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As filed with the Securities and Exchange Commission on June 14, 2002

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 20-F

(Mark One)

|o | Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934                                
|- | --------------------------------------------------------------------------------------------------------------------------------
|ý | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2001
|o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from
 to     

Commission file number 001-12140

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PROPERNYN B.V.(Exact Name of Registrant as Specified in Its Charter)

|Propernyn B.V.                                  |  | The Netherlands                                
|----------------------------------------------- |  | -----------------------------------------------
|(Translation of Registrant's Name Into English) |  | (Jurisdiction of Incorporation or Organization)

c/o Petróleos de Venezuela, S.A.
Avenida Libertador, La Campiña, Apdo. 169, Caracas 1010-A, Venezuela(Address of Principal Executive Offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange
on Which RegisteredGuarantee of PDV America, Inc.'s 77/8% Senior Notes Due 2003

New York Stock Exchange, Inc.


Securities
registered or to be registered pursuant to Section 12(g) of the Act:None

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:None

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 1,113 shares of the
common stock were outstanding as of December 31, 2001.

Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý        No o

Indicate
by check mark which financial statement item the registrant has elected to follow.

Item
17    o        Item 18 ý

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PROPERNYN B.V.

Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2001

Table of Contents



|                                                |        |         
|----------------------------------------------- | ------ | --------
|INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
|FACTORS AFFECTING FORWARD-LOOKING STATEMENTS   
|                                                | PART I |         
|                                                |        | Item 1. 
|                                                |        | Item 2. 
|                                                |        | Item 3. 
|                                                |        | Item 4. 
|                                                |        | Item 5. 
|                                                |        | Item 6. 
|                                                |        | Item 7. 
|                                                |        | Item 8. 
|                                                |        | Item 9. 
|                                                |        | Item 10.
|                                                |        | Item 11.
|PART III                                       
|                                                |        | Item 17.
|                                                |        | Item 18.
|                                                |        | Item 19.
|SIGNATURES                                     
|ANNEX A                                        

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

With respect to our guarantee of PDV America, Inc.'s 77/8% Senior Notes due 2003, PDV America, Inc.'s annual report on
Form 10-K for the year ended December 31, 2001, as first filed with the U.S. Securities and Exchange Commission (Commission File No. 001-12138) on
March 29, 2002, is incorporated herein by reference.

FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specifically, certain statements under the caption "Item 4.B. Business overview" and under the caption "Item 5.
Operating and Financial Review and Prospects" relating to refining processes, capital expenditures and investment, the expected results of joint venture projects, the anticipated demand for new or
improved products, environmental compliance and remediation and related capital expenditures and investments and future capital expenditures in general are forward-looking statements. Words such as
"anticipate," "estimate," "prospect" and similar expressions are used to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties related to Venezuelan
and international markets, inflation, the availability of continued access to capital markets and financing on favorable terms, regulatory compliance requirements, changes in import controls or import
duties, levies or taxes and changes in prices or demand for our products as a result of actions of our competitors or economic factors. Those statements are also subject to the risks of costs and
anticipated performance capabilities of technology, and performance by third parties of their contractual obligations. Should one or more of these risks or uncertainties materialize, actual results
may vary materially from those estimated, anticipated or projected. Specifically, but without limitation, capital costs could increase, projects could be delayed, and anticipated improvements in
capacity or performance may not be fully realized. Although we believe that the expectations reflected by such forward-looking statements are reasonable based on information currently available,
readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report. We undertake no obligation to publicly release any
revision to these forward-looking statements to reflect events or circumstances after the date of this annual report.

The
annual report on Form 10-K of PDV America, Inc. ("PDV America") for the year ended December 31, 2001, incorporated by reference herein and referred
to throughout this annual report, also contains forward-looking statements. For a discussion of the factors affecting the forward-looking
statements contained in PDV America's annual report, see "Factors Affecting Forward-Looking Statements" on page 1 thereof.

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As used in this annual report references to "dollars" or "$" are to the lawful currency of the United States. A unit conversion table and a glossary of certain
oil and gas terms, including abbreviations for certain units, used in this annual report are contained in Annex A. When used in this annual report, the terms "we," "our," "us" and "Propernyn" refer to
Propernyn B.V. and its consolidated subsidiaries. The term "Petróleos de Venezuela" refers to Petróleos de Venezuela, S.A. and the term "PDVSA" refers to
Petróleos de Venezuela, S.A. and its consolidated subsidiaries.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable

Item 2. Offer Statistics and Expected Timetable

Not Applicable

Item 3. Key Information

3.A  Selected financial data

The following table sets forth certain selected historical consolidated financial data of Propernyn as of the end of and for each year in the
five-year period ended December 31, 2001. The following table should be read in conjunction with the consolidated financial statements of Propernyn as of December 31, 2001
and 2000, and for each year in the three-year period ended December 31, 2001,

