Petrocaribe Integration in Motion a Newsletter About Venezuelan National Oil Industry

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Caracas, july 2005 • # 1

Petrocaribe integration in motion A Newsletter about Venezuelan National Oil Industry

14 countries executed Petrocaribe Energy Cooperation Agreement last June 29 in Puerto La Cruz, on the north-eastern coast of Venezuela

Full Oil Sovereignty A revolutionary national oil policy 3 8 CompaniesCompanies awaitawait Venezuelan Ministry of Venezuelan gas 4 Energy and Petroleum 2 licenses The Oil to take over control Sovereignty Plan of export prices

Mission PDVSA Cuba: Ribas: Inaugural Office Empowering PDVSA´s 9 of Petrocaribe 1111 Venezuelans 1122 Plan Europa Solidarity and integration in motion 14 countries endorse the Petrocaribe Energy Cooperation Agreement

Caribbean high offi cials met » The governments of the ms with contributions from fi nancial last 29th June in Puerto La Cruz, a city region hailed this initiative and non-fi nancial entities, from funds on Venezuela’s northeastern coast, put forward by Venezuelan allocated from the fi nanced portion to decide on the immediate crea- of the oil invoice, as well as from President Hugo Chávez tion of Petrocaribe, and towards this savings generated by direct trade. end signed the Energy Cooperation Frías, which seeks to To activate the Fund, the Bolivarian Agreement which sets guidelines for guarantee energy security Republic of Venezuela will contribute the implementation of this initiative. and promote social and an initial capital of US$ 50 million. economic development, as The document in question defi nes well as the integration of Petrocaribe as an instrument that PDV Caribe Caribbean countries through enables the development of energy In order to begin operations within the policies and plans aimed at achieving the sovereign use of energy Petrocaribe framework, Petróleos de the integration of Caribbean natio- resources, sustained by the Venezuela (PDVSA) has set up a spe- ns through the sovereign use of the guiding principles of the cial purpose subsidiary under the name region’s natural energy resources, Bolivarian Alternative for the of PDV Caribe, which will begin opera- for the direct benefi t of its peoples. tions immediately by providing shipping Americas (ALBA) required to meet supply commitments. To achieve these aims, Petrocaribe is to be headed by a Ministerial Council, Freights resulting from these opera- which will meet at least once per year, will include the direct administration tions will be billed at cost, thereby made up of the Energy Ministers of the and management of Petrocaribe´s producing savings for the signa- respective countries. The responsibi- affairs, ensure the implementation and tory countries of the Petrocaribe lities of the Ministerial Council include monitoring of the decisions taken by Energy Cooperation Agreement. the coordination of policies, strategies, the Ministerial Council in conference, and long-range plans, along with the and submit to it the corresponding PDV Caribe guarantees a direct overseeing and holding accountable reports and recommendations. supply relationship, without third-party the Executive Secretariat’s manage- intermediaries, which will translate into ment, and approving the addition of further savings for consumer countries new members or eventual separations. ALBA-Caribe Fund in the area. The company will also be For the purpose of contributing to the responsible for organizing a logistics The Executive Secretariat will be economic and social development of network of ships, marine terminals, and headed by the Minister of Energy and the Caribbean community countries, storage facilities, including, whene- Petroleum of the Bolivarian Repu- the ALBA-Caribe fund will be created to ver possible, refi ning and distribution blic of Venezuela, and its functions fi nance social and economic progra- capacities with regard to fuels and 2 The New PDVSA Contact • J u l y 2 0 0 5 Investment

other products, assigning priorities to the countries with the greatest needs. The Rafael Urdaneta Project encompasses 29 areas in all, in which PDVSA estimates 26 TCF of potential gas reserves. Compensation and ﬁ nancing mechanisms

In addition to the beneﬁ ts already established in the San José Accord and the Caracas Energy Cooperation Accord, Venezuela will extend ﬁ nancing facilities to Caribbean countries with a lower relative development, based on quotas to be established bilaterally.

