history of the Venezuelan oil industry

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.

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. The first documented shipment of petroleum from Venezuela was in 1539 when a single barrel of oil was sent to Spain to alleviate the gout of Emperor Charles V.{{cite book|title=Chronology of Venezuelan Oil|year=1969|publisher=Purnell and Sons LTD.|author=Anibal Martinez}}

File:Juan Vicente Gómez, 1911.jpg ]]

File:Ancient office Mene Grande Oil Company.jpg was built in 1951.]]

Despite the knowledge of the existence of oil reserves in Venezuela for centuries,{{fact|date=November 2024}} the first oil wells of significance were not drilled until the early 1910s. In 1908, Juan Vicente Gómez replaced his ailing predecessor, Cipriano Castro, as the president of Venezuela. Over the next few years, Gómez granted several concessions to explore, produce, and refine oil. Most of these oil concessions were granted to his closest friends, and they in turn passed them on to foreign oil companies that could actually develop them.{{cite book | title=The Nationalization of the Venezuelan Oil Industry | year=1983 | publisher=Heath and Company | author=Gustavo Coronel}} One such concession was granted to Rafael Max Valladares who contracted to General Asphalt for exploration and development of oil fields. The geologist Herbert Hoover, then in London as a consulting engineer for Gold Fields, Ltd. of South Africa, recommended the geologist Ralph Arnold to that company for a survey of oil resources in Venezuela. At that time there was a single oil well in Venezuela producing 40 gallons of oil per day. Arnold's survey, conducted for Caribbean Petroleum Company a subsidiary of General Asphalt Company in Northern Venezuela, employed a staff of 52 geologists, engineers, and drillers. So successful was this venture, that Royal Dutch Shell paid General Asphalt $1,000,000 for 51% in Caribbean Petroleum Company. 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. This major discovery encouraged a massive wave of foreign oil companies to Venezuela in an attempt to gain a foothold in the burgeoning market.

From 1914 to 1917, several more oil fields were discovered across the country including the emblematic Bolivar Coastal Field; however World War I slowed significant the development of the industry. 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. By the end of 1917, the first refining operations began at the San Lorenzo refinery to process the Mene Grande field production, and the first significant exports of Venezuelan oil by Caribbean Petroleum left from the San Lorenzo terminal. By the end of 1918, petroleum appeared for the first time on the Venezuelan export statistics at 21,194 metric tons.

It was the blowout of the Barroso No. 2 well in Cabimas in 1922[http://www.unimet.edu.ve/centros/cel/articulos/royal.pdf The Royal Dutch Shell Group of Companies in Venezuela, 1913-1922] {{webarchive|url=https://web.archive.org/web/20061013010207/http://www.unimet.edu.ve/centros/cel/articulos/royal.pdf |date=13 October 2006 }} that marked the beginning of Venezuela's modern history as a major producer. This discovery captured the attention of the nation and the world. 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. Oil ended Venezuela's relative anonymity in the eyes of world powers, making it a linchpin of an ever-expanding international oil industry and a new consideration in global policymaking.{{citation needed|date=November 2022}}

Cabimas still plays an important role in production from the nation's largest oil fields, which are located around and beneath Lake Maracaibo. Other fields are increasing in importance, mainly in eastern Venezuela,Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power [Simon and Schuster, 1990], pp. 233–236; 432 where the Oficina Formation was discovered in 1937.{{Cite journal|author=Hedberg, H.D.|author2= Sass, L.C.| author3= Funkhouser, H.J.|date=1947|title=Oil Fields of Greater Oficina Area Central Anzoategui, Venezuela|journal=AAPG Bulletin|volume=31|pages=2089–2169|issue=12|url=http://archives.datapages.com/data/bulletns/1944-48/data/pg/0031/0012/2050/2089.htm|doi=10.1306/3D933A94-16B1-11D7-8645000102C1865D}} About twenty years after the completion of the first oil-producing well Venezuela had become the largest oil exporter in the world and, after the United States, the second largest oil producer. Exports of oil boomed between 1920 and 1935.{{cite book|title=The Politics of Oil in Venezuela|year=1975|publisher=Stanford University Press|author=Franklin Tugwell}} 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.{{Harvnb|Painter|2012|p=26}}.