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which are prepared in accordance with accounting principles generally accepted in the United States, and included under "Item 18. Financial Statements."

|                                                      |                                                     | 2001 |     | 2000 |        | 1999 |        | 1998 |        | 1997 |       
|----------------------------------------------------- | --------------------------------------------------- | ---- | --- | ---- | ------ | ---- | ------ | ---- | ------ | ---- | ------
|
|Income Statement Data for the year ended
December 31: |                                                     |      |     |      |        |      |        |      |        |      |       
|                                                      | Net sales                                           |      | 44  |      | 20,405 |      | 13,331 |      | 11,004 |      | 13,665
|                                                      | Equity in earnings of affiliates (1)                |      | 16  |      | 85     |      | 3      |      | 72     |      | 89    
|                                                      | Other income (expense), net                         |      | 2   |      | 21     |      | 71     |      | (2     | )    | (9    
|                                                      |                                                     |      |     |      |        |      |        |      |        |      |       
|                                                      | Total net revenues                                  |      | 62  |      | 20,511 |      | 13,405 |      | 11,074 |      | 13,745
|                                                      | Total costs of sales and expenses                   |      | 44  |      | 20,107 |      | 13,284 |      | 10,857 |      | 13,306
|                                                      | Income before income taxes                          |      | 18  |      | 480    |      | 210    |      | 290    |      | 517   
|                                                      | Extraordinary incomenet of taxes                   |      | 16  |      |       |      |       |      |       |      |      
|                                                      |                                                     |      |     |      |        |      |        |      |        |      |       
|                                                      | Net income                                          |      | 34  |      | 298    |      | 161    |      | 165    |      | 410   
|                                                      |                                                     |      |     |      |        |      |        |      |        |      |       
|Balance Sheet Data (at end of year):                  |                                                     |      |     |      |        |      |        |      |        |      |       
|                                                      | Total assets                                        |      | 490 |      | 488    |      | 8,524  |      | 7,926  |      | 8,018 
|                                                      | Long-term debt (excluding current portion) (2)      |      | 188 |      | 205    |      | 3,785  |      | 4,072  |      | 4,183 
|                                                      | Total debt (3)                                      |      | 188 |      | 205    |      | 4,141  |      | 4,181  |      | 4,544 
|                                                      | Shareholders' equity                                |      | 241 |      | 216    |      | 1,596  |      | 1,438  |      | 1,273 
|Other Financial Data:                                 |                                                     |      |     |      |        |      |        |      |        |      |       
|                                                      | Net cash provided by operating activities           |      | 21  |      | 693    |      | 328    |      | 678    |      | 434   
|                                                      | Net cash (used in) provided by investing activities |      | (18 | )    | 27     |      | (268   | )    | (565   | )    | (590  
|                                                      | Net cash (used in) provided by financing activities |      |    |      | (845   | )    | (2     | )    | (100   | )    | 159   
|                                                      | Capital expenditures                                |      | (16 | )    | (113   | )    | (254   | )    | (236   | )    | (214  

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We
have not declared or paid any dividends since our inception.

3.D  Risk factors

We are subject to production, equipment, transportation and other risks that are common to oil and gas companies.

PDVSA
is an integrated oil and gas company and is exposed to production, equipment and transportation risks that are common to oil and gas companies, including fluctuations in production
volume due to changes in reserve levels, production accidents, mechanical difficulties, adverse natural conditions, unforeseen production costs, condition of pipelines and the vulnerability of other
modes of transportation and the adequacy of our equipment and production facilities.

These
risks may, among other things, lower the amount of crude oil that is processed in the refineries in which we own an interest, increase our costs and expenses, cause damage to our
property or cause personal injury to our employees or others. We maintain insurance to cover certain losses and exposure to liability. However, consistent with industry practice, we are not fully
insured against the

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risks described above. We cannot assure you that our insurance coverage is sufficient to cover all of our losses or our exposure to liability that may result from these risks.

Risks related to the Venezuelan government's ownership, regulation and supervision of Petróleos de Venezuela

The Bolivarian Republic of Venezuela is the sole owner of Petróleos de Venezuela. The Venezuelan government regulates and supervises its
operations. However, the Republic of Venezuela is not legally liable for the obligations of Petróleos de Venezuela, including its guarantees of indebtedness of its subsidiaries, or the
obligations of its subsidiaries.

Petróleos
de Venezuela has been operated as an independent commercial entity since its formation. However, we cannot assure that the Venezuelan government will not in the
future intervene in Petróleos de Venezuela's commercial affairs in a manner that will adversely affect our business.

