Instruct: Given a question, retrieve relevant passages that can help answer the question.
Query: When was oil discovered in Venezuela?
It was the blowout of the Barroso No. 2 well in Cabimas in 1922[9] 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.[10] 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.[10] Venezuela's oil production became a major factor in policy making in Washington before the Second World War.[10]
In 2008, it had net oil exports of to the United States. As a result of the lack of transparency in the country's accounting, Venezuela's true level of oil production is difficult to determine, but OPEC analysts estimate that it produced around of oil in 2009, which would give it 234 years of remaining production at current rates. In 2010 Venezuela reportedly produced 3.1 millions barrels of oil daily and exporting 2.4 million of those barrels per day. Such oils exports brought in $61 billion for Venezuela. However, Venezuela only owned about $10.5 billion in foreign reserves, meaning that its debt remained at $7.2 billion when 2015 rang out.
In October 2000, Chávez and Castro signed the "Convenio Integral de Cooperación" under which Venezuela will send per day of oil to Cuba and will receive technical support in the fields of education, health care, sports, science and technology. In February 2005, Venezuela increased its discounted oil shipments to Cuba to per day which represents less than 3.5% of Venezuela's total oil production. But for Cuba, is of high value. Much of this oil obtained from Venezuela is subsidized. According to 2005 estimates, Venezuela is providing Cuba nearly to of oil free of cost, for a total "gift" of $6–8 billion until 2020. Cuba is reportedly re-exporting 40,000 to of oil because Cuba produces oil domestically and total oil consumption in Cuba is .
Oil was discovered in the early 20th century, and today, Venezuela has the world's largest known oil reserves and has been one of the world's leading exporters of oil. Previously, the country was an underdeveloped exporter of agricultural commodities such as coffee and cocoa, but oil quickly came to dominate exports and government revenues. The 1980s oil glut led to an external debt crisis and a long-running economic crisis. Inflation peaked at 100% in 1996 and poverty rates rose to 66% in 1995 as (by 1998) per capita GDP fell to the same level as 1963, down a third from its 1978 peak. The recovery of oil prices in the early 2000s gave Venezuela oil funds not seen since the 1980s. The Venezuelan government under Hugo Chavez then established populist social welfare policies that initially boosted the Venezuelan economy and increased social spending, temporarily reducing economic inequality and poverty in the early years of the regime. However, such populist policies later became inadequate, causing the nation's collapse as their excesses—including a uniquely extreme fossil fuel subsidy—are widely blamed for destabilizing the nation's economy. The destabilized economy led to a crisis in Bolivarian Venezuela, resulting in hyperinflation, an economic depression, shortages of basic goods and drastic increases in unemployment, poverty, disease, child mortality, malnutrition and crime. By 2017, Venezuela was declared to be in default regarding debt payments by credit rating agencies. In 2018, the country's economic policies led to extreme hyperinflation, with estimates expecting an inflation rate of 1,370,000% by the end of the year.
Venezuela is a charter member of the UN, OAS, UNASUR, ALBA, Mercosur, LAIA and OEI.
Nationalization become 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.[20]
Venezuela is a federal republic located on the northern coast of South America. Oil was discovered in the early 20th century and, today, Venezuela has the world's largest known oil reserves and has been one of the world's leading exporters of oil. Previously an underdeveloped exporter of agricultural commodities such as coffee and cocoa, oil quickly came to dominate exports and government revenues. The 1980s oil glut led to an external debt crisis and a long-running economic crisis. Inflation peaked at 100% in 1996 and poverty rates rose to 66% in 1995 as (by 1998) per capita GDP fell to the same level as 1963, down a third from its 1978 peak. The recovery of oil prices in the early 2000s gave Venezuela oil funds not seen since the 1980s. A destabilized economy led to a crisis in Bolivarian Venezuela, resulting in hyperinflation, an economic depression, shortages of basic goods and drastic increases in poverty, disease, child mortality, malnutrition, and crime.