By 1929, the dramatic development of the Venezuela oil industry had begun to dominate all other economic sectors in the country, however, agricultural production began to decrease dramatically.[http://www.semp.us/publications/biot_reader.php?BiotID=476. Suburban Emergency Management Project, "History of Venezuela's Oil and Rentier Economy"], Suburban Emergency Management Project.

Agriculture accounted for about one-third of economic production in the 1920s, but by the 1950s this fraction dramatically reduced to one-tenth. This sudden increase of oil production restricted Venezuela's overall ability to create and maintain other industries. The government had ignored serious social problems, including education, health, infrastructure, agriculture, and domestic industries, causing Venezuela to fall well behind other industrialized countries.{{citation needed|date=September 2015}}

"Dutch disease" is a term used in economics to describe the situation in a nation's economy when the development of one sector of the economy that is particular prosperous leads to the underdevelopment of other important sectors of the economy.

{{See also|Venezuela during World War II|San Tomé, Venezuela}}

{{unreferenced section|date=September 2015}}

File:Oil_production_in_Venezuela.svg, 1965-2019]]

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.{{Cite web|url=http://digital.library.northwestern.edu/league/le0280ah.pdf|title=League of Nations data for oil production in the world|website=Library of the Northwestern university}} In 1941, Isaías Medina Angarita, a former army general from the Venezuelan Andes, was indirectly elected president. One of his most important reforms during his tenure was the enactment of the new Hydrocarbons Law of 1943. This new law was the first major political step taken toward gaining more government control over its oil industry. Under the new law, the government took 50% of profits.Yergin, p. 435 Once passed, this piece of legislation basically remained unchanged until 1976, the year of nationalization, with only two partial revisions being made in 1955 and 1967.{{citation needed|date=September 2015}}

In 1944, the Venezuelan government granted several new concessions encouraging the discovery of even more oil fields. 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 {{convert|1|Moilbbl/d|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.{{cite book|title=Oil: Venezuela and the Persian Gulf|year=1994|publisher=Editorial Panapo|author=Jose Toro-Hardy}} Even after the war, oil demand continued to rise due to the fact that there was an increase from twenty-six million to forty million cars in service in the United States from 1945 to 1950.{{cite book|title=The Prize: The Epic Quest for Oil, Money, and Power|url=https://archive.org/details/prize00dani|url-access=registration|year=1991|publisher=Simon and Schuster|author=Daniel Yergin|isbn=9780671502485}}

By the mid-1950s, however, Middle Eastern countries had started contributing significant amounts of oil to the international petroleum market, and the United States had implemented oil import quotas. The world experienced an over-supply of oil, and prices plummeted.{{citation needed|date=September 2015}}

{{Main|OPEC}}

{{more citations needed|section|date=October 2016}}

File:OPEC.svg countries.]]

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). The main goal of the OPEC member countries was to work together in order to secure and stabilize international oil prices to ensure their interests as oil producing nations. This was managed largely via maintaining export quotas that helped prevent the overproduction of oil on an international scale.

{{Main|1973 oil crisis}}

In the early 1970s, oil producing countries of the Persian Gulf began negotiations with oil companies in attempt to increase their ownership participation. In 1972 they rapidly obtained a 25 percent participation, and less than a year later they revised those agreements to obtain up to 60 percent participation in the ownership of the companies. By 1973, OPEC Persian Gulf states members decided to raise their prices by 70 percent and to place an embargo on countries friendly to Israel (the United States and the Netherlands). This event became known as the 1973 oil crisis. Following a culmination of conflicts in the Middle East and the oil producing countries of the Persian Gulf no longer exporting to the United States and oil prices rising steeply, Venezuela experienced a significant increase in oil production profits. Between 1972 and 1974, the Venezuelan government revenues had quadrupled. With a new sense of confidence, Venezuelan president Carlos Andrés Pérez pledged that Venezuela would develop significantly within a few years. By substituting imports, subsidies, and protective tariffs, he planned to use oil profits to increase employment, fight poverty, increase income, and diversify the economy.{{citation needed|date=July 2023}}

File:Venezuela petrol 1972.jpg, 1972.]]

