Oil was first discovered in Venezuela in the state of Táchira in 1878. The government gave the first exploration contract to a large local landowner, followed by similar concessions to other Venezuelan capitalists and landlords. As new oil deposits were discovered in subsequent decades, foreign investments also grew. By 1930, more than 100 foreign companies—including Chevron, Mobil, Amoco, and Shell—were doing business there in oil exploration and production.

Venezuela is a semicolonial country, dominated by Washington and other imperialist powers. So it’s no wonder that foreign investment in oil, especially from the United States, loomed large from the beginning, fattening the coffers of the seven sisters—the oil monopolies that have dominated world petroleum resources and markets for decades—and the imperialist powers they are based in. Venezuelan capitalists, however, have always been involved in investing and profiting from the country’s number one natural resource. That remained true after the oil industry became state-owned.

The government of Venezuela nationalized oil in 1975. When the businesses owned by foreign companies and Venezuelan capitalitists became state property, however, the new company—Petroleos de Venezuela (PDVSA)—left the operations in the hands of the same bosses. Steps to bring the company more firmly under state control were not taken prior to 2001, when the government headed by President Hugo Chávez enacted a new hydrocarbons law. Venezuelan and foreign capitalists continue to profit from oil exploration and distribution of petroleum products today, however, because the capitalist class maintains control of the means of production under the new administration.

Until the beginning of 2003, when working people defeated a bosses’ “strike” aimed at overthrowing the elected government and opened the way for a completely new management at PDVSA, the company’s president had a salary 10 times that of the minister of energy, who was supposed to be his superior. According to the Ministry of Energy and Mines, the salary and benefit packages of the company’s top 20 executives ranged from $16,000 to $51,000 per month in 2002. In addition, many managers had access to PDVSA-provided chalets in the Andes. Top administrators enjoyed luxurious company-owned residences near their offices.

These bosses made sure that PDVSA was organized from the wellhead to the gas pump to serve the local bourgeoisie and its U.S. allies, rather than the interests of working people in Venezuela. Under capitalism local and international finance capital continues to usurp the profits from state-owned companies, like PDVSA.

Here are a few examples of how this has worked and continues to work today in Venezuela.

In the early 1990s, prior to Chávez’s election, the Venezuelan government adopted a policy known as “Petroleum Opening” to encourage foreign investment. Between 1992 and 1993, Caracas awarded 14 such contracts. Under this policy, the capitalists involved got 20-year exploration contracts that mandated certain minimum investment levels but guaranteed a fat percentage to these businessmen from every barrel of oil their operations extracted. So while PDVSA continued to own the oil wells, a huge percentage of the profits went to these imperialist-owned monopolies.

In 1996, Venezuela’s Congress authorized profit-sharing agreements under which private firms, local and foreign, had the right to own the majority stake in any new gas or oil deposits they developed. The government also lowered the royalties these investors had to pay to the state for such contracts.

In addition, while refining and most gasoline distribution in Venezuela is done by PDVSA and its subsidiaries, most natural gas marketing and the production and distribution of some other petroleum derivatives have remained in private hands.

Three years after the Chávez administration took office, it passed a new hydrocarbons law that increased the royalties investors have to pay from 16 percent to 30 percent for exploration contracts and mandated that PDVSA hold a majority stake in any new exploration project. This measure angered most of the capitalists in Venezuela and their imperialist allies. But as it became clear prior to and after the recent defeat of the presidential recall referendum, international capital in oil, and a minority of Venezuelan capitalists, act on the hope they can continue to do business with the Chávez administration and profit from their operations.

Only if working people take political power, establish a workers and farmers government, and end imperialist domination and capitalist exploitation once and for all, can this situation change and all the natural wealth of the country be put to use to solve the needs of the vast majority.  
 
 
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