Long-term fi nancing of 30% of the oil invoice is being contemplated when the price is greater than or equal to $40 per barrel, of 40% if it 29 companies await to be is $50 per barrel, and of 50% is the price reaches $100 per barrel. granted 6 Venezuelan gas Energy effi ciency licenses next September An essential aspect of the work to be undertaken by Petrocaribe will be to include energy savings programs in future supply agreements. It can for A total of 29 Licenses to be awarded by the this purpose negotiate credits and national and inter- Ministry of Energy and Petroleum exchange technologies, so that the national compa- will have a duration of 25 years. The benefi ciary countries can develop nies ratifi ed their Venezuelan State may participate programs and systems that are highly interest in investing in Venezuelan through Petróleos de Venezuela with effi cient in terms of energy con- gas in April 2005. These companies up to a maximum share of 35%, once sumption, as well as other means which signed confi dentiality and participa- marketability has been declared. The will allow these countries to reduce their tion letters for Phase A of the Rafael gas produced will be mainly devoted oil consumption and expand coverage. Urdaneta Project, providing them with to meet domestic demand, while the project’s data pack, as part of the any surplus can be exported, as set It is worth noting that, for the purpo- company selection process for bid- forth in the Organic Law on Gaseous se of undertaking energy operations, ding on non-associated gas licenses Hydrocarbons. License awards are the Petrocaribe framework requires of over six offshore blocks in the Gulf to be issued in September, 2005. the existence of state oil entities in of Venezuela and off of Northeast the member countries. In this sen- Falcon, in the Northwest of Venezuela. The Rafael Urdaneta Project is made se, Venezuela is offering technical up of a total of 29 blocks, 18 located cooperation for the setting up of the This level of participation is seen appropriate state entities in countries as quite a success for a process where they do not already exist. that began last March 31st , in Venezuelan Los Taques, in the state of Falcon, Gas Reserves The Petrocaribe Energy Cooperation because these 29 companies are Agreement was signed by Antigua ratifying their confi dence in the and Barbuda, Bahamas, Belize, Cuba, actions the Ministry of Energy and Venezuela has the world’s 8th largest gas Dominica, Grenada, Guyana, Jamai- Petroleum has been undertaking. reserves. In an offshore area of 500 km2 ca, Dominican Republic, St. Kitts and it has an estimated potential of 100 TCF Nevis, St. Lucia, St. Vincent and the These oil companies are from 15 (trillion cubic feet) of natural gas, of which Grenadines, Suriname, and Venezuela. countries: Australia, Argentina, 65 TCF are estimated to be located in the United States of America, China, east coast and 35 TCF in the west coast. England, Russia, Japan, France, 165 Km2 of the above mentioned area is in Brazil, Spain, Norway, Netherlands, water that is less than 1,000 meters deep. Additional information may be obtained at: www.mre.gov.ve Italy, Canada, and Venezuela. The New PDVSA Contact • J u l y 2 0 0 5 3 Oil Regulation

