Venezuela’s Oil Industry: A Century of Change and Control

Venezuela’s oil industry has experienced multiple phases of development, regulation, and ownership since the early twentieth century. The sector’s evolution has influenced both national policy and the global energy landscape.

The country’s first commercially productive oil well, Zumaque I at Mene Grande, started operating in July 1914. This initial development marked the beginning of Venezuela’s emergence as a major oil producer and exporter in the decades that followed.

Foreign investment and discoveries, such as the 1922 La Rosa field in the Maracaibo Basin, contributed to rapid growth in oil output. By 1929, Venezuela had become the world’s leading oil exporter and the second-largest producer after the United States.

During the 1940s, Venezuela introduced the Hydrocarbons Law, which required oil companies to share profits with the state and return concessions after forty years. The law also gave companies the option to retain existing terms or accept new, less favorable concessions for forty years.

What the numbers show

• Zumaque I began production on July 31, 1914
• Venezuela produced over 27 million tonnes of crude oil annually by 1940
• Proven oil reserves reached about 304 billion barrels as of 2020

In the 1960s, Venezuela became a founding member of the Organization of the Petroleum Exporting Countries (OPEC), joining other nations to coordinate oil policies. This step reflected a shift toward greater involvement in international energy affairs.

The nationalization of the oil industry took place on January 1, 1976, with the establishment of the state-owned company PDVSA at the site of the original Zumaque I well. This move transferred control of oil resources from foreign operators to the Venezuelan government.

In the 1990s, the government adopted the apertura policy, opening the upstream oil sector to private investment. This approach led to the creation of operating service agreements with foreign oil companies, allowing them to participate in oil production under specific terms.

In 2007, the Venezuelan government completed a renationalization process for oil operations in the Orinoco Belt. Under President Hugo Chávez, the state reclaimed control from foreign companies, consolidating ownership of key oil assets.

* This article is based on publicly available information at the time of writing.