Oil and gas reserves

Crude oil: 75.27 billion barrel (2006)

Natural gas: 4.276 trillion m³ (2006)

Gas sector

According to the statistics and information of oil and gas Journal of Venezuela, 151 trillion m³ of the world gas proved reserve are in Venezuela. Therefore, it has the second rank of the western hemisphere in this case (the United States has the first rank). It has the ninth rank in world in this respect. Venezuela produced 1.05 trillion m of gas within 2003 that totally consumed for domestic purposes. Oil and gas reservoirs are common in this country and oil production will cause to produce gas.

In accordance with the available data, about 70% of Venezuela natural gas is used in petroleum industry to inject for crude oil exploitation. As the western part of the country does not have gas reservoirs, therefore, crude oil production is reduced in this region. To solve this problem, Venezuela imports gas from Colombia.

PdVSA Company is responsible for executive affairs of gas industry. The significance of gas industry is recognized from late 1990s. A law was approved related to it in 1999. This law has great emphasis on investment of private sector to develop gas industry and domestic systems related to gas, gas refinery, distribution and consumption of gas inside the country, etc. Domestic production and consumption of natural gas is designed in the following graph;

Oil sector

In 20 century, oil became the most important part of Venezuela’s economy. The biggest oil production was from 1929 to 1970. Within the mentioned period, Venezuela was the biggest oil exporter in the world.

The first oil well drilling in Venezuela occurred in 1917. After the first world war, the US and British international oil companies commenced to exploit crude oil in this country. Weak laws respecting wage and tax plus unclear local and national policies encouraged different oil companies to invest enormously in this sector of this country.

Development of corruption among foreign oil companies and increment of domestic pressures by labors and intellectuals caused to nationalize the oil industry of this country in 1974. A national commission was also formed by the President Perez to manage and lead this industry. Nationalization Oil Industry Act was approved in 1975. A leading company under the name of PDVSA was established to supervise all activities related to oil industry in 1977. This company when established included 14 foreign companies and one national company. When oil prices went up in 1981, the oil income of Venezuela was considerably increased. A lot works were carried out with the support of this income by Venezuelan government during 1970s. Of course, this situation caused to increase foreign debts of this country. After recession in the oil market in 1986 and reduction of oil price up to 50%, the Venezuelan government faced to a financial crisis. The government decided to develop the industry diversification plan to reduce the economy emphasis on oil income. This program caused to develop the oil and gas refining industry, petrochemistry industry, various mines and exploration of new reserves. Oil exploration was the most important plan of PDVSA remaining from 1980s. In fact, there was no attempt to explore more oil reserves after nationalization of oil industry in 1976. Since oil companies predicted this event in Venezuela from 1958, hence fewer attempts were carried out to explore new oil reserves during 1960s and 1970s. Various crude oil reserves were explored and almost the proved reserves of this country increased twice.