Item 4. Information on the Company

4.A  History and development of the company

Propernyn B.V. is a closed limited liability company organized in 1994 under the laws of The Netherlands Antilles. Propernyn is domiciled in and is governed by
the laws of The Netherlands Antilles. Propernyn is a wholly owned subsidiary of Petróleos de Venezuela, the national oil company of the Bolivarian Republic of Venezuela. Our registered
office is located at Eisenhowerlaan 150-2517 KP, The Hague, The Netherlands, and our telephone number is 011-31-70-306-5001.

Prior
to November 3, 2000, Propernyn was a wholly owned subsidiary of Venedu Holding N.V., which is wholly owned by Petróleos de Venezuela and organized under the
laws of The Netherlands Antilles. We
operated primarily through two of our wholly owned subsidiaries: PDV Holding, Inc. ("PDV Holding") and PDV Europa B.V. ("PDV Europa"). PDV Holding was established in 1997 as a holding company
for our operations in the United States. PDV Europa was established in 1982 as a holding company for our operations in Europe. We also own two crude oil and petroleum product storage and shipping
facilities in the Caribbean.

Effective
November 3, 2000, pursuant to a transfer by Venedu Holding N.V. of all of its share ownership in Propernyn to Petróleos de Venezuela, we became a directly
and wholly owned subsidiary of Petróleos de Venezuela. Additionally, effective December 1, 2000, we sold and transferred all of our share ownership in PDV Holding to
Petróleos de Venezuela for a purchase price of $3,315.1 million, in exchange for the set off of loans payable by us to Petróleos de Venezuela of
$1,647.9 million and a set off of a distribution payable to Petróleos de Venezuela on that date of $1,667.2 million. No gain or loss arose upon sale, as the purchase price
was equal to the carrying value of our investment in PDV Holding at that date.

4.B  Business overview

We are PDVSA's holding company for investments related to the refining, marketing, transportation and storage of crude oil located in Europe (Germany, Sweden, the
United Kingdom and Belgium) and in the Caribbean. Since 1986, through investments in us and in our affiliates, Petróleos de Venezuela has implemented a worldwide program of downstream
integration into major consumer markets, designed to establish long-term, value-added outlets for its crude oil production and refined products. Prior to the sale and transfer of our share
ownership in PDV Holding to Petróleos de Venezuela effective December 1, 2000, we were also PDVSA's principal holding company for its investments in the United States.

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Europe

PDV Europa manages Propernyn's 50% interests in Ruhr Oel GmbH ("Ruhr Oel") and AB Nynäs Petroleum ("Nynäs"), two joint venture
companies which principally manufacture gasoline, diesel fuel, jet fuel, heating oil, petrochemicals, asphalt, naphthenic specialty oil and other refined products.

PDVSA
supplies crude oil to Ruhr Oel and Nynäs under various supply agreements. In 2001, PDVSA supplied 242 MBPD of crude oil to these affiliates, out of which 40 MBPD
were exported from Venezuela and 202 MBPD were purchased in the world markets.

At
December 31, 2001, our aggregate net ownership interest in crude oil refining capacity in Europe was 252 MBPD.

The
following table shows our aggregate net interest in refining capacity:

Propernyn's Refinery Production

|                             |                 | Year Ended December 31,           |    
|---------------------------- | --------------- | --------------------------------- | ---
|
|
|Aggregate Refining Capacity: |                 |                                   |    
|                             | PDV Holding (1) |                                   |   
|                             | PDV Europa      |                                   | 252
|                             |                 |                                   |    
|                             |                 | Total aggregate refining capacity |    
|                             |                 |                                   |    
|Utilization:                 |                 |                                   |    
|                             | PDV Holding     |                                   |   
|                             | PDV Europa (2)  |                                   | 96 

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Ruhr Oel

Ruhr Oel, the largest refining company in Germany, is a joint venture between PDV Europa and Veba Oel AG, of Germany. Ruhr Oel holds an interest in four German
refineries (Gelsenkirchen, Neustadt, Karlsruhe and Schwedt) in which our net interest in crude oil refining capacity at December 31, 2001 was 113 MBPD, 31 MBPD, 33 MBPD and 39 MBPD,
respectively, or a total of 216 MBPD. Its share of the refining capacities of such refineries is hereinafter referred to "Ruhr Oel Refineries." Ruhr Oel also owns two petrochemical complexes:
Gelsenkirchen and Münchmünster. The Gelsenkirchen complex includes modern, large-scale units that are integrated with the crude oil refineries located in the same
complex, and primarily produces olefins, aromatic products, ammonia and methanol. The Münchmünster complex, integrated with the nearby Bayearn Oil refinery, primarily
produces olefins. Ruhr Oel's petrochemical complexes have an average production capacity of approximately 3.8 million metric tons per year. Veba Oel operates the Ruhr Oel Refineries and the
petrochemical complexes under a long-term operating agreement with Ruhr Oel. Ruhr Oel has no employees and does not directly operate any of these refineries.