Well before 1976, Venezuela had taken several steps in the direction of nationalization of its oil industry. In August 1971, under the presidency of Rafael Caldera, a law was passed that nationalized the country's natural gas industry. Also in 1971 the law of reversion was passed which stated that all the assets, plant, and equipment belonging to concessionaires within or outside the concession areas would revert to the nation without compensation upon the expiration of the concession. The movement towards nationalism was experienced once again under decree 832. 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. Led by finance minister Luis Enrique Oberto, nationalization led to the Venezuelan economy reaching an average growth of 5% between 1970 and 1973.{{Cite web |last=Vazquez |first=Luis David |date=2022-08-09 |title=Fallece el académico y ex-ministro de Hacienda venezolano, Luis Enrique Oberto González |trans-title=The academic and former Venezuelan Minister of Finance, Luis Enrique Oberto González, dies |url=https://www.descifrado.com/2022/08/09/fallece-el-academico-y-ex-ministro-hacienda-venezolano-luis-enrique-oberto-gonzalez/ |access-date=2022-08-13 |website=Descifrado |language=es}}

Nationalization became official when the presidency of Carlos Andrés Pérez, whose economic plan, "La Gran Venezuela", called for the nationalization of the oil industry and diversification of the economy via import substitution. 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. All foreign oil companies that once did business in Venezuela were replaced by Venezuelan companies. Each of the former concessionaires was simply substituted by a new 'national' oil company, which maintained the structures and functions of its multi-national corporation (MNC)-predecessor.Vegard Bye, [https://www.jstor.org/stable/422789?seq=11 "Nationalization of Oil in Venezuela: Re-defined Dependence and Legitimization of Imperialism"], Journal of Peace Research, 16, no. 1 (1979): 67, accessed 3 December 2014.

All the new companies are owned by a holding company-Petroven or PDV- and which in turn is owned by the State.Bye, "Nationalization of Oil in Venezuela:Re-defined Dependence and Legitimization of Imperialism", p. 67. Ultimately not much had changed in this regard, as all Venezuelans with leading positions in the MNCs took over the leading positions of the respective new companies, and therefore still securing their interests in Venezuela's oil. PDVSA controls activity involving oil and natural gas in Venezuela. 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.{{citation needed|date=July 2023}}

After the 1973 oil crisis, the period of economic prosperity for Venezuela was relatively short-lived. As Venezuelan oil minister and OPEC co-founder Juan Pablo Pérez Alfonzo had presciently warned in 1976: "Ten years from now, twenty years from now, you will see, oil will bring us ruin... It is the devil's excrement."{{cite news|title='The Devil's Excrement'|last=Useem|first=Jerry|journal=Fortune|date=3 February 2003|url=https://money.cnn.com/magazines/fortune/fortune_archive/2003/02/03/336434/index.htm}} This was the case during the "1980s oil glut". OPEC member countries were not adhering strictly to their assigned quotas, and once again oil prices plummeted.{{citation needed|date=October 2016}}

During the mid-1980s, Venezuela's oil production steadily began to rise.[http://crudeoilpeak.info/venezuela-peak Venezuela peak] By the 1990s, symptoms of the Dutch Disease (the development of one sector of an economy at the expense of other often critical sectors) were once again becoming apparent. Between 1990 and 1999, Venezuela's industrial production declined from 50 percent to 24 percent of the country's gross domestic product compared to a decrease of 36 percent to 29 percent for the rest of Latin America,{{cite book|title=World Development Report 2000/2001|page=297}} but oil production levels continued to rise until 1998.

