Nacionalizacion De PDVSA

Oil was discovered in Venezuela in the term of the dictatorship Juan Vicente Gomez and the first export was in 1917. PDVSA, which was founded in 1975, is the Venezuelan oil company, which activities include: exploration, production, refining, and the export of oil; it is also in charge of the exploration and production of natural gas. PDVSA is the company that dominates the oil industry in Venezuela and it is the world’s fifth largest oil exporter.

As of today, Venezuela has one of the largest oil reserves in the world. In addition, according to Diego Gonzalez, there is an amount of 296,501 million barrels in reserve, and of that amount only 14.2 million are developed and 282.3 are not developed. This characterization clearly confirms that there is a lack of production and development in the country, which leads to a radical decline in the country’s profits because oil is the first source of income of the country.

The real problem, and the one it is been discussed, is the consequences of expropriating and nationalizing an industry. Hugo Chavez expropriated PDVSA on 2002. The consequences were many and among them were the numerous people who lost their jobs and the decline in oil production throughout the industry. Before PDVSA was nationalized its production reached an amount, according to Diego Gonzalez, of 3,342,000 barrels per day at the beginning of 2001. In contrast, as of December 31st of 2010 the oil production had declined up to 2,130,000 barrels per day. That gets the production to decrease to a 36.27%.

According to Jesus Rangel, the amount of people unemployed do to the nationalization of PDVSA reached the outrageous number of 23,000. In addition, it is important to include that neither of these people received their monetary settlement nor their benefits. People were fired because they did not agreed with Chavez’s government. Therefore, a great amount of them were deprived of getting a job inside the country. Consequently, a lot of people had to immigrate to different countries to keep sustaining their families.

According to Trading Economics, after PDVSA was nationalized, in 2002, unemployment rate rose from 11%, in December 2001, to 16.4%, in January 2002. This one month impact was severe for the Venezuelan economy and therefore, for the industry. In addition to the raise in unemployment, inflation rate was also through the roof. According to Trading Economics inflation rate as of December 2001, before PDVSA was nationalized, was approximately 30%, in comparison after PDVSA was nationalized the inflation rate reached an all time high of 83%. The inflation rate rose about 40% in just two months. At this point Venezuela had a decline in its economy and in addition, exports also decreased by a significant amount, having exports at $7,240 million in January 2001, and a decrease to $4,331 million in January 2003.

It is noteworthy to mention that before Chavez took possession of PDVSA

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