The
crude oil processed at the Ruhr Oel Refineries is supplied in equal amounts by PDVSA and Veba Oel pursuant to a joint venture agreement and a long-term supply agreement.
Pursuant to these agreements, Ruhr Oel does not acquire title to any crude oil or refined products that it processes.

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Instead, the crude oil supplied remains owned by PDVSA or Veba Oel, as applicable, throughout the refining process. All the refined products processed at the Ruhr Oel Refineries is distributed
through Veba Oel's marketing network.

The
operating costs of the Ruhr Oel Refineries are shared equally by PDVSA and Veba Oel. PDVSA receives 50% of the revenues from Veba Oel's sales of the refined products processed at the
Ruhr Oel Refineries, less attributable operating and marketing costs. This arrangement has been providing Ruhr Oel with constant break-even results.

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The following table shows our aggregate net interest in the Ruhr Oel Refineries' refining capacity, refinery input and product yield:

Propernyn's Net Interest in Ruhr Oel Refineries

|                         |                | Year Ended December 31,                |   
|------------------------ | -------------- | -------------------------------------- | --
|
|
|Refining Capacity        |                | 216                                    |   
|Crude Oil Refinery Input |                | 215                                    |   
|Other Feedstocks         |                | 21                                     |   
|Product Yield:           |                |                                        |   
|                         | Light fuels:   |                                        |   
|                         |                | Gasoline                               |   
|                         |                | Middle distillates                     |   
|                         | Residuals      |                                        | 10
|                         | Asphalt/Coke   |                                        | 10
|                         |                |                                        |   
|                         |                | Total refined product yield            |   
|                         |                |                                        |   
|                         | Petrochemicals |                                        |   
|                         |                | Industrial products and petrochemicals |   
|Utilization(1)           |                | 100                                    | % 

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The
following table shows Ruhr Oel Refineries' interests in delivery capacity by terminal and pipelines:

Ruhr Oel Refineries' Terminal and Pipelines Interests

|Company                                        |  | Ruhr Oel
Refineries'
Interest |   | Type
of Operations |  | Location                         |  | Total
Capacity
|---------------------------------------------- |  | ----------------------------- | - | ------------------ |  | -------------------------------- |  | --------------
|N.V. Rotterdam-Rijn Rijplelieding Maatschappij |  | 20.0                          | % | Pipeline           |  | Rotterdam to
Gelsenkirchen       |  | 340MBPD       
|Société du Pipeline Sud-Européen S.A.          |  | 7.5                           | % | Terminal/Pipeline  |  | Marseille to Karsruhe            |  | 450MBPD       
|Nord-West Oelleitumg GmbH                      |  | 33.7                          | % | Terminal/Pipeline  |  | Wilhelmshaven to Gelsenkirchen   |  | 270MBPD       
|Transalpine Pipeline Companies                 |  | 11.0                          | % | Terminal/Pipeline  |  | Trieste to Neustadt and Karsruhe |  | 680MBPD       

In
addition, three ports owned by Ruhr Oel on the Rhine-Herme Canal, with barge access to the Rhine and North Sea coastal ports, provide Ruhr Oel with access to substantial refinery
feedstocks.

Nynäs

Nynäs is a Swedish company that is 50.001% owned by Propernyn, through PDV Europa, and 49.999% owned by Fortum Oil and Gas OY. Each party to the
joint venture has equal voting control. Nynäs produces and markets bitumen naphtenic specialties and other petroleum products for the European market.

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Nynäs
owns and operates four specialized refineries: Nynäshamn and Gothenberg in Sweden, Antwerp in Belgium and Dundee in Scotland. Our net interest in
crude oil refining capacity in each of the refineries at December 31, 2001 was 11 MBPD, 6 MBPD, 7 MBPD and 5 MBPD, respectively. Nynäs also owns a 50% interest in a refinery in
Eastham, England, that is a specialized asphalt refinery, and in which our net interest crude oil refining capacity at December 31, 2001 was 7 MBPD. All of the above refineries shall
hereinafter be referred to, collectively, as the "Nynäs Refineries." Our total net interest in refining capacity in the Nynäs Refineries was 36 MBPD at
December 31, 2001.

The
Nynäs Refineries are specially designed to process heavy sour crude oil. The Nynäs Refineries in Nynäshamn produce asphalt and naphthenic
specialty oils. The Dundee, Gothenberg, Antwerp and Eastham refineries are specialized asphalt refineries. Nynäs purchases crude oil from PDVSA and produces asphalt and naphthenic
specialty oils, two products for which Venezuelan heavy sour crude oil is particularly well suited feedstock due to its proportions of naphthenic, paraffinic and aromatic compounds. Asphalt products
are used for road construction and various industrial purposes, while naphthenic specialty oils are used principally in electrical transformers, as mechanical process oils and in the rubber and
printing ink industries.