However, the efficiency of PDVSA (Petróleos de Venezuela S.A.) was brought into question over the years. During 1976–1992, the amount of PDVSA's income that went towards the company's costs was on average 29 percent leaving a remainder of 71 percent for the government. From 1993 to 2000, however, that distribution almost completely reversed, to where 64 percent of PDVSA's income were kept by PDVSA, leaving a remainder of only 36 percent for the government. This change in government revenue was due to a change in accounting methods, lower taxation on private investment, higher production of oil sands, and transfer pricing.{{cite book|title=Venezuelan Oil Politics at the Crossroads|year=2001|publisher=Oxford Institute for Energy Studies, Monthly Commentary|author=Bernard Mommer}}

File:Operemm-2.jpg.]]{{Quote box|width=250px|align=right|quote="There is no question that Venezuela under Chávez came to experience one of the worst cases of Dutch Disease in the world."|source=Foreign Policy}}

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.{{Cite book |last=Cederlöf |first=Gustav |title=The Low-Carbon Contradiction: Energy Transition, Geopolitics, and the Infrastructural State in Cuba |date=2023 |publisher=University of California Press |isbn=978-0-520-39313-4 |series=Critical environments: nature, science, and politics |location=Oakland, California}}{{Rp|page=191}} Since then, PDVSA has not demonstrated any capability to bring new oil fields onstream since nationalizing heavy oil projects in the Orinoco Petroleum Belt formerly operated by international oil companies ExxonMobil, ConocoPhillips, Chevron.{{cite news|last1=Egan|first1=Matt|title=Why Venezuela's oil production plunged to a 13-year low|url=https://money.cnn.com/2016/07/12/investing/venezuela-crisis-oil-production-plunges/|access-date=14 July 2016|work=CNNMoney|date=12 July 2016}}Sheridan Titman, [http://blogs.mccombs.utexas.edu/titman/2010/03/23/the-future-oil-production-in-venezuela "The Future Oil Production in Venezuela"] {{Webarchive|url=https://web.archive.org/web/20100428035309/http://blogs.mccombs.utexas.edu/titman/2010/03/23/the-future-oil-production-in-venezuela/ |date=28 April 2010 }}, blogs.mccombs.utexas.edu, 23 March 2010.

The Chávez government used PDVSA resources to fund social programmes, and PDVSA staff were required to support Chávez. His social policies resulted in overspending {{cite news|last1=Corrales|first1=Javier|title=The House That Chavez Built|url=https://foreignpolicy.com/2013/03/07/the-house-that-chavez-built/|access-date=6 February 2015|agency=Foreign Policy|date=7 March 2013}}{{cite news|last1=Siegel|first1=Robert|title=For Venezuela, Drop in Global Oil Prices Could Be Catastrophic|url=https://www.npr.org/2014/12/25/373128433/for-venezuela-drop-in-global-oil-prices-could-be-catastrophic|access-date=4 January 2015|agency=NPR|date=25 December 2014}}{{cite news|last1=Scharfenberg|first1=Ewald|title=Volver a ser pobre en Venezuela|url=http://internacional.elpais.com/internacional/2015/01/30/actualidad/1422646346_475356.html|access-date=3 February 2015|agency=El Pais|date=1 February 2015}} that caused shortages in Venezuela and allowed the inflation rate to grow to one of the highest rates in the world .{{cite news|last1=Lansberg-Rodríguez|first1=Daniel|title=Coup Fatigue in Caracas|url=https://foreignpolicy.com/2015/03/15/coup-fatigue-in-caracas-venezuela-maduro/|access-date=10 July 2015|agency=Foreign Policy|date=15 March 2015}}{{cite web|url=https://www.cia.gov/library/publications/the-world-factbook/rankorder/2092rank.html|archive-url=https://web.archive.org/web/20070613003710/https://www.cia.gov/library/publications/the-world-factbook/rankorder/2092rank.html|url-status=dead|archive-date=13 June 2007|title=Inflation rate (consumer prices)|work=CIA World Factbook|access-date=26 February 2014}}{{cite news|url=http://www.economist.com/node/21526365|access-date=23 February 2014|title=Venezuela's economy: Medieval policies|newspaper=The Economist|date=20 August 2011}}

