Caracas, Dec 27 (EFE).– Venezuela completed the nationalization of its oil industry in 1976 through a legal process under President Carlos Andrés Pérez, but US President Donald Trump has questioned that move by alleging that US companies were stripped of their rights, claims disputed by experts.
Historian Tomás Straka described Trump’s remarks as “very misinformed,” while former deputy minister of energy and mines Dolores Dobarro said that natural resources found in Venezuela’s subsoil have belonged to the state since independence.
Trump, who ordered a blockade of sanctioned ships to and from Venezuela after months of military deployment in the Caribbean, recently claimed that the country took oil rights away from US companies and said he wants those rights restored.
President Nicolás Maduro’s government has countered that Washington’s objective is to seize Venezuelan resources and has accused the United States of piracy following the seizure of two oil tankers carrying Venezuelan crude.
Here is an overview of the nationalization process and subsequent developments in the oil sector:
The 1976 nationalization
On Aug. 29, 1975, Venezuela published the Organic Law Reserving the Hydrocarbons Industry and Trade to the State, known as the Loreich, which set Jan. 1, 1976 as the date on which all oil concessions operating in the country were declared void.
Before nationalization, Straka said, oil production was carried out by private companies, mostly backed by foreign capital, although “technically registered in Venezuela.”Under the reform, the state reserved the exclusive right to explore, exploit, refine and export oil.
To manage the industry, Pérez’s government created Petróleos de Venezuela (PDVSA) in 1975, which assumed the assets of foreign oil companies operating in the country.
The nationalization “replaced concessionary companies, both domestic and foreign, with state-operated firms, PDVSA and its subsidiaries,” Dobarro said.
Dobarro, who served during President Rafael Caldera’s second term (1994–1999), noted that the policy was “widely discussed and debated” and said it can be described as broadly consensual among the political forces of the time.
Straka added that in the 1990s Venezuela reopened its oil sector to foreign investment to attract capital, allowing international companies to return through operating agreements.
The Chávez era
The situation changed under President Hugo Chávez, who took office in 1999 and died in 2013.
Chávez deepened an already existing state control of the sector, particularly after 2007, when he forced foreign oil companies into joint ventures with PDVSA, Straka said.
“Chávez prohibited foreign companies from operating independently and required them to form mixed enterprises with PDVSA,” he said. Under the new framework, private firms were limited to minority stakes.
In 2007, Chávez also mandated that PDVSA hold a majority share in all oil projects, recalled economist Francisco Monaldi, director of the Latin American Energy Program at Rice University.As a result, Venezuela expropriated assets from companies such as ExxonMobil and ConocoPhillips, which refused to accept the new terms.
Both firms pursued international arbitration and obtained rulings ordering Venezuela to pay compensation.Monaldi also noted that PDVSA lost much of the operational autonomy it had enjoyed since its creation, as its revenues were redirected to fund government social programs.
Chávez also dismissed thousands of employees who supported the 2002–2003 oil strike.
A key supplier for the US
Straka said Venezuela has been a “fundamental piece” on the US geopolitical chessboard since World War II, largely because of its role as a major oil exporter.Although Venezuela is no longer the world’s leading oil exporter, as it was during the war years, it remains strategically important to Washington, he said.
“It is oil that is four days away by ship from US refineries,” Straka said.
However, the historian, also director of the Institute of Historical Research at Andrés Bello Catholic University, stressed that the United States has never held rights over Venezuela’s subsoil, which under the Hispanic legal tradition belongs to the state. EFE
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