In
2001, Nynäs sold 5 MBPD of specialty naphthenic oils and 19 MBPD of asphalt, making it the fourth largest asphalt supplier in the European market.

The
following table shows our aggregate net interest in the Nynäs Refineries' refining capacity, refinery input and product yield:

Propernyn's Net Interest in Nynäs Refineries

|                            |                           | Year Ended December 31, |   
|--------------------------- | ------------------------- | ----------------------- | --
|
|
|Refining Capacity           |                           | 36                      |   
|Crude Oil Refinery Input    |                           | 27                      |   
|Refined Product Yield:      |                           |                         |   
|                            | Asphalt                   |                         | 19
|                            | Distillates               |                         | 7 
|                            | Naphthenic specialty oils |                         | 5 
|                            |                           |                         |   
|Total refined product yield |                           | 31                      |   
|                            |                           |                         |   
|Utilization(1)              |                           | 75                      | % 

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Nynäs
does not own crude oil reserves or production facilities and, therefore, purchases crude oil for its refining operations. Nearly all high-sulfur,
extra-heavy Venezuelan crude oil purchased by Nynäs

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is supplied by PDVSA pursuant to long-term supply contracts. The following table shows a breakdown of Nynäs' sales by type of refined product:

Nynäs Refined Product Sales

|                  |                           | Year Ended December 31,
|----------------- | ------------------------- | -----------------------
|
|
|Refined Products: |                           |                        
|                  | Asphalt                   |                        
|                  | Distillates               |                        
|                  | Naphthenic specialty oils |                        
|                  |                           |                        
|                  |                           | Total product sales    
|                  |                           |                        

Nynäs
markets asphalt products through an extensive marketing network in several European countries. Scandinavia, the United Kingdom and continental Europe accounted for
24%, 22% and 24%, respectively, of Nynäs' 2001 consolidated revenues. Nynäs markets its naphthenic specialty oils throughout Europe, Africa, the Middle East and
Australia, and the distillates that it produces are either sold as fuel or further processed into naphthenic specialty oils. Nynäs distributes its refined products primarily by
specialized bitumen ships, rail tanks and trucks and also maintains a terminal system network in Scandinavia in Europe.

The Caribbean

We own two Caribbean crude oil and petroleum product storage and shipping facilities located in The Bahamas and Bonaire through The Bahamas Oil Refining Company
International Limited ("BORCO") and Bonaire Petroleum Corporation N.V. ("BOPEC"), our indirectly and wholly owned subsidiaries.

BORCO, The Bahamas

BORCO's facilities handle crude oil, fuel oil, gasoline and other distillates and has four deep water berths and an aggregate storage capacity of approximately 20
MMB, of which approximately 12.1 MMB of storage capacity is currently in service. BORCO's main activities include the storage, blending and sale of gasoline, diesel fuel, jet fuel and bunker fuel.
BORCO is the largest petroleum storage facility in the Caribbean and is one of the closest terminals to the mainland United States with blending and shipping facilities.

BOPEC, Bonaire

BOPEC's facilities have two deep water berths and an aggregate storage capacity of approximately 10.1 MMB, of which 9.35 MMB is currently in service. It is also
equipped to handle extra-heavy crude oil and Orimulsion®. BOPEC's main activities include providing shipping services for our subsidiaries, providing strategic storage facilities for
PDVSA's Venezuelan subsidiaries and fuel oil blending.

BORCO's
and BOPEC's terminal facilities provide PDVSA with the ability to store significant quantities of crude oil and petroleum products outside Venezuela. These terminal facilities
also serve as storage facilities for the supply of crude oil and petroleum products to the United States.

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United States

Prior to the sale and transfer of our share ownership in PDV Holding to Petróleos de Venezuela effective December 1, 2000, we were also
PDVSA's principal holding company for its investments in the United States. See "Item 4A. History and development of the company."

PDV
Holding, through its wholly owned subsidiary PDV America, manages PDVSA's 100% interest in CITGO Petroleum Corporation ("CITGO") and PDV Midwest Refining, L.L.C. ("PDV Midwest").
Through its subsidiary, PDV Chalmette Inc., PDV Holding also manages PDVSA's 50% equity interest in a crude oil refinery in Chalmette, Louisiana, which principally produces gasoline and
distillate from upgraded extra-heavy crude oil. Through its subsidiaries, PDV Sweeny Inc. and PDV Texas Inc., PDV Holding manages PDVSA's 50% interest in an integrated vacuum/coker
facility at Phillips Petroleum Corporation's refinery, in Sweeny, Texas.

