novel hyphomycetes Noosia banksiae and Sporidesmium tengii, in the naphtha storage tank; 2) two yeasts, Rhodotorula mucilaginosa BM-104 (Phylum Basidiomycota) and Wickerhamia sp. BM-105 (Phylum Ascomycota), in a highly damaged naphtha pipeline branch and; 3) Cladosporium cladosporioides BM-102 (Phylum Ascomycota) in a cluster oil well. DNA fingerprinting analysis using ERIC-PCR primers pairs also allowed us to detect the presence of R. mucilaginosa BM-104 right in the access of the studied naphtha system. Interestingly, R. mucilaginosa and C. cladosporioides were previously reported as predominant fungal contaminants of diesel and jet fuel and of kerosene and fuel storage systems, respectively. This paper represents the first evidence of fungal strains isolated and identified from the naphtha systems in the Venezuelan oil industry. The results obtained are discussed.

The Enduring Legacy: Oil, Culture, and Society in Venezuela

This book examines the impact of the Venezuelan oil industry on the social and political development of the country. Although the book spans the oil industry’s development from its beginning in the nineteenth century to the arrival of the current administration of Hugo Chávez Frias in 1999, the author concentrates mainly on events that took place during the Juan Vicente Gómez dictatorship (1908 – 35), when the country became the second largest crude oil producer in the world. The book tries to prove that the oil industry was the modernizing conduit for the country, but there is no adequate definition of what is meant by modernization. The few examples given refer to the haphazard development of townships that became cities. Possible indicators of modernity, such as the introduction of electricity, banking facilities, or sports played by the oil community do not help. The first bank in Maracaibo was opened in 1878 and the first electric generator was installed in the city in 1888. The quintessentially American and English games of baseball and cricket were played by the expatriate oil community, but cricket never caught on, and baseball only took off after 1941 when Venezuela won the world championships in Havana, Cuba.The book suffers from a lack of essential facts on which to anchor the social and political impact of the industry. The author argues that the oil workers became a modernizing influence, but the total number of people employed by the oil companies is not given. The author relies instead on vague statements, such as that the oil industry’s labor force “remained exceedingly small” (p. 172). Detailed employment statistics appeared annually in the Development Ministry’s Memorias. In 1936, for instance, the ministry reported that the industry employed 13,754 workers directly (14 percent foreign) out of a national population of 3.4 million. The author also states that the oil industry in Zulia and other oil states was responsible for the largest internal migration of people in the country, but again the evidence contradicts such an assertion. John Robert Moore shows that between 1928 and 1936 the total migrant population accounted for 12 percent of the country’s population and that the oil states received 24 percent of total migrants. According to E. J. Stann, the majority of migrants went to Caracas, accounting for 25 percent of the city’s population in 1920 and rising to 40 percent in 1936. The reason for such a movement was the wage differential between urban and rural sectors, which existed long before the arrival of the oil companies. There is scant information on the wages paid in the oil industry compared with local wages. In 1917, the average wage in the mining sector was 33.3 percent higher than the oil industry. With the oil boom after 1922, wages increased and began to exert a slight pull in attracting rural labor to the region. In 1936, there were few industries in Zulia that could match the oil industry’s average monthly salary for native staff, but there were still three sectors, chemical firms, financial services, and transport services, that paid higher salaries than the oil companies.On the political front, the author inexplicably fails to mention the undisputed example of foreign political intervention by a hydrocarbon company. In 1901, the New York & Bermudez Co., owned by the Asphalt Company of America, contributed US$140,000 toward Manuel Antonio Matos’s Libertadora Revolution (1901 – 3), which almost toppled the government of Cipriano Castro (1899 – 1908). The author gives little credit to the Gómez dictatorship for tackling the abuses perpetrated by the oil companies during the early part of the 1920s in Zulia. The appointment of Vincencio Pérez Soto as state president of Zulia in 1926 was partly to bring order to the oil industry that he found out of control. The author refers to a racist undercurrent in both the oil companies and the Venezuelan elite, but the examples quoted can be found in almost any of the expatriate literature of the time describing the native population. Indeed, it would be remarkable to find the contrary, especially as racial segregation existed in the US southern states up to the 1960s, and the British ruled a vast empire.In spite of the lack of a convincing argument that the oil industry had a modernizing influence, the book adds value in its treatment and description of the social development and activities that took place within the oil industry. The author manages to bring to life an important and fascinating aspect of the oil industry that is not often seen in the literature.

Venezuela's Nascent Oil Industry and the 1932 US Tariff on Crude Oil Imports, 1927–1935

ABSTRACTAfter a brief description of the initial development of Venezuela's crude oil industry, this paper examines the impact the 1932 US tariff on crude oil imports had on the country. The US tariff on crude oil imports stabilised domestic crude oil prices but prevented consumers from benefting from lower prices in refned petroleum products. The large us international integrated crude oil companies gained from higher crude oil prices for their domestic production while supplying their european markets with mostly cheap crude oil from their newly developed Venezuelan oilfelds. The tariff increased the Venezuelan oil industry's vulnerability to international events because it narrowed the competitive edge it had over domestic us crude oil production. consequently, the Gómez dictatorship in Venezuela at the time became more dependent on the oil companies operating in the country since they could reduce production considerably, or even leave the country as quickly as they entered with a negative impact on government revenues.