According to Corrales and Penfold, "Chávez was not the first president in Venezuelan history to be mesmerized by the promise of oil, but he was the one who allowed the sector to decline the most", with most statistics showing deterioration of the industry since the beginning of his presidency.{{cite book|last1=Corrales|first1=Javier|last2=Penfold|first2=Michael|title=Dragon in the Tropics: The Legacy of Hugo Chávez|date=2 April 2015|publisher=Brookings Institution Press|isbn=978-0815725930|page=7}}

Chávez's successor, Nicolás Maduro, continued much of the policies championed by Chávez, with Venezuela further deteriorating as a result of continuing such policies.{{cite news |title=Chavez leaves Venezuelan economy more equal, less stable |author=Kevin Voigt |url=https://edition.cnn.com/2013/03/06/business/venezuela-chavez-oil-economy/ |publisher=CNN |date=6 March 2013 |access-date=6 March 2013}}

From the beginning of his presidency, Chávez took an active role in OPEC and sought to increase international oil prices.{{Rp|page=131}}

In March 1999, at a meeting of the heads of OPEC nations, a 3% cutback in oil supplies was agreed to.{{cite news|last=Ibrahim|first=Youssef M.|date=March 24, 1999|title="Oil Countries Approve World Cutback of 3%"|newspaper=New York Times|page=C1|url=https://www.nytimes.com/1999/03/24/business/oil-countries-approve-world-cutback-of-3.html|access-date=7 April 2025}} The meeting could be considered a success given the record high oil prices of the following years, but much of that is also a consequence of the 11 September 2001 attacks against the United States, the Iraq War, and the significant increase in demand for oil from developing economies like China and India, which helped prompt a surge in oil prices to levels far higher than those targeted by OPEC during the preceding period. In addition to these events, the December 2002 oil strike in Venezuela, which resulted in a loss of almost 3mmbpd of crude oil production, brought a sharp increase in world prices of crude.{{cite book|title=Energy and Security|url=https://archive.org/details/isbn_9780801882791|url-access=registration|year=2005|publisher=Woodrow Wilson Center Press|author=Jan Kalicki, David Goldwyn}}

{{more citations needed section|date=July 2016}}

File:PDVSA Towers in Maracaibo Center.jpg supporting Chávez on the PDVSA Towers in Maracaibo.]]

In 2000, the pro-Chávez National Assembly granted Chávez the ability to rule by decree due to the poor economic conditions.{{cite book|last1=Nelson|first1=Brian A.|title-link= The Silence and the Scorpion|title=The silence and the scorpion : the coup against Chávez and the making of modern Venezuela|date=2009|publisher=Nation Books|location=New York|isbn=978-1568584188|pages=1–8|edition=online}} On 13 November 2001 while ruling by decree, Chávez enacted the new Hydrocarbons Law, which came into effect in January 2002. The laws "marked a turning point in public sentiment toward the president" with both chavistas and anti-chavistas outraged at the changes.{{cite book|last1=Nelson|first1=Brian A.|title-link= The Silence and the Scorpion|title=The silence and the scorpion : the coup against Chávez and the making of modern Venezuela|date=2009|publisher=Nation Books|location=New York|isbn=978-1568584188|pages=40–41|edition=online}} For the opposition to Chávez, such dramatic changes to the government proved to them that Chávez was a "dictator-in-training".