in the Gulf of Venezuela and 11 in Agreements caused $260 million in losses for 2004 alone Northeast Falcon. Together, they cover an area of ap- proximately 30,000 square kilometers, The Oil Sovereignty Plan where probable gas reserves are estimated at moves forward with the revision 26 trillion cubic The Rafael Urdaneta feet (TCF). of operating agreements Project is a plan to develop the offshore Gulf The blocks that of Venezuela area and make up the Rafael the Northeast region of Urdaneta Project One of the values prized by From now on, the the State of Falcon, for » are in low explor- the workers of the New PDVSA is the exploration and production accumulated total amount of atory risk areas and achievement of having restored to of non-associated payments owed to contractors their geologic char- the Venezuelan people the natu- gaseous hydrocarbons. during the calendar year will It is part of the Bolivarian acteristics make ral rights they possess over their not exceed 66.67% of the government’s strategic them potentially hydrocarbons; rights which had plans aimed at promoting proliﬁc in gaseous been taken away from them for many hydrocarbons produced in the the development of the hydrocarbons, in years. This task continues, which is corresponding area because country’s gas potential in addition to being why the National Executive, com- it is inconceivable that the order to improve the quality close to currently plying with the sovereign mandate of life of Venezuelans, production of hydrocarbons productive reser- conferred to it by the Constitution, increase its gas exports to under this mode, would continue voirs. The blocks continues to take steps aimed at the international market, to generate losses to PDVSA. and leverage industrial have been located dismantling the industry’s exist- park development, all in shallow waters ing contractual structures, which in accordance with and in areas where threaten our national sovereignty. » All necessary steps should the Law on Gaseous there is oil industry be taken over the next months Hydrocarbons, the National infrastructure. As Minister of Energy and Petro- so that these agreements Development Plan, and leum and President of PDVSA Ra- the National Gas Plan. change to the partnership Gas demand is ex- fael Ramirez recently noted, during pected to increase, the nineties the sovereignty of mode, as foreseen in the current as a result of growing demand from the Venezuela’s oil industry was con- Organic Law on Hydrocarbons domestic oil, power supply, and petro- stricted by “globalization and the based in the principle that chemical sectors, as well as from inter- oil ‘Apertura’ discourse imposed the state should intervene national markets. Within this context, on the country by multinational directly in the oil business, the Ministry of Energy and Petroleum oil companies, with the backing of but could perform activities is promoting the development of the local political sectors and the man- country’s gas potential in order to im- aging elites of the old PDVSA.” in partnerships, in which it prove the quality of life of Venezuelans posseses 50% or more of the and to leverage industrial park develop- Among the measures already social capital. ment, pursuant to the Law on Gaseous taken to reverse that process are Hydrocarbons, the National Develop- the increase of the royalty to be ment Plan, and the National Gas Plan. paid by the companies that oper- agreements because “the fee clauses ate in the Orinoco Oil Belt to 16.66% based on the volume and price of Additionally, this effort will further and, more recently, the revision of hydrocarbons produced in the areas the business opportunities of the the 32 operating agreements entered of operation,” which were agreed to Transguajiro Gas Pipeline, which will into between 1992 and 1997 by with the companies exploiting these ultimately facilitate the transport of gas Petróleos de Venezuela with national areas, “contravene the nature of a to Colombia and Central America, areas and international oil companies. simple service contract, which was where we are implementing energy the structure foreseen in the 1975 Na- integration processes to promote the As a result of a legal and technical tionalization Law.” The above analysis sustainable development of these fellow study it carried out, the Ministry of also underlines that these agreements peoples of the region. Energy and Petroleum advised PD- are incongruous with the present VSA to review the accounts of these Organic Law on Hydrocarbons.

4 The New PDVSA Contact • J u l y 2 0 0 5 Ramírez believes that the necessary had to be approved by the Congress, conditions to undertake a healthy while the operating agreements were Ministry of Energy and discussion process are present, the conceived as performing a service Petroleum Resolution aim being to correct these vices over a fi nite time period. However, this of April 12, 2005 that are “illegal and contrary to the legal fi gure was used for the purpose legal framework in force at the time of handing over large acreage for the these agreements were signed.” purpose of producing oil, a process ithin the framework of the new strate- exclusively reserved for PDVSA. W gies being developed by the Natio- nal Executive, which is aimed at obtaining Bad business deals strict compliance with applicable legislation Under the shadow of the harmful “Oil “The old PDVSA was and the development of the hydrocarbons Opening,” PDVSA undertook 32 agree- essentially anti-national,” sector in terms of the people’s well-be- ments with various oil operators, who ing, the following resolution was issued: received an equal number of areas in says Energy Minister The Ministry of Energy and Petroleum, the national territory for development. Rafael Ramirez. based on articles 8, 29 and 30 of the Organic Law on Hydrocarbons, and These areas were awarded directly in accordance with article 117 of the or through tenders, the latter being In short, these agreements provided a Organic Law on Public Administra- one of the forms considered in Article cover for disguised concessions, which tion, instructed PDVSA as follows: 5 of the 1975 Nationalization Law, were illegal because they were never which specifi ed two possible types of approved by Congress. In practice, First: In the shortest time possible, all relationships: operating agreements argues Ramirez, these companies companies that are signatories to the and association agreements. The latter ended up being oil producers, rather operating agreements must rectify the vices confi rmed in each and every of the operating agreements on hydrocarbons which have been entered into, for the purpose of having these subsumed into the legal framework currently in force.

Second: Regarding each of these agreements and without detriment to the former, it should be ensured that the total accumulated payments due to a contractor do not exceed during a calendar year 66.67% of the hydrocarbons produced in the corresponding area, since it is unsustainable for the production of hydrocarbons under this mode to generate losses to PDVSA.