CITGO

CITGO owns and operates two modern, highly complex crude oil refineries (located in Lakes Charles, Louisiana and Corpus Christi, Texas) and two asphalt refineries
(located in Paulsboro, New Jersey and Savannah, Georgia) with a combined aggregate crude oil refining capacity of 589 MBPD for the year 2001. CITGO also owns a minority interest in LYONDELL-CITGO
Refining Company, L.P. ("LYONDELL-CITGO"), a limited partnership that owns and operates a refinery in Houston, Texas, with a rated crude oil refining capacity of 265 MBPD. LYONDEL-CITGO is a joint
venture owned 41.25% by CITGO and 58.75% by Lyondell Petrochemical Company. Additionally, CITGO operates a 167 MBPD refinery in Lemont, Illinois, owned by PDV Midwest. CITGO's assets include a
65%-owned lubricant and wax plant, pipelines, and equity interests in pipeline companies and petroleum storage terminals.

PDV Midwest

In May 1997, PDV America acquired sole ownership of a refinery in Lemont, Illinois, together with associated product distribution terminals, 89 retail
outlets and a hydrocarbon solvents marketing business, in each case as a result of PDV America's liquidation of its 50% interest in a joint venture with the Union Oil Company of California. Following
the acquisition, PDV America created a 100%-owned subsidiary, PDV Midwest to manage and operate the Lemont refinery, which has an oil refining capacity of 167 MBPD. PDV Midwest, principally
manufactures gasoline, diesel fuel, jet fuel and petrochemicals.

Chalmette Refining, L.L.C.

In October 1997, PDV Holding (through PDV Chalmette, Inc.) acquired a 50% equity interest in Chalmette Refining, L.L.C., a refinery in Louisiana
with a processing capacity of 190 MBPD for $319 million, in a joint venture with ExxonMobil Corporation.

The
Chalmette refinery processes upgraded extra-heavy crude oil produced by Petrolera Cerro Negro located in the eastern Venezuelan basin. Petrolera Cerro Negro is a company owned by
PDVSA,
ExxonMobil Corporation and Veba Oel, with PDVSA having a 41.7% interest and ExxonMobil and Veba Oel having a 58.3% interest collectively.

Merey Sweeny, L.L.C.

In October 1998, PDV Holding, through its wholly owned subsidiaries PDV Texas Inc. and PDV Sweeny Inc., entered into definitive agreements
with Phillips Petroleum Corporation to form Merey Sweeny, L.L.C. for the purposes of processing crude oil in the United States. Pursuant to this joint venture, PDV Holding and Phillips Petroleum
Corporation each hold a 50% equity interest in a 58

9

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MBPD coker and a 110 MBPD vacuum crude distillation unit at Phillips Petroleum Corporation's refinery in Sweeny, Texas. This facility became operational in September 2000.

Environment and Safety Matters

Environment

Our European subsidiaries and joint ventures are subject to extensive European Union, international, national and local environmental laws and regulations, some
of which require us to obtain permits for our operations. We are also subject to regulations that require cleanup of environmental damage.

Our
operations within the European Union are subject to environmental directives and regulations issued by the European Union governing, among other things, air and water emissions, and
the generation, use, handling, transportation, treatment and disposal of hazardous materials. European Union regulations issued by the European Union Commission or the European Union Council are
directly enforceable by their terms, and European Union member states must enact domestic legislation to implement and enforce European Union directives issued by the European Union Council. European
Union member states are, based on European Union directives, implementing increasingly strict national regulations relating to oil spill prevention, disaster-response planning and funding and limits
on emissions of sulfur dioxide and volatile organic compounds. As part of its overall effort to combat air pollution, the European Union has set stringent emission limits for new cars and commercial
vehicles to be implemented in stages.

We
believe that our operations are in substantial compliance with these laws and regulations. In addition, our operations within the European Union are being adjusted to suit changes in
consumption
patterns resulting from various measures adopted by the European Union authorities, including measures to reduce the maximum levels of pollutants contained in exhaust emissions of motor vehicles and a
directive on fuel quality to phase out the use of leaded petroleum by 2001. Both measures were introduced under the European Union Commission's Auto Oil Program, which was based on the results of an
extensive, three-year technical collaboration with the European oil and automobile industries. As of December 31, 2001, we have phased out the use of leaded petroleum in our
operations within the European Union. European Union member states are at various stages of adopting European Union requirements.

In
Germany, the refining industry is subject to stringent air and water emissions regulations under the Federal Pollution Control Act and Water Resources Management Act. Compliance with
both the Acts could require substantial capital expenditures. In addition, the 1991 Environmental Liability Law imposes strict, joint and several liability on property owners and operators for
pollution related damages. Recently the German federal government also drafted a Soil Remediation Act pursuant to which site operators can be required to remedy and restore existing soil and ground
water that has been contaminated.