It did not take much geological expertise to know that Venezuela had large petroleum deposits, because the petroleum oozed out from seeps all over the country and an asphalt lake had formed naturally. Venezuelans themselves had tried to extract oil for a small hand-pumped refinery early in the 20th century. When word spread internationally of Venezuela's oil potential, representatives of large foreign companies came to the country and started lobbying for rights of exploration and exploitation, and Gómez established the concessionary system. Venezuela had inherited from Spain the law that the ground surface—presumably, as deep as a plow or a water well went—could belong to individuals but everything under the soil was state property. Thus, Gómez began to grant huge concessions to family and friends. Any one who was close to Gómez eventually would become rich in one way or another. Gómez himself accumulated immense expanses of grasslands for cattle-raising, which had been his original occupation and was a lifelong passion. The Venezuelan concessionaires leased or sold their holdings to the highest foreign bidders. Gómez, who didn’t trust industrial workers or unions, refused to allow the oil companies to build refineries on Venezuelan soil, so these were built them in the Dutch islands of Aruba and Curaçao. The one in Aruba was for a time the second largest in the world, after the one in Abadan, Iran. Although the Venezuelan oil boom started around 1918, the year when oil first figured as an export commodity, it took off when an oil well called Barroso blew a spout that threw up an average of the equivalent to 100,000 barrels a day. It took five days to bring the flow under control. By 1927, oil was Venezuela's most valuable export and by 1929 Venezuela exported more oil than any other country in the world.
As crude oil imports form the bulk of bilateral trade, the total value of trade is heavily dependent on crude oil prices. Bilateral trade between India and Venezuela totalled US$5.83 billion in 2015–16. This was much lower than the $14.46 billion, $14.22 billion and $11.99 billion recorded in 2012–13, 2013–14 and 2014–15 respectively. In 2015-16, crude oil exports from Venezuela to India stood at $5.68 billion, while non-oil exports from Venezuela accounted for just $23.18 million. Apart from crude oil, the other major commodities India imports from Venezuela are iron pellets and electrical cables.
The policy changed in the 1990s, when Venezuela introduced a new oil policy known as , which opened its upstream oil sector to private investments. This facilitated the creation of 32 operating service agreements with 22 separate foreign oil companies, including international oil majors like Chevron, BP, Total, and Repsol-YPF. The role of PdVSA in making national oil policy increased significantly. In 1999, Venezuela adopted the Gas Hydrocarbons Law, which opened all aspects of the sector to private investment.
The biggest obstacle Chávez faced in exporting Venezuelan oil to China was due to the fact that during the early 2000’s, China did not have the machinery in their refineries capable of processing the highly sulfurous Venezuelan oil. This meant that the only oil that China was interested in importing was a specific type of low-grade oil called “orimulsion” which was mainly used to make asphalt. Another factor that constrained Venezuela’s ability to export its oil to China was the size of Venezuela's oil shipment tankers. The tankers were simply too big to fit through the Panama Canal and would have to take a longer route that traversed around southern Africa. The final obstacle to the exportation of oil was a diplomatic one. Since about 60 percent of Venezuela’s oil exports were going to the United States, Chinese officials were worried that by buying more oil that they would become involved in the disputes between Chavez’s anti-US regime and the Bush administration. Because of these factors, in 2005, Venezuela was only exporting 140,000 barrels of crude orimulsion per day. In addition, Venezuela made up only 2 percent of China’s imports and exports in 2003.
Keying on cashflows from China and Russia, Dallen would help discover and publicize that Venezuela's state-owned oil company PDVSA was so short of cash that they had mortgaged 49.9% of their U.S. oil refinery Citgo to Russia's state-owned oil company Rosneft and he would later be called upon to Testify about Russia's actions before Congress. Likewise, Dallen was also able to document the breakdown in good relations between China and Venezuela by discovering an international arbitration and lawsuit brought by Sinopec against PDVSA for non-payment.