Third: Petróleos de Venezuela and its subsidiaries should, in coordination with the Ministry of Energy and Petroleum, provide support to the National Integrated Service for Customs and Taxation Administration (SENIAT), for the purpose of ensuring income tax payments, in accordance with real proﬁ ts, with the aim of putting an end to the existence of contractors who for years have obtained important proﬁ ts without ever having paid any taxes.

Fourth: Within a six-month period, all necessary steps should be taken to convert the operating agreements into partnerships, an association mode foreseen in the current Organic Law on Hydrocarbons.

The New PDVSA Contact • J u l y 2 0 0 5 5 than service companies. Whenever ments from PDVSA; one of them for PDVSA, made payments as incentives, Congress attempted to look into operating costs and the other for so that the operators would continue these irregularities in the old PDVSA, amortization of invested capital. producing. Some operators received continued Ramirez, management as much as one million dollars every refused, thereby succeeding in three days. These incentives are paid keeping the country ignorant. on the volume produced, and vary The National Oil Sovereignty Plan, “The association directly with per barrel prices, which currently being pushed forward by the agreements had to makes them completely unsustain- National Executive, seeks to correct able for any company. In this way this series of bad business deals. be approved by the contractors increase their profi ts to the Congress, while the detriment of PDVSA and the nation. The tendering process used for these agreements dwelt on the exploita- operating agreements A total of 13 operating agreements tion of inactive fi elds, considered at emerged from the third and fi nal round the time to be marginal producers. At were conceived as a (1997). In these, contractors receive a later stage, however, areas which service over a fi nite time a payment to cover base produc- never would have been dedicated tion costs; which is to say, that of the to production were awarded, thus period…these agreements production owed to investments carried revealing intentions to privatize the provided a cover for out by PDVSA prior to the awarding national oil industry. At present, the of the corresponding areas. These contractors for these fi elds produce disguised concessions” companies receive between 30% and more than 500,000 barrels per day. 100% of the incremental production’s value. Direct losses sustained by According to Ramirez, in the fi rst PDVSA from the three rounds amount, quarter of 2005 these barrels had an for 2004 alone, to $259 million. average market value of $34.67 per barrel. In this case, he explained, Additionally, the majority of these the contractors’ bill for the cost of agreements paid little or no income their services of up to $18.17 per tax, resulting in losses, according barrel, equivalent to 52% of market to an investigation being carried out value, while the barrels produced by Venezuela’s national tax author- by PDVSA through its own efforts ity SENIAT, of $2 billion in tax arrears cost the company $4 per barrel. accrued over the past ten years.

The Operating Agreements in ques- Ramírez insists that these Operat- tion were tendered in three separate ing Agreements arose as a way of rounds. The costs associated with cutting back PDVSA’s share of the these production agreements were oil sector’s productive activities, in indexed to US energy-output related effect opening the doors to eventual prices, which makes them directly privatization. This cutting back, he related to the price of oil produced. More areas were tendered in the argues, meant that part of the activi- second round (1993-1995), resulting ties which PDVSA had been directly Three contracts emerged from the in 11 agreements in which, in addition engaged in, such as ships, terminals ﬁ rst round (1992-1993), the win- to the indexation of costs to oil prices and IT support, were privatized. Ac- ning operators receiving two pay- and volumes, the contractors received cording to Ramírez, this privatization productionproduction bonuses. This is to say process responded to the thesis of that the VenezuelanVenezuelan State, throughthrough “growth without growing,” espoused by the industry’s old management, and which in practice meant that core corporate activities could be outsourced to private companies.

The “Oil SovereigntySovereignty Plan” aims to addressaddress and reversereverse these barriers to the establishment of an oil industryindustry in VenezuelaVenezuela that beneﬁ ts all citizens.

