WORLD TRADE
ORGANIZATIONG/STR/N/7/VEN
6 December 2001
(01-6223)
Working Party on State Trading Enterprises Original:  Spanish
STATE TRADING
New and Full Notification Pursuant to Article XVII:4(a) of GATT 1994 and
Paragraph 1 of the Understanding on the Interpretation of Article XVII
VENEZUELA
The following communication, dated 26 November 2001, has been received from the
Permanent Mission of Venezuela.
_______________
I. ENUMERATION OF STATE TRADING ENTERPRISES
Enterprise:  Petróleos de Venezuela S.A. (PDVSA) and its subsidiaries.
Product:  Hydrocarbons (Chapter 27 of the Venezuelan tariff).
II. REASON AND PURPOSE
The oil industry is reserved for the Venezuelan State for reasons of national interest.
The Organizational Law Reserving the Hydrocarbon Industry and Trade to the State
(Nationalization Act) contains a provision whereby any enterprises established to engage in reserved
activities, if they take the form of joint-stock companies, may consist of one single partner (Article 6),thereby forming an exception to the Commercial Co de, which requires two or more partners for the
establishment of joint-stock companies.
The joint-stock company Petróleos de Venezuela S.A., whose shares are held exclusively by
the Republic of Venezuela, is the sole shareholder of the above-mentioned subsidiaries.  One of theprincipal objectives of the State petroleum enterprise must be to achieve a maximum economic rate of
return, in keeping with the requirements of national development (Article 3 of the
Nationalization Act).  The Nationalization Act stipulates that the petroleum enterprise shall be
governed by the Act and the regulations thereto, by its own statutes, by the provisions issued by the
National Executive and by any applicable provisions of ordinary law (Article 7);  this provision isrepeated in the Constituent Instrument – Statutes of Petróleos de Venezuela S.A.
This principle is reaffirmed in Part VI, Chapter I, Article 302 of the Constitution of the
Bolivarian Republic of Venezuela, published in Official Gazette No. 5453 of 24 March 2000, which
provides that "for reasons of economic and political sovereignty and national strategy, the State shallhold all the shares of Petróleos de Venezuela S.A. or of the body established to manage the oil
industry, except those of the subsidiaries, strategic associations, enterprises or any other entity that
have been established or are established as a result of the business of Petróleos de Venezuela S.A.".G/STR/N/7/VEN
Page 2
I. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING
ENTERPRISES
The subsidiaries of Petróleos de Venezuela S.A. are engaged in meeting the needs both of the
domestic market and, directly or indirectly, exports.
They are also responsible for imports of products and inputs for their activities.
As of 1 January 1998, the former subsidiaries of PDVSA, Lagoven and Maraven, were
absorbed by the subsidiary Corpoven.  The resulting enterprise changed its business name on that
occasion to PDVSA Petróleo y Gas S.A.
More recently, by a decision of the PDVSA board, contained in the Commercial Register
under No. 23, Volume 81-A Second, dated 9 May 2001, the enterprise PDVSA Petróleo y Gas S.A.
changed its business name to PDVSA Petróleo S.A ., which groups together the core activities of the
oil business.
The enterprise PDVSA Petróleos S.A. is made up two main business units:  (a) Exploration,
Production and Upgrading and (b) Refining, Supply and of Trade.
PDVSA Exploration, Production and Upgrading is responsible for locating and developing oil
reserves and manufacturing Orimulsion.
PDVSA Refining, Supply and Trade is in charge of crude refining activities, product
manufacturing, marketing and supplying domestic and international markets.
With regard to the local (domestic) market, the private sector may be authorized by the
Ministry of Energy and Mines to play a role in the marketing process for petroleum products.  Thus,for example, service stations and systems for distributing gas cylinders are operated by private traders,
who are also involved in the production and marketing of lubricants.
On 11 September 1998 the Organic Law on the Opening Up of the Domestic Market for
Gasoline and Other Hydrocarbon Fuels for Motor Vehicles was promulgated.  This Law eliminates
the State reserve in respect of the domestic market for hydrocarbons, opening up fuel storage,
distribution, sales and transport activities to competition.
Inputs and products required by the subsidiaries of PDVSA are imported according to need.
Manufactured products, using both domestic resources and imported inputs, are then re-exported or
sold on the domestic market.
It is important to note that the Decree with the Status and Force of Organic Law concerning
Gaseous Hydrocarbons, which was published in Official Gazette No. 36793 of 23 September 1999,
provides that the collection, storage and use, not only of unassociated natural gas resulting from the
exploitation of gaseous hydrocarbon deposits, but also the gas produced that is associated with
petroleum or other fossil fuels, may be carried out by the State directly or through bodies which itowns, or by natural or foreign private persons, with or without the participation of the State, under the
terms established by this legal order.
Export quantities are determined on the basis of international supply and demand for
petroleum.  The prices of exports are determined by the market and by their competitiveness.G/STR/N/7/VEN
Page 3
In regard to pricing:
1. Domestic prices are established by the Government, through the Ministry of Energy
and Mines.
2. Export prices are determined by market forces, on the basis of competitive prices for
crude and for oil products on the international oil market.
Crude and oil products are sold on the international market by contracts of various kinds
based on clearly commercial criteria and negotiated by mutual agreement between the parties.
Finally, as concerns the "upstream" oil business, private enterprises may participate through
two mechanisms:
(a) Strategic associations with PDVSA subsidiaries subject to authorization by the
National Congress;
(b) operating agreements with PDVSA subsidiaries.
In the former case, the private enterprises engage in their respective production activities on
their own behalf and jointly with the PDVSA subsidiary (this also includes private enterprises
participating in exploration risk contracts and profit-sharing production);  in the latter case, on the
other hand, the private enterprises act on behalf of the PDVSA subsidiary, and it is the subsidiary that
carries out the activity from the legal point of view.G/STR/N/7/VEN
Page 4TABLE 2
Exports
Product designation
(indicating HS Code)Total quantity
exported
(MBD)Total
quantity
exported
PDVSA (MBD)Average
purchase
priceAverage home
market price
($/Barrel)Average
export price
($/Barrel)Domestic
production
volume
(MBD)
12 3 4 5 6 7 *
1998       2709.00.00
      2710.00.60
2710 – 2710.0049
      2710.00.71-2715Crude
Residual
Naphtha/gasoline
Other1
TOTAL2,261
176
309
370
3,1162,261
176
309
370
3,116n.a.
n.a.
n.a.
n.a.n.a.
3.72
6.75
8.899.38
9.42
16.13
13.7710.573,236
222
485
415
1999       2709.00.00
      2710.00.60
2710 – 2710.0049
      2710.00.71-2715Crude
Residual
Naphtha/gasoline
Other1
TOTAL1,924
163
292
406
2,7851,924
163
292
406
2,785n.a.
n.a.
n.a.
n.a.n.a.
8.30
6.14
11.3715.35
12.81
20.84
17.1316.042,912
202
485
425
2000       2709.00.00
      2710.00.60
2710 – 2710.0049
      2710.00.71-2715Crude
ResidualNaphtha/gasolineOther
1
TOTAL1,998
216267343
2,8241,998
216267343
2,824n.a.
n.a.n.a.n.a.n.a.
12.14
6.71
13.5624.94
19.8734.8728.40
25.913,010
252477407
n.a.:  not applicable.
1Others include:  diesel/fuel oils, lubricants, LPG, others.
*  Excludes:  self-consumption/domestic production losses, condensates and production-site LPG.
Source: Office of Management Supervision – PDVSA R, SYC
Office for Geopolitical Affairs – PDSVA R, SYC
29 October 2001.
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