PrintVenezuela is one of the world’s largest exporters of crude oil and the largest in the Western Hemisphere.
In 2006, the country was the sixth-largest net oil exporter in the world. The oil sector is of central importance to the Venezuelan economy: it accounts for more than three-quarters of total Venezuelan export revenues, about half of total government revenues, and around one-third of total gross domestic product (GDP).
Venezuela was a founding member of the Organization of the Petroleum Exporting Countries (OPEC).
Natural gas and oil represent the bulk of total energy consumption in Venezuela.
After reaching 46 percent of total energy consumption in 1998, the share of natural gas in Venezuela’s oil mix has fallen to 38 percent.
During the same period, the share of oil consumption has risen from 32 percent to 38 percent.
Hydroelectricity represents the remainder of the country’s energy mix, and Venezuela is well-endowed with hydroelectric potential.
Oil
Venezuela was the world’s sixth-largest net oil exporter in 2006.
According to Oil and Gas Journal (OGJ), Venezuela had 80.0 billion barrels of proven oil reserves in 2007, the largest amount in South America.
Venezuela is a significant supplier of crude oil to the world market: in 2006, the country had net oil exports of 2.2 million barrels per day (bbl/d), sixth-largest in the world and the largest in the Western Hemisphere.
In recent years, crude oil production in the country has fallen, mostly due to natural decline at existing oil fields.
Sector Organization
Venezuela nationalized its oil industry in 1975-1976, creating Petroleos de Venezuela S.A. (PdVSA), the country's state-run oil and natural gas company.
Along with being Venezuela's largest employer, PdVSA accounts for about one-third of the country’s GDP, 50 percent of the government’s revenue and 80 percent of Venezuela’s exports earnings.
In recent years, the Venezuelan government has reduced PdVSA’s previous autonomy and amended the rules regulating the country’s hydrocarbons sector.
An example of this trend is the November 2004 appointment of Rafael Rodriguez, the energy minister, as chairman of PdVSA.
Nearly one-half of PdVSA’s employees walked off the job on December 2, 2002 in protest against the rule of President Chavez. The strike severely impacted PdVSA, practically bringing the company’s operations to a halt. PdVSA fired 18,000 workers following the strike, draining the company of technical knowledge and expertise. Industry analysts speculate that the strike did permanent damage to PdVSA’s production capacity and remains the contributing factor to continued declines in production in recent years.
Investment in Maintaining/Expanding Production
Industry analysts estimate that PdVSA must spend some $3 billion each year just to maintain production levels at existing fields, as many of these fields suffer annual decline rates of at least 25 percent. Affecting PdVSA’s ability to meet its investment goals are the increasing demands placed upon its finances by the Venezuelan government.
In 2004, the Venezuelan government established a special development fund to finance infrastructure projects throughout the country; PdVSA will supply billions of dollars per year directly to this fund. The company also funds additional social programs directly from its budget. These new priorities divert billions of dollars per year away from oil-related activities. Along with these directly-administered programs, PdVSA pays billons of dollars each year to the Venezuelan governme
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