6 The New PDVSA Contact • J u l y 2 0 0 5 The Minister of Energy and Petroleum

and President of PDVSA

Rafael Ramírez Carreño in an address

to the National Assembly FullFull OilOil Sovereignty

A revolutionary national oil policy

» Summary of an With the Apertura of the oil The internationalization process was address by the Minister industry to foreign investment during structured over a complex system the 1990s, a veritable assault on of more than 70 companies, with an of Energy and Petroleum Venezuelan oil took place. This assault organizational and fi nancial structure and President of Petróleos was coordinated by international designed to evade State control over de Venezuela, Rafael D. institutions from the consuming these investments. The old PDVSA was Ramírez Carreño, before countries and the usual major privatizing its oil production activities the special commission transnational companies, which, through a policy which it would continue in complicity with the country’s so developing with the Orinoco Oil Belt of the National Assembly called oil meritocracy, the oligarchy association agreements. The operating set up to investigate and their political representatives, agreements were structured in such irregularities detected by conspired against the Venezuelan a way as not to pay royalties, which the Energy and Petroleum State, promoting its erosion and would be taken care of by PDVSA. At Ministry in the design, the subsequent economic and the same time, it was also arranged content, and execution social crisis in our country. for them to pay of operating agreements, income tax, not With the oil Apertura, transnational at the oil rate strategic associations capital expected to expropriate then at 67,7%, and internationalization from the Venezuelan people but at the non- business ventures, from the sovereign handling and use oil tax rate of 1992 to 1997, a period of our main resource: oil. 34% because known as the oil “Apertura”. they were The old PDVSA was essentially conveniently anti-national, a fact which was no held to be secret to anyone because PDVSA plain service and its subsidiaries were run by companies. This an entrenched perverse and anti- meant that a production of 499,000 national meritocracy, always lying in barrels per day was assigned the wait for new opportunities to attack. same tax rate as that of a bakery or a The New PDVSA Contact • J u l y 2 0 0 5 7 drugstore; in other words, a deliberately along with the contractors, agreed that the management of PDVSA. We will es- arranged massive oil tax evasion. everything would always be paid in tablish the principle that the State, and dollars, a situation we have just put an therefore the Venezuelan people, will The oil elite successfully dedicated end to by order of the President of the obtain a minimum of 50% of the market itself to preventing the State from having Republic himself, and which requires value of each barrel produced, by way access to the industry’s accounting a coordinated action with the Central of royalty plus income tax. The fi scal records. Bank of Venezuela, since there is a “fl oor” that the meritocracy of the old clear violation of the exchange controls PDVSA aspired to, was zero. Zero roy- On reviewing income tax statements, in force. This situation is unaccept- alty and zero income tax. The strategy SENIAT, the national tax authority, was able because it makes a mockery deployed together with transnational surprised to fi nd that the majority of of our institutions and our laws. interests to reach this objective—that companies, among them the large of expropriating our oil wealth—led us transnationals, were simply not paying We are dismantling this black box piece into a deep economic and social crisis any income tax at all. The PDVSA elite, by piece, to defi nitively shed light on which systematically impoverished millions of Venezuelans in all walks of life. Throughout the nineties, the old oil elite’s anti-national project went forward Before the year 2005 is over in the form of three streams: internationalization, operating agreements, and strategic association agreements. Venezuelan Ministry of Energy The new PDVSA, whose Venezuelan and Petroleum to take over birth certifi cate is beyond doubt, is putting an end to this perverse structure. control of export prices Be assured that the national government will not falter in enforcing our laws “A system of ‘formula’ type price-setting and in standing up for our sovereignty, Prices are to be made » will be established, similar, for example, and we will only work with companies public and will always reflect to those used by Mexico and Saudi which respect these principles. the best conditions in each of Arabia,” said Ramírez. “This system ensures that PDVSA will sell at the In September 2004, within the the markets. same price to all its customers within framework of the Full Oil Sovereignty the same geographical region, whether espoused by President Hugo Chávez they are affi liated or not,” he explained. Frías, our Ministry eliminated the 1% Before the year is over, the Boli- rate for the Orinoco Oil Belt asso- varian Republic of Venezuela’s Ministry The Minister pointed out that prices ciations. Defi nitively, in economic of Energy and Petroleum will again be are to be made public and will always terms, all of the operating agree- in a position to control export prices refl ect the best conditions in each of ments now generate a 30% royalty. for crudes and products, according the markets. “In this manner we will to Energy and Petroleum Minister and shed full light on the mechanisms used In view of the facts, and with the anti- President of PDVSA, Rafael Ramírez. to set fi nal sales prices, something national role of the old PDVSA meritoc- which hithertohitherto had been hidden in racy made evident, it does not seem at one of the blackest boxes of the old all strange that their ideological affi nity �� PDVSA,” he said. with transnational interests led them to a violent confrontation with the State on Additionally,Additionally, these April 11th, 2002, followed by its active mechanisms which involvement in the criminal sabotage areare being develo- against our oil industry, which lasted ped by the MinistryMinistry from December 2002 to February 2003. of Energy and Petroleum,Petroleum, will be The fact is that PDVSA now belongs useful to SENIAT,SENIAT, to the people. It is perfectly aligned the tax authori- with the State’s guidelines, and is in ty,ty, in controllingcontrolling the hands of a patriotic manage- the associations’ ment, its workers, our Armed Forces transfer prices. and our people, always vigilant