According to Cannon, the state income from oil revenue grew "from 51% of total income in 2000 to 56% 2006"; 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. When oil prices dropped in 2015, this worsened the crisis Venezuela was experiencing from the government's mismanagement.
Venezuela's development of its oil reserves has been affected by political unrest in recent years. In late 2002, nearly half of the workers at the state oil company PDVSA went on strike, after which the company fired 18,000 of them. Venezuela's crude oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries. Venezuela continues to be one of the largest suppliers of oil to the United States, sending about to the U.S. Venezuela is also a major oil refiner and the owner of the Citgo gasoline chain.
Throughout Chávez's early life, Venezuela had enjoyed a period of economic and democratic stability that was remarkable in South America at the time. This stability was partly based on Venezuela's massive foreign exchange earnings gained from petroleum exports. Venezuelans referred to their society as "Venezuela Saudíta" ("Saudi Venezuela"—a parody of Saudi Arabia's heavily modernized and oil-based economy). When Saudi Arabia itself and other United States-aligned oil producers significantly raised their production output—in an attempt to bring about economic implosion in the heavily oil-dependent Soviet Union—a global oil glut ensued. Oil prices collapsed to historic lows, and Venezuelan oil earnings, and economic and social stability in general, were suddenly imperiled: in the 1980s, per-capita gross domestic product (GDP) fell by more than 20%, and by 1989 real wages fell to a third of their previous levels. The nation also faced a dire balance of payments crisis.
Venezuela has been producing oil for nearly a century and was an OPEC founder-member. In 2005, Venezuela produced 162 million tons of oil, which is 4.1% of world's total production. By the oil production Venezuela ranks seventh in the world. Venezuela is the world's eight oil exporter and fifth largest net exporter. In 2012, 11 percent of US oil imports came from Venezuela.
Venezuela has the largest oil reserves, and the eighth largest natural gas reserves in the world, and consistently ranks among the top ten world crude oil producers. Compared to the preceding year another 40.4% in crude oil reserves were proven in 2010, allowing Venezuela to surpass Saudi Arabia as the country with the largest reserves of this type. The country's main petroleum deposits are located around and beneath Lake Maracaibo, the Gulf of Venezuela (both in Zulia), and in the Orinoco River basin (eastern Venezuela), where the country's largest reserve is located. Besides the largest conventional oil reserves and the second-largest natural gas reserves in the Western Hemisphere, Venezuela has non-conventional oil deposits (extra-heavy crude oil, bitumen and tar sands) approximately equal to the world's reserves of conventional oil. The electricity sector in Venezuela is one of the few to rely primarily on hydropower, and includes the Guri Dam, one of the largest in the world.
India surpassed China as the largest Asian importer of crude oil from Venezuela in 2012. Venezuela is India's fourth largest source of crude oil after Iraq, Saudi Arabia, and Iran accounting for 12% of the country's oil imports in April-November 2018. In the preceding decade, India became the third largest importer of oil in the world, after the United States and China. Following unrest in West Asia, its traditional source of oil, India looked to diversify its sources of oil imports. The rise in US domestic oil production resulted in a 49% reduction of American oil imports from Venezuela in 2014, creating an opportunity for India to increase crude oil imports from Venezuela.
The oil sands consist of large deposits of extra heavy crude. Venezuela's heavy oil deposits of about of oil in place are estimated to approximately equal the world's reserves of lighter oil. Petróleos de Venezuela S.A. (PDVSA), Venezuela's national oil company, has estimated that the producible reserves of the Orinoco Belt are up to which would make it the largest petroleum reserve in the world.
Venezuela has the largest conventional oil reserves and the second-largest natural gas reserves in the Western Hemisphere. In addition Venezuela has non-conventional oil deposits (extra-heavy crude oil, bitumen and tar sands) approximately equal to the world's reserves of conventional oil. Venezuela is also amongst world leaders in hydroelectric production, supplying a majority of the nation's electrical power through the process.