In
the United Kingdom, petroleum processing, transportation and waste disposal is subject to an Integrated Pollution Control permit authorization pursuant to the Environmental Protection
Act of 1990. Under the Integrated Pollution Control, new facilities are required to use the best available techniques without entailing excessive cost. All sites in the United Kingdom in which we have
an interest are being monitored and upgraded in accordance with the Integrated Pollution Control. In certain instances, the Water Resources Act of 1991 and certain common law doctrines also impose
strict liability for water pollution. Additionally, the Environmental Act of 1995 places cleanup requirements on the owners and occupiers of contaminated property.

Under
Belgian national and regional legislation, licensing conditions imposed on oil refineries and terminals impose certain sanctions, including remediation orders and fines. Damages
may also be

10

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imposed for pollution-related injury to persons or property. Swedish environmental regulations additionally impose sanctions for spills and unauthorized emissions.

Our
operations are subject to certain international agreements and conventions, imposing liability for environmental damage arising from marine pollution and oil spills and to treaties
regulating the trans-border shipment of hazardous chemicals and wastes.

We
may incur significant capital costs to comply with increasingly stringent environmental laws and regulations. Potential environmental expenditures include improvements to wastewater
treatment facilities, sulfur removal operations and containment of underground leakage at refinery complexes, service stations and crude oil and refined product storage terminals.

During
2001, our subsidiaries and joint ventures spent, collectively, approximately $30 million for environmental, health and safety capital improvements in their operations. We
anticipate budgeting, collectively, approximately $145 million for environmental and health and safety capital projects over the next five years. The above expenditure and anticipated budget
include 50% (representing our percentage interest in these companies) of the total amount spent by Ruhr Oel and Nynäs in 2001 and budgeted by these companies for the next five years.

We
believe that our subsidiaries and joint venture operations are in substantial compliance with all applicable environmental laws, and additional efforts will continue to be made to
fulfill future environments laws requirements.

Safety

We are subject to strict occupational health and safety laws and maintain comprehensive safety, training and maintenance programs. We believe that our
subsidiaries and joint venture operations are in substantial compliance with applicable occupational health and safety laws.

4.C Organizational structure

We are a wholly owned subsidiary of Petróleos de Venezuela, the national oil company of the Bolivarian Republic of Venezuela. PDVSA is engaged in
various aspects of the petroleum industry, including the exploration, production and upgrading of crude oil and natural gas, or upstream operations; the refining, marketing and transportation of crude
oil, natural gas and refined petroleum products, or downstream operations; the production and marketing of petrochemicals; and the development and marketing of Venezuela's natural bitumen, known as
Orimulsion®, and coal resources. PDVSA's crude oil and natural gas reserves and our upstream operations are located in Venezuela, while our downstream operations are located in Venezuela,
North America, Europe and the Caribbean.

Propernyn
is Petróleos de Venezuela's holding company for investments, located in Germany, Sweden, the United Kingdom, Belgium and the Caribbean. Since 1986, through
investments in us and in our affiliates, Petróleos de Venezuela has implemented a worldwide program of downstream integration into major consumer markets, designed to establish
long-term value-added outlets for its crude oil production and refined products. Prior to the sale and transfer of our share ownership in PDV Holding to Petróleos de
Venezuela effective December 1, 2000, we were also PDVSA's principal holding company for its investments in the United States.

11

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Our significant subsidiaries, country of incorporation and our proportion of ownership in such subsidiaries are as set forth below:

LOGO

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4.D  Property, plant and equipment

See note 6 to our consolidated financial statements included under "Item 18. Financial Statements."

Item 5. Operating and Financial Review and Prospects

Basis of presentation

The following discussion should be read in conjunction with Propernyn's consolidated financial statements included elsewhere herein.

5.A  Operating results

Overview

Our consolidated operations consisted of the operations of (1) PDV Europa and its consolidated subsidiaries and joint ventures, (2) BOPEC and
(3) Baproven Limited, our wholly owned subsidiary which owns 100% of BORCO. Joint ventures are accounted for under the equity method.

Effective
December 1, 2000, we sold and transferred to Petróleos de Venezuela all of our share ownership in PDV Holding for a purchase price of
$3,315.1 million, in exchange for the setoff of loans payable by us to PDVSA of $1,647.9 million and a setoff of a distribution payable by us to Petróleos de Venezuela on
that date of $1,667.2 million. The purchase price was equal to the carrying value of our

12

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investment in PDV Holding at that date; as such, we incurred no gain or loss in connection with the sale.

As
a result of the transfer, the only operations remaining at our company are in Europe and the Caribbean. These operations, as detailed below, are very small relative to our historical
operations. Our results after the transfer are not comparable to our results prior to the transfer. For information on the revenues, gross profit and net income of the transferred assets, see
note 1 to our consolidated financial statements.

Results of Operations2001 compared to 2000

Our results of operations for 2000 include those of PDV Holding for the eleven-month period from January 1, 2000 through November 30, 2000.