8 The New PDVSA Contact • J u l y 2 0 0 5 and ready to defend our main in- and we retain all our moral and ethical ment has taken on the commitment dustry, and our sovereignty. strength to undertake a permanent of rescuing and redistributing the oil self-analysis, shedding light on the revenue for the beneﬁt of the people. The new PDVSA now has the face management of our industry, as we of the people and it has multiplied are doing now, and regaining further The new PDVSA has been assigned its presence in the government’s strength after the terrible events of the a wonderful role: that of contributing social missions to help the needy: oil sabotage and its consequences. effectively, with all our capacity, to the Robinson, Barrio Adentro, Ribas, liberation of our people from the dark- Mercal and Milagro. This extraordi- The new PDVSA is a Venezuelan ness cast by poverty and exclusion. nary social contribution is traveling company, proudly Venezuelan, and throughout the country like a liberating strongly rooted in the homeland. The The new PDVSA is an sword in the service of our people. old oil elite’s, the oligarchy and its instrument of the people. political representatives, as expected, The new PDVSA has had sufﬁcient complain to high heaven for their lost technical and operating capacity to privileges. This is the extension of overcome the sabotage’s attempts the same struggle being fought since and to restore our industry to April 11th of 2002. The popular and Minister Ramirez’s complete address operational excellence and growth, revolutionary orientation of our govern- is available at www.pdvsa.com

Petróleos de Venezuela is now present in Havana

PDVSA Cuba: Inaugural Office of Petrocaribe

Petróleos de Venezuela PDVSA Cuba plans to maximize the op- (PDVSA) recently opened its portunity potential offered by the region commercial and business office in and to reduce the presence of inter- Havana under the name of PDVSA mediaries for the purpose of lowering Cuba, a subsidiary which will boost the costs and guaranteeing the broadest Petrocaribe project within the framework access possible to energy at fair prices. of the Bolivarian Alternative for the Petrocaribe, together with Petrosur and Americas (ALBA), an alternative which Petroandina, are part of the Petroame- has arisen as a counterproposal to the rica Energy Integration Initiative which, PDVSA Cuba, a subsidiary of Free Trade Area of the Americas (FTAA). when fully established, could count on Petróleos de Venezuela (PDV- aggregate potential oil and gas reser- SA), will work jointly with Cuba Venezuela, Cuba, Argentina, Uruguay ves of up to 11.5% of the world total. Petróleo (CUPET) to increase and Brazil are some of the countries the possibilities of Caribbean oil seeking a new integration model for and gas through exploration and Latin America and the Caribbean Regional integration and production processes (upstream), which would be based on the prin- the multipolar world as well as refining, storage and ciples of mutual cooperation and marketing projects (downstream). complementation together with the Petrocaribe, as part of the Petro- sustainable social and economic américa Energy Integration Initiative, Petrocaribe aims to promote development of the region’s peoples. has been preceded by the San José the social progress of the Ca- Agreement and the the Caracas Energy ribbean and Central American PDVSA Cuba intends to strengthen and Agreement, through which Venezuela peoples by providing a free and expand the progress already made supplies oil and refined products under democratic access to energy at by Petrocaribe in the vast area of the special financing conditions to vario- fair and reasonable prices. Caribbean basin. To achieve this goal, us countries in Latin America and the The New PDVSA Contact • J u l y 2 0 0 5 9 Caribbean . Within this context, PDVSA Quote of the Month Petrotips Cuba has been created as a contribution to the promotion of regional integration as a strategic option towards the establishment of a more balanced and The problem with ownership over fair multipolar world; one which guaran- “natural resources and its relation to tees that the best use is made of the prices is definitely a question of politics region’s energy resources and their de- and not of economics. As a matter of velopment . On this basis it is possible fact, it is also an ideological issue, to to not only maximize national and regio- the extent that in the current economic nal participation in the use of goods and services for the production and mar- literature, particularly that which refers PDVSA Gas sets sales record to oil, the owners of natural resources keting of oil and gas in the region, but in domestic market also to strengthen South-South coope- have generally disappeared as actors PDVSA GAS set a gas sales record in that exert their legitimate rights. ration and to encourage technological, the national market when it reached economic and cultural exchanges. ” 1.967 billion of standard cubic feet per Bernard Mommer, day (BSCFD) of gas sales both for the PDVSA Cuba’s headquarters in Havana industrial and domestic sectors. This Global Oil and the Nation State, growth in domestic gas sales reflects will primarily focus on the region and Oxford University Press, 2002 promote the undertaking of projects the steady effort the New PDVSA GAS related to the production and marketing is making to achieve a greater and better distribution of our hydrocarbons. of fuels, lubricants and other bypro- Once again, gas consolidates its posi- ducts targeted at Central America and PDVSA in figures * tion as raw material and energy input countries located in the Caribbean for the domestic and the industrial sec- Basin. PDVSA Cuba will also coordi- tors in our country, while increasing the nate projects regarding technological quality of life of the Venezuelan people. exchange and human resource training within the hydrocarbons sector.

