Petróleos de Venezuela Sociedad Anónima (PDVSA)

Petroleos de Venezuela Sociedad Anonima (“PDVSA”) is a State-owned company dedicated to the exploration, production, refining, marketing and transportation of Venezuelan oil. PDVSA was created by Decree No. 1.123, published in the Official Gazette (Extraordinary) No. 1.170, on August 30, 1975 as a result of the nationalization of the oil industry in 1975. Since that time, PDVSA has dominated the oil industry of Venezuela.

PDVSA is the world’s fifth largest oil exporter and is third in the ranking of the 50 oil companies in the world – exceeded only by Aramco (Saudi Arabia State-owned company) and ExxonMobil of the United States. Among PDVSA’s greatest assets are international Citgo refineries in the United States (of which owns 100%), the German Ruhr Oil (of which owns 50%), and Nynas in Sweden where it shares equal ownership with an oil company in Finland.

The Bolivarian Republic of Venezuela owns all the shares of PDVSA, which depends upon the Ministry of Popular Power for Energy and Petroleum. The 1999 Constitution requires PDVSA to maintain a monopoly of the Venezuelan oil, and PDVSA’s shares cannot be sold to individuals. The company, however, can partner with and provide concessions for the provision of any service related to their products pursuant to Article 5 of the Organic Law Reserving to the State the Industry and Commerce of Hydrocarbons, published in the Official Gazette (Extraordinary) No. 1.769, on August 29, 1975:

“The State shall carry out the activities indicated in Article 1 of this Law directly through the National Executive or through entities owned by it, being able to enter into the operating agreements necessary for the better performance of its functions, without these arrangements affecting in any case the very essence of the activities assigned. In special cases and when convenient to the public interest, the National Executive or the aforesaid entities may, in the exercise of any of the aforementioned activities, enter into association agreements with private entities, with a participation such that guarantees the control by the State and with a determined duration. In order to enter into such agreements, the prior authorization of the Chambers in a joint session shall be required, under the conditions [the Chambers] establish, once they have been duly informed by the National Executive of all relevant circumstances.”

Until 1999 , PDVSA (through its affiliates) had the monopoly of the oil industry in Venezuela. However, that same year, after the so-called “apertura petrolera”, other companies entered the Venezuelan market – such as Shell, BP and Texaco. These foreign companies were allowed to commercialize and sell petroleum products within certain limitations, such as a controlled pricing of their gasoline. This control continues independently of the international market prices. The local pricing is approximately .045 US dollars per liter of 91 and 95 octane gasoline. This is the least expensive gasoline in most if not all of the world.

In 2005 they stopped producing leaded gasoline so they would be in compliance with the international environmental rules.

According to the net income from sales that PDVSA reported in 2007, this company is the eighth largest in the world with a balance of $6,273 million US dollars (15% higher than in 2006). By comparison, Pemex of Mexico reported $4,287 million US dollars and EcoPetrol reported $2,800 US dollars for the same 2007 period.

PDVSA has the world’s third largest refining capacity with a production of 3.3 million barrels per day. PDVSA owns 24 refineries throughout the world, of which 18 are outside Venezuela and 6 in country. Refinador Paraquena in Falcon state (Venezuela) is the world’s largest refinery with a production capacity of 940,000 of crude every day. On its part, the refinery Puerto La Cruz has a production capacity of 200,000 barrels per day, and El Palito refinery has a capacity of 130,000 barrels per day.

Through Citgo, PDVSA owns eight refineries in the US. They are located at Houston, Texas, Illinois, New Jersey, Louisiana and Georgia. The production capacity of all the refineries in the US is approximately 1.12 million barrels per day. In Europe, the refining capacity is over 252,000 barrels per day and is produced by its affiliate Nynas in Nynasshamn (Sweden) and Antwerp (Belgium), as well as in the United Kingdom. Furthermore, approximately 608,000 barrels are refined every day at refineries in the Caribbean.

In May 2010, PDVSA purchased a 49% share of Refidomsa in the Dominican Republic for $133.4 million US dollars. In August 2009, PDVSA acquired 20% of the shares in the Canadian company Enbridge.