Chávez began setting goals of reinstating quotas, such as ten percent of PDVSA's annual investment budget was to be spent on social programs.Cesar J. Alvarez, [http://www.cfr.org/publication/12089 "Venezuela's Oil-Based Economy"], Council on Foreign Relations. Chavez initiated many of these major changes to exert more control over PDVSA and efficiently deal with the problems he and his supporters had over PDVSA's small revenue contributions to the government. By 2002, warnings grew of the Chávez overspending on social programs in order to maintain populist support.{{cite book|last1=Heritage|first1=Andrew|title=Financial Times World Desk Reference|date=December 2002|publisher=Dorling Kindersley|isbn=9780789488053|pages=618–621}}

In December 2002, PDVSA officially went on strike creating a near-complete halt on oil production in Venezuela. The aim of the Venezuelan general strike of 2002-2003 was to pressure Chávez into resigning and calling early elections. The strike lasted approximately two and a half months, and the government ended up firing 12,000 PDVSA employees and replacing them with workers loyal to the Chávez government, many of whom came out of retirement to replace the fired.{{Cite journal|url=https://www.csmonitor.com/2003/0219/p07s01-woam.html|title = Venezuela's oil strike may be over, but industry faces high hurdles|journal = Christian Science Monitor|date = 19 February 2003}}

By January 2002, protests involving hundreds of thousands of Venezuelans opposing Chávez became common in Venezuela. 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|date=July 2016}}

In 2005, PDVSA opened its first office in China, and announced plans to nearly triple its fleet of oil tankers in that region. Chávez had long stated that he would like to sell more Venezuelan oil to China so his country can become more independent of the United States.

In 2007, Chávez struck a deal with Brazilian oil company Petrobras to build an oil refinery in northeastern Brazil where crude oil will be sent from both Brazil and Argentina. A similar deal was struck with Ecuador where Venezuela agreed to refine {{convert|100000|oilbbl|m3}} of crude oil from Ecuador at discount prices. Cuba agreed to let thousands of Venezuelans be received for medical treatment and health programs, and in turn, Venezuela agreed to sell several thousands of barrels to Cuba at a 40% discount under Petrocaribe program.{{citation needed|date=September 2015}}

The Chávez administration used high oil prices in the 2000s on his populist policies and to gain support from voters. The social works initiated by Chávez's government relied on oil products, the keystone of the Venezuelan economy, with Chávez's administration suffering from Dutch disease as a result.{{cite book|last1=Corrales|first1=Javier|last2=Romero |first2=Carlos|title=U.S.-Venezuela relations since the 1990s: coping with mid-level security threats|date=2013 |publisher=Routledge|location=New York|isbn=978-0415895248|pages=79–81}}

According to Cannon, the state income from oil revenue grew "from 51% of total income in 2000 to 56% 2006";Cannon, p. 87. oil exports increased "from 77% in 1997 [...] to 89% in 2006"; and his administration's dependence on petroleum sales was "one of the chief problems facing the Chávez government". By 2008, exports of everything but oil "collapsed" and in 2012, the World Bank explained that Venezuela's economy is "extremely vulnerable" to changes in oil prices since in 2012 "96% of the country's exports and nearly half of its fiscal revenue" relied on oil production.{{cite web|title=Venezuela Overview|url=http://www.worldbank.org/en/country/venezuela/overview|publisher=World Bank|access-date=13 April 2014}}

Economists say that the Venezuelan government's overspending on social programs and strict business policies contributed to imbalances in the country's economy, contributing to rising inflation, poverty, low healthcare spending and shortages in Venezuela going into the final years of his presidency.{{cite web|title=Health expenditure, total (% of GDP)|url=http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS|website=World Bank|access-date=19 May 2015}}