Venezuela matters

PDVSA to undertake new exploration studies in Lake Maracaibo Petróleos de Venezuela will undertake new exploration studies in Lake Maracaibo where reserves of 2 billion barrels of hydrogen sulphur associated hydrocarbons have been estimated, an- nounced amoung Exploration and Pro- duction Vice-President Luis Vierma. “We need to develop a technology to efﬁ- ciently separate this component and to be able to use these reserves,” he said.

This activity makes part of the exploration and production program being executed by PDVSA, which has resulted in the discovery of major reservoirs in the three Corporate divisions. The plan was implemented to carry out re-exploration activities in areas known to hold reserves and exploration activities in areas that have never been drilled before. 10 The New PDVSA Contact • J u l y 2 0 0 5 Social investment

While chairing the graduation ce- President Chávez chaired the graduation ceremony of the first remony of the ﬁrst 20,686 high school group of students of Mission Ribas students of Mission Ribas—a high- school level adult education program— Venezuelan President Hugo Chávez Mission Ribas: building Frías stated that the educational scheme implemented by Mission Ribas intends to break the chains of exclusion capacities and empowering set by the old capitalist model. Para- phrasing Antonio Gramsci, President thousands of venezuelans Chávez said that, “it is senseless to prepare a qualiﬁed worker to be conti- nuously exploited.” He also explained that Mission Ribas represents a way to open new paths towards Venezuela’s liberation on the basis of an educational process focused on acquiring skills to take control of their lives through cooperatives, small and middle enter- prises, and continuing education in order to improve their standard of living.

In this regard, President Chávez invited graduates to enthusiastically commit themselves to the new Re- public being built. “As graduates, you represent Mission Ribas, moving towards Mission Sucre [university-level adult-education], with which you’ll be consciously developing further skills”, President Chávez emphasized. The implementation of Mission Ribas Republican woman, people able to President Chávez thanked the tech- is carried out by the Ministry of Energy value themselves and their communi- nical and methodological support and Petroleum (MEP), undertaken by ties, in order to live in a democratic, provided by the Republic of Cuba and means of the “José Félix Mission Ribas” participative, and co-responsible way, also stressed the work carried out by Foundation, which counts with the within a Bolivarian framework; through facilitators, volunteers and coordina- sponsorship of Petróleos de Venezu- a holistic vision, in harmony with the tors of Mission Ribas. “All of them have ela, S.A. (PDVSA). To the state-owned environment; with the idea of building been a supreme example of sacrifice,” corporation, producing oil barrels and a society characterized by people liv- said Chávez. Likewise, he made a generating revenues to the nation is as ing together in cooperation, solidarity, special reference to the Ministry of important as preparing a newly quali- justice, and therefore peace,” ac- Energy and Petroleum and PDVSA, fied graduated high school student who cording to the Manual of Educational whose effort, support, and resources overcomes social exclusion to then be Policy of the José Félix Mission Ribas. have made possible the acceleration reinserted into the new and optimization of Mission Ribas. nationwide educational model. PDVSA thus “Now PDVSA belongs to Venezuelans; sees itself as a force now it truly belongs to Venezuela”, of change respon- President Chávez assured. He then sible for empowering pointed out that, “this year, thanks new Venezuelans. to domestic savings and production and oil price recovery, we have The profile of these allocated $209 million to economi- newly graduated cally and financially support Mission high school students Ribas”, which provided services to is, “a New Bolivar- 718,309 active students, of which ian Republican man, 200,000 receive scholarships. a New Bolivarian The New PDVSA Contact • J u l y 2 0 0 5 11 Venezuela´s government and corporations synergize through