21st-Century Transformation of the Venezuelan Oil Industry

This article explores the evolution of Venezuela’s oil industry during the period 2005–2007 and addresses the related regression in the use of and respect for arbitration in oil industry projects. There has been a major transformation in the form of doing business within the oil sector in Venezuela. From structure and control issues, to the approach the state takes on arbitration, we have seen a 180-degree turn. Venezuela has gone from allowing direct private participation in all major oil activities to restricting those activities to ‘Mixed Companies’ where the foreign company becomes a minority shareholder.This article first explores the historic background of the Apertura Petrolera in Venezuela, and then recounts the steps taken by Venezuela in the past years (2005–2007) to reverse the Apertura. It then addresses some of the protective measures that companies can consider in similar situations to minimise risks and perhaps even benefit from the process undertaken by the current government. Finally, the article addresses the treatment that has been given to arbitration clauses in the oil business and explores recent developments in Venezuelan arbitration, within that specific context.

A indústria petrolífera na visão da Nova Economia Institucional: o caso da Petróleos de Venezuela (PDVSA)

Este artigo analisa as estratégias de crescimento da empresa Petróleos deVenezuela (PDVSA) à luz da teoria da organização industrial. No segmento upstream,as associações da PDVSA são feitas na exploração e produção de petróleo na Venezuela,o que ampliou a posição competitiva da empresa através de economias de escala,acesso a novas tecnologias e equipamentos, compartilhamento de riscos, custose lucros. No segmento downstream, a integração ocorre através de jointventuresnas atividades de refino, estocagem, distribuição e comercialização de derivados.Essas estratégias consolidaram a indústria petrolífera venezuelana através de umaestrutura verticalmente integrada por associações, seguindo a lógica apontada pela nova economia institucional.

Entrepreneurial Behaviour and Institutional Change: The Dynamics of Building Industry Alliances in Venezuela

This article presents and analyses the final results of a four-year experience aimed at developing innovative capacities and competitiveness by creating alliances between the state-owned oil company (PDVSA), and national firms supplying goods and services to the Venezuelan oil and petrochemical industry. The article proposes a different approach from the standard analysis on firm behaviour, innovation competitiveness, and cooperative organisation and alliances that tend to disregard national environment, including national political developments and government ideological orientations. We make a case in favour of the analysis of the long-term macro-economic and macro-political trends and ideological orientations of a country, as well as how firms attempt to develop their competitiveness and the collaboration programmes supposedly taking place. We argue in favour of this approach in countries with high levels of political and economic instability, such as most underdeveloped nations. This is the case of several Latin American countries at present, especially of the Venezuelan oil-driven economy. A country now in a ‘u-turn’ economy, and maybe the only one since the fall of the Berlin Wall and the end of the Soviet Union trying to impose a kind of planned economy and socialism.

Evaluación fisico-química de la semilla y del aceite de corozo ( <i>Acrocomia aculeata Jacq.</i>)

In this research, physicochemical characteristics of the seed and seed oil of corozo ( Acrocomia aculeata Jacq.), a wild palm from Central and South America , were evaluated. Seeds obtained from mature fruits from “El Chaparro” town, Anzoategui state, Venezuela, harvested in March 2003, were decorticated; the endospermus was transformed to meal by means of grinding and then using a sieve (425 µm), and its oil was extracted with n-hexane. The whole seed showed an average weight of 9.67 ± 0.32 (P<0.05) and proportions of pericarp and endospermus of 75.39 % and 24.61 %, respectively. The meal presented important contents of fat (53.13 %), protein (13.75 %) and crude fiber (25.82 %). Crude oil showed low free fatty acidity (0.4 %) and high stability (Peroxide was not detected; stabitlity index OSI 100 h), with iodine index 29.87 cg I/g and saponification value 205 mg KOH/g. In the fatty acid composition a high level of saturated acids (79.6 %) was found, and the major fatty acid was lauric acid (50.9 %). The corozo seed is an oleaginous source that may be useful in the Venezuelan oil industry.

A discrete-event simulation and continuous software evaluation on a systemic quality model: An oil industry case

This paper proposes a specific set of criteria for evaluating discrete-event Simulation Software capable of simulating continuous operations. A quality specifications model was developed; it identified 40 sub-characteristics and 131 metrics to assess the quality of this type of software; it is then to be used in the selection process. The application was demonstrated in one organization that provides consulting services in the logistics’ area of the Venezuelan oil industry and it was used to examine four commercial software systems that might fulfill the technical requirements established by the organization. The selection and evaluation technique successfully identified the software that best suited their needs.

Catalysis research in Venezuela

The existence of oil, gas and coal resources in Venezuela led directly to the country’s need for research and development in the field of catalysis. With the intention of contributing to the development of the chemical industry, especially relating to the refining processes in the Venezuelan oil industry (PDVSA), catalysis studies began in 1964 with a cooperation agreement between the Chemistry School of the Science Faculty of the Universidad Central de Venezuela and the Research Institute of Catalysis of Munich. To begin with personnel were recruited; before the establishment of research activities. The provision of infrastructure and equipment took a little longer, but once established the growth in research activities never stopped. The pioneering effort of Prof. Noller from Germany and his students (P. Andreu from Spain and Edmundo Schmidt, from Venezuela) led to the creation of all the existing catalysis groups in the country and in 1983[1,2] to the foundation of the Venezuelan Catalysis Society.