Chávez proposed in December 2006 that Venezuela would build an oil refinery in Malaysia, and Golden Hope, a Malaysian state-owned palm oil company, agreed with the Venezuelan state oil company to cultivate 40,000 ha of oil palms in Venezuela, while Malaysian company Petronas would start oil exploration in Venezuela. Malaysia also agreed to help Venezuela with city planning.
Oil was discovered in producible quantities in Venezuela in 1914 at the town of Mene Grande in the east central part of the Maracaibo basin near a surface oil seep.
When oil was discovered in the Maracaibo Basin town of Mene Grande in 1914, the fortunes of the island were dramatically altered. In the early years, both Shell and Exxon held drilling concessions in Venezuela, which ensured a constant supply of crude oil to the refineries in Aruba and Curaçao. Crude oil production in Venezuela was inexpensive. The integrated companies Shell and Exxon controlled the entire industry from pumping, transporting, and refining to marketing the end product. The refineries on Aruba and Curaçao operated in global markets and were profitable partly because of the margin between the production costs of crude oil and the revenues realized on products. This provided a safety net for losses incurred through inefficiency or excessive operating costs at the refineries.
The US Gulf Coast has a large concentration of refineries designed to process very heavy crude oil. At present, the refineries are dependent on heavy crude from Venezuela, including crude from Venezuela's own massive Orinoco oil sands. The United States is the number one buyer of crude oil exported from Venezuela.[154] The large trade relationship between the US and Venezuela has persisted despite political tensions between the two countries. However, the volume of oil imported into the US from Venezuela dropped in half from 2007 to 2014, as overall Venezuelan exports have dropped, and also as Venezuela seeks to become less dependent on US purchases of its crude oil. The Keystone pipeline is seen as a way to replace imports of heavy oil-sand crude from Venezuela with more reliable Canadian heavy oil.[155]
Soon after taking following the Cuban Revolution, Fidel Castro sought to take advantage of relations with Venezuela and incorporate its oil wealth within Cuba and quickly began to make relations with Venezuela guerrillas. President of Venezuela Rómulo Betancourt cut ties with Cuba in 1961 as part of the Betancourt Doctrine, which saw Venezuela breaking relations with governments that came to power through non-democratic means. In July 1964, the Organization of American States sanctioned Cuba after a cache of weapons destined for the Fuerzas Armadas de Liberación Nacional was discovered on Venezuela's shores. In May 1967, the Machurucuto Incident saw Cuban troops attempting to make their way into the Andes to train Venezuelan guerrillas, but they were captured by the Venezuelan Army and National Guard. Ties between Cuba and Venezuela resumed in 1974 after guerrilla activity decreased in Venezuela. When Cuba began to enter its Special Period which saw domestic economic collapse, it once again became motivated to take control of Venezuela's oil wealth. In 1987, future Venezuelan president Nicolás Maduro moved to Venezuela where he was trained by Pedro Miret Prieto (), a senior member of the Politburo of the Communist Party of Cuba with direct links to Fidel Castro. When Maduro returned to Venezuela, he was allegedly tasked with serving as a Cuban mole to infiltrate Hugo Chávez's MBR-200. Venezuelan intelligence had also later discovered that Cuban Dirección de Inteligencia agents remained in Venezuela following the second inauguration of Carlos Andrés Pérez and eventually escalated political tensions during the Caracazo riots in 1989.
Despite the knowledge of the existence of oil reserves in Venezuela for centuries, 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.[8] One such concession was granted to Rafael Max Valladares who hired Caribbean Petroleum Company (later acquired by Royal Dutch Shell) to carry out his oil exploration project. 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.[7] This major discovery encouraged a massive wave of foreign oil companies to Venezuela in an attempt to get a piece of the action.