April 30, 2007
Venezuela takes up oil fields during an historical and sovereign May 1st

(ABN) - "The President of Venezuela, Hugo Chávez, indicated: 'Oil fields that are coming back to Venezuelan hands will definitely close an historical chapter of what was called 'the oil opening', which was nothing but to give our oil to the empire through private companies',

During the just finished Presidents of the Bolivarian Alternative for the Americas (Alba- Spanish acronym) Summit and the Commerce Treaty for the Peoples (TCP- Spanish abbreviation), Chávez stated: 'This May 1st, we are going to take one of the oil fields that is still under transnational hands'.

This announcement implies a change in the traditional Venezuelan workers celebration of the May 1st for more than one century. 'Usually, workers of our country, and of several countries around the world, commemorate and tribute the vindicative fight the so-called 'Chicago's martyrs'.

Nevertheless, May 1st could have a new meaning for Venezuelan people since this year, the State will have total operative control of the Orinoco Oil Strip Association of Agreements, as well as the oil improvers, located at the Jose Oil Cryogenic Complex, Anzoátegui State, Venezuela.

Private partners of Venezuelan Oil Company (Pdvsa- Spanish acronym) in those fields will have until next June 26 to negotiate their participation in the new joint ventures.

Likewise, the Government will have the legal authority over the oil improvers, located at the Industrial and José Antonio Anzoátegui Petrochemical Complex.

As a result of these actions Venezuela will have at least 60% of participation in each of the new investment forms of the oil activities carried out at the Oil Strip, demanding a fair and appropriate to the new current market conditions tax contribution.

Even if it was in January 2007 when the Bolivarian Government, through the Ministry of Energy and Petroleum, started the Nationalization Plan of the four Oil Strip Association Agreements, the process of oil sovereignty recovery began long ago.

The first step towards the oil sovereignty was when appeared in the Official Gazette N° 37,323, of November 13, 2001, the Hydrocarbons Organic Law.

In that Gazette, specifically in the 22nd article of the III Chapter, section I, About the forms and conditions to make primary activities, like exploration, extraction, recollection, transport, and storage of oil resources, says: 'Primary activities will be made by the State, directly or through exclusive State-owned companies (...) where the State has control of its decisions, keeping a participation over 50% of the social capital (...) these companies are called Joint Ventures'.

During the following years after the promulgation of this legal instrument, the Bolivarian Government has given answer to the demand to recover the country's oil market, which was before an exploitation system in detrimental of Venezuela interests.

Before starting the recovery of the oil sovereignty process, oil companies, under the argument of exploiting extra-heavy oil, which requires a higher effort for its processing, paid a royalty of only 1% over the total of the extraction profit. Likewise, they only paid 34% of the tax.

Unlike that time the values went substantially high and now the country gets for the activities carried out at the Orinoco Oil Strip a total of 33.2% for royalty and 50% due to taxes.

During an event of Wednesday April 25, in Pdvsa headquarter, the signings of memorandums of understanding was carried out in compliance with the Decree N° 5200 for the hydrocarbons nationalization, promulgated by the President of the Republic, Hugo Chávez.

In this sense, the Minister of Energy and Petroleum and President of Pdvsa, Rafael Ramírez, indicated: 'It is important for the country to know that the development of the oil total politic and sovereignty is a people's mandate'.

Likewise, 10 out of the 13 companies have undersigned the documents. 'We consider that the migration process of the companies is running according the schedule established by the law and it will have a successful finish', he said.

Next June 26 will be the last day to sign the conversion to joint ventures agreements, 'and two month later the term will be over and the National Assembly approval process will end', Ramírez stated.

The extension of the Orinoco Oil Strip is about 55,314 square kilometers. It is divided in four major fields: Boyacá, Junin, Ayacucho, and Carabobo. Each one of those field are segmented in 27 blocks organized according to their characteristics, techniques, and strategies.

The first perforation in the Orinoco north basin, where it is delimited the Strip zone, was made in 1935. At that time, the discovery did not show a big potential, therefore, during 40's and 50's, the Orinoco Oil Strip remained out of the oil companies interests.

In the 60's, the interest over the north Orinoco basin was reborn due to the results of the studies carried out by the then Ministry of Mines and Hydrocarbons and the Venezuelan Oil Company, which concluded that the volume of hydrocarbons in the zone was initially estimated in 110 thousand million cubic feet, i.e., 692 million of oil barrels.

After that first investigation, other investigations with more accurate technology were made. The results showed that the zone shelters about 1.3 trillion of oil barrels in situ.

However, according to Pdvsa's emitted information, it is on 2008 when it is expected the culmination of the certification process of the reservoirs located at the Orinoco Oil Strip, which it is expected to shelter 235 thousand million of recovered oil barrels. With this estimation of proved reserves, Venezuela would reach 316 thousand million of oil barrels.

Therefore, Venezuela would become in the country with the biggest oil reserves in the world, followed by nations like Saudi Arabia, Iran, Iraq, Kuwait, and United Arab Emirates".