Since 2014, oil production in Venezuela has suffered from a poor oil market and Venezuela's insufficient funding of the industry. Venezuela's nationalistic oil policies have not succeeded in making them more independent from their oil customers. In 2016, the United States imported 291,461,000 barrels of oils from Venezuela, an amount consistent with imports in the five years prior.{{cite web|title=U.S. Imports by Country of Origin|url=https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_a.htm|website=Independent Statistics and Analysis|publisher=U.S. Energy Information Administration|access-date=25 September 2017}} To assuage the oil price decline which began back in June 2014 and continues through to today, President Maduro printed more currency, resulting in inflation as high as 700% of what the inflation rate was in 2014.{{cite news|last1=Aslund|first1=Anders|title=Venezuela Is Heading for a Soviet-Style Collapse|url=https://foreignpolicy.com/2017/05/02/the-maduro-regime-is-heading-for-a-soviet-style-collapse-venezuela/|access-date=4 October 2017|publisher=Foreign Policy|date=2 May 2017}} The Economic policy of the Nicolás Maduro administration did not revive the oil decline, and by 2016, the oil production reached the lowest it had been in 23 years.{{cite news|last1=Pourcelot|first1=Jean-Philippe|title=Venezuela Commodities March 2017|url=https://www.focus-economics.com/countries/venezuela/news/commodities/venezuelan-oil-prices-tumble-in-march-compounding-pressure-on|access-date=6 October 2017|publisher=Focus Economies|date=6 April 2017}} According to analysts, the economic crisis suffered under President Nicolás Maduro would have still occurred with or without Chávez.{{cite web|title=Post-Chavez, Venezuela Enters a Downward Spiral|url=http://knowledge.wharton.upenn.edu/article/post-chavez-venezuela-enters-downward-spiral|website=Wharton School of the University of Pennsylvania|access-date=21 February 2015}}

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.{{cite news|last1=Gramer|first1=Robbie|title=Venezuela Is So Broke It Can't Even Export Oil|url=https://foreignpolicy.com/2017/01/26/venezuela-is-so-broke-it-cant-even-export-oil/|access-date=31 January 2017|work=Foreign Policy|date=26 January 2017}} In July 2017, this arrangement was extended from just the first half of 2017 to continue until March 2018.{{cite news|last1=Meredith|first1=Sam|title=OPEC and non-OPEC production cuts can go longer and deeper if necessary, says Russia energy minister|url=https://www.cnbc.com/2017/07/10/opec-and-non-opec-production-cuts-can-go-longer-and-deeper-if-necessary-says-russia-energy-minister.html|access-date=6 October 2017|publisher=CNBC|date=10 July 2017}}{{cite news|last1=Ghaddar|first1=Ahmad|last2=Lawler|first2=Alex|last3=Soldatkin|first3=Vladimir|title=OPEC, non-OPEC set for new oil cut, eye longer duration|url=https://www.reuters.com/article/us-opec-oil/opec-non-opec-set-for-new-oil-cut-eye-longer-duration-idUSKBN18K0W9|access-date=6 October 2017|publisher=Reuters|date=24 May 2017}} This continued depression in income from oil has led Maduro to pressure the OPEC to raise the falling oil prices to help the Venezuelan economy.{{cite news|last1=Cunningham|first1=Nick|title=Venezuela is desperate for higher oil prices|url=http://www.businessinsider.com/venezuela-desperate-for-higher-oil-prices-2017-7|access-date=23 September 2017|publisher=Business Insider|date=20 July 2017}} 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.{{cite news|last1=Ulmer|first1=Alexandra|title=Venezuela's Maduro wins power over oil despite court reversal|url=https://www.reuters.com/article/us-venezuela-politics-oil-analysis/venezuelas-maduro-wins-power-over-oil-despite-court-reversal-idUSKBN1740XF|access-date=8 October 2017|publisher=Reuters|date=2 April 2017}} In October 2017, Venezuela had its lowest oil output in 28 years, with only 1.863 million bpd being pumped that month.{{cite news|title=Venezuela pumps below OPEC target|url=http://www.aljazeera.com/news/2017/11/venezuela-pumps-opec-target-171121131953739.html|access-date=23 November 2017|work=Al Jazeera|date=21 November 2017|quote=The South American country's oil output hit a 28-year low in October as state-owned oil giant PDVSA struggled to find the funds to drill wells, maintain oilfields and keep pipelines and ports working ... Venezuela pumped 1.863 million bpd in October}} By late-2017, the PDVSA struggled to repay $725 million of debt, part of a total $5 billion owed.{{cite news|last1=Gillespie|first1=Patrick|title=Venezuela oil production dives as big debt bills loom|url=https://money.cnn.com/2017/07/13/news/economy/venezuela-oil-production/index.html|access-date=8 October 2017|agency=CNN|date=13 July 2017}}{{cite news|last1=Wernau|first1=Julie|last2=Cui|first2=Carolyn|title=Venezuelan Default Fears Rise With Billions in Debt Coming Due Soon -- Update|url=http://www.foxbusiness.com/features/2017/08/02/venezuelan-default-fears-rise-with-billions-in-debt-coming-due-soon-update.html|access-date=8 October 2017|publisher=Fox Business|date=2 August 2017}}