PDVSA´s Plan Europa

Born out of PDVSA’s need to strengthen its corporate position and network in Continental Europe, Plan Europa’s aim is to develop a Plan Europa promotes The first set of projects involves comprehensive program of activi- promoting joint ventures between direct“ investment and ties that will further both PDVSA and Venezuela and the target countries Venezuela’s industrial development the formation of strategic to strengthen the Venezuelan goals in the hydrocarbon sector. supply chain of goods and services alliances with European to the Hydrocarbon sector: In its first phase, Plan Europa has suppliers and contractors” identified 5 target countries where So far, the Plan Europa team has particular collaborative initiatives have produced a refined tool for detecting been carried out: Norway, the United opportunities for Joint Ventures in Kingdom, Spain, Italy, and France. industrial segments with medium Contact has also been initiated with local content that would greatly partners in other countries: Austria, benefit from financial investment, as Russia, the Netherlands, and Denmark. well as knowledge and technology transfer from European SMEs. The initiative is centered on the three main competency areas of As part of the Plan Europa Initiative, PDVUK’s Corporate Positioning Unit: industry meetings in Norway, the United Kingdom, Italy, and Austria have been • Domestic Capital Development organized to bring together Venezuelan • Investor Relations suppliers and providers to the Oil and • Reputation Management isting diplomatic representation Gas Industry and their European peers. in key European countries. These maintain a continuous feed- The second set of projects is con- To create a network of effective commu- back both with the Corporation cerned with best practice transfer from: nication links, Plan Europa relies at the and with the country at large. level of strategic planning on guidelines • The North Sea from high–level government and corpo- • The Rest of Europe Plan Europa’s objectives rate management. At a functional level, • To help develop the local supply a support network has been estab- This project involves reporting on signif- chain which supports Venezuela’s lished, involving close ties with different icant matters related to Sustainable De- Oil and Gas Industry, by promoting PDVSA Units in Venezuela, as well as velopment, Supply Chain Management, direct investment and the forma- industrial chambers and associations. Social Corporate Responsibility and best practices in the European Oil and tion of strategic alliances with Euro- Today the Plan Europa team maintains Gas Sector, as well as the production pean suppliers and contractors. a dynamic relationship with its Euro- of learning tools aimed at transferring • To promote the transfer of best pean partners, Venezuelan Embassies knowledge to PDVSA’s supply chain. practices from Europe to PDVSA. in Europe, the Venezuelan Ministry of Energy and Petroleum, PDVSA Head Furthermore, Plan Europa coordi- • To help European operators in Office, and Venezuela at large. nates a training program that ad- Venezuela identify and consoli- dresses PDVSA’s need to raise date business opportunities. Current Plan Europa projects awareness among managers, staff, and vendors about Sustainable The current Plan Europa projects The Plan Europa network Development policy and practices were chosen by ranking Plan The Plan Europa project is coor- Europa’s objectives in accordance The third project deals with monitoring dinated from PDV (UK) in London with the specific opportunities Venezuela for business opportunities and makes use of Venezuela’s ex- offered by each European country. on behalf of European operators.

The New PDVSA Contact: a publication of Petróleos de Venezuela, S. A. Corporate Public Affairs. Caracas, June 2005. Fax: (58 + 2 + 12 ) 708 44 60. Legal Deposit: If13820053502083. For questions or comments e-mail: Daniel Cortez at [email protected] Photography: PDVSA ﬁles. This publication may be viewed at our Web site: www.pdvsa.com 12 The New PDVSA Contact • J u l y 2 0 0 5