In August of 2017, the Trump Administration imposed sanctions aimed at PDVSA.Seelke, C. R., [https://crsreports.congress.gov/product/pdf/IF/IF10715 Venezuela: Overview of U.S. sanctions policy] (2024). Washington, D.C.; Congressional Research Service. While these initial sanctions were mainly aimed to block the company's access to US financial markets, later sanctions extended restrictions to prohibit all trade between companies under US jurisdiction and PDVSA. By 2020, sanctions had halted oil trade between the US and Venezuela.Brown, P., [https://crsreports.congress.gov/product/pdf/R/R46213 Oil market effects from U.S. economic sanctions: Iran, Russia, Venezuela] (2020). Washington, D.C.; Congressional Research Service. Since then, limited trade has resumed beginning in October of 2023.Kreil, E., & Hill, S. (2023, October 23). [https://www.eia.gov/todayinenergy/detail.php?id=60762 Venezuela’s heavy crude oil output increases are limited following U.S. sanctions relief.] U.S. Energy Information Administration.

Beginning in 2020 Iran began assisting Venezuela with maintenance and repair of refining facilities. {{as of|2022}} Iranian state firms were negotiating to repair Venezuela's largest refinery complex, the Paraguaná Refinery Complex which has a capacity of 955,000 barrels per day.{{cite news |author1=Mircely Guanipa |author2=Marianna Parraga |author3=Tibisay Romero |title=Exclusive: After revamping Venezuela's smallest oil refinery, Iran to fix the largest |url=https://www.reuters.com/business/energy/exclusive-after-revamping-venezuelas-smallest-oil-refinery-iran-fix-largest-2022-05-23/ |access-date=May 25, 2022 |work=Reuters |date=May 23, 2022}}

File:Venezuela Shortages 2014.png|Shortages leave shelves empty in this Venezuelan store.

File:Escasez de gasolina en Venezuela.png|Shortages of gasoline in Venezuela in March 2017

File:EEPPhoto2.png|Venezuela's Yearly Petroleum Exports Demonstrating The Recent and Continued Decline in Exportation{{cite web|last1=Cunningham|first1=Nick|title=Desperate to Boost Oil Production, Venezuela Moves to Devalue Currency|url=http://oilprice.com/Energy/Crude-Oil/Desperate-to-Boost-Oil-Production-Venezuela-Moves-to-Devalue-Currency.html|website=oilprice.com}}

File:EEPPHOTO1.png|Figure Depicting Venezuelan Exports and the Interdependence Between the U.S. and Venezuela{{cite news|title=Political risks focus attention on supply of Venezuelan oil to the United States|url=https://www.eia.gov/todayinenergy/detail.php?id=9651|access-date=2 October 2017|publisher=U.S. Energy Information Administration|date=22 January 2013}}

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• Corporación Trebol Gas C.A.

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{{Reflist}}

• {{Cite journal

|last= Painter |first= David S. |author-link= David S. Painter |year= 2012

|title= Oil and the American Century

|journal= The Journal of American History |volume= 99 |issue= 1 |pages= 24–39

|doi= 10.1093/jahist/jas073 |doi-access= free }}

• {{Cite book

|last= Randall |first= Laura |year= 1987

|title= The Political Economy of Venezuelan Oil

|location= New York, NY |publisher= Praeger

|isbn= 978-0-275-92823-0 }}

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{{DEFAULTSORT:History of the Venezuelan Oil Industry}}

Category:Geology of Venezuela

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Category:Economic history of Venezuela

Category:Petroleum in Venezuela