The
table below sets forth our results of operations for 2001 and 2000 that are attributable to PDV Holding and our results of operations for 2001 and 2000 that are attributable to the
rest of our operating subsidiaries:

|                                      |  | Total |   | PDV Holding |  | Continuing
Operations |  
|------------------------------------- |  | ----- | - | ----------- |  | --------------------- | -
|
|For the year ended December 31, 2001: |  |       |   |             |  |                       |  
|Total net revenues                    |  | 62    |   |            |  | 62                    |  
|Costs of operations                   |  | (45   | ) |            |  | (45                   | )
|Foreign exchange gain                 |  | 1     |   |            |  | 1                     |  
|Interest income from affiliates       |  |      |   |            |  |                      |  
|Income taxes                          |  |      |   |            |  |                      |  
|Extraordinary income                  |  | 16    |   |            |  | 16                    |  
|                                      |  |       |   |             |  |                       |  
|Net income                            |  | 34    |   |            |  | 34                    |  
|                                      |  |       |   |             |  |                       |  

|                                      |  | Total   |   | PDV Holding |   | Continuing
Operations |  
|------------------------------------- |  | ------- | - | ----------- | - | --------------------- | -
|
|For the year ended December 31, 2000: |  |         |   |             |   |                       |  
|Total net revenues                    |  | 20,511  |   | 20,446      |   | 65                    |  
|Costs of operations                   |  | (20,108 | ) | (20,018     | ) | (90                   | )
|Foreign exchange gain                 |  | 1       |   |            |   | 1                     |  
|Interest income from affiliates       |  | 77      |   | 75          |   | 2                     |  
|Income taxes                          |  | (183    | ) | (183        | ) |                      |  
|                                      |  |         |   |             |   |                       |  
|Net income/(loss)                     |  | 298     |   | 320         |   | (22                   | )
|                                      |  |         |   |             |   |                       |  

13

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The
table below sets forth our results of operations for 2001 and 2000:

|                                             |  | 2001 |   | 2000    |   | Increase
(Decrease) |   
|-------------------------------------------- |  | ---- | - | ------- | - | ------------------- | --
|
|Results of Operations2001 Compared to 2000: |  |      |   |         |   |                     |   
|Total net revenues                           |  | 62   |   | 20,511  |   | (100                | )%
|Costs of operations                          |  | (45  | ) | (20,108 | ) | (100                | )%
|Foreign exchange gain                        |  | 1    |   | 1       |   | 0                   | % 
|Interest income from affiliates              |  |     |   | 77      |   | (100                | )%
|Income taxes                                 |  |     |   | (183    | ) | (100                | )%
|Extraordinary incomenet of taxes            |  | 16   |   |        |   | 100                 | % 
|                                             |  |      |   |         |   |                     |   
|Net income                                   |  | 34   |   | 298     |   | (89                 | )%
|                                             |  |      |   |         |   |                     |   

In
2000, our results of operations were heavily dependent upon the results of operations of PDV Holding, and substantially all of our results of operations (representing approximately
99% of our revenues) were attributable to PDV America and its subsidiaries. For a description of the results of operations of our U.S. activities, see "Item 5. Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in PDV America's annual report on Form 10-K incorporated herein by reference.

|                                                        |  | 2001 |   | 2000 |   | Increase
(Decrease) |   
|------------------------------------------------------- |  | ---- | - | ---- | - | ------------------- | --
|
|Results of Continuing Operations2001 Compared to 2000: |  |      |   |      |   |                     |   
|Total net revenues                                      |  | 62   |   | 65   |   | (5                  | )%
|Costs of operations                                     |  | (45  | ) | (90  | ) | (50                 | )%
|Foreign exchange gain                                   |  | 1    |   | 1    |   | 0                   | % 
|Interest income from affiliates                         |  |     |   | 2    |   | (100                | )%
|Extraordinary incomenet of taxes                       |  | 16   |   |     |   | 100                 | % 
|                                                        |  |      |   |      |   |                     |   
|Net income/(loss)                                       |  | 34   |   | (22  | ) | 255                 | % 
|                                                        |  |      |   |      |   |                     |   

Our
continuing operations in 2000 exclude the operations of PDV Holding that were sold and transferred to Petróleos de Venezuela, effective December 1, 2000. The
following paragraphs discuss certain fluctuations in our continuing operations from 2000 to 2001.

Total
net revenues decreased by approximately $3 million from $65 million in 2000 to $62 million in 2001 primarily due to a decrease in equity in earnings of
approximately $4 million from our 50% interest in our joint venture investments in Europe.

Total
costs of operations decreased by approximately $45 million from $90 million in 2000 to $45 million in 2001 primarily due to Propernyn's interest expenses of
approximately $44 million in 2000.

Our
foreign exchange gains are recorded as being attributable to Propernyn, which we account for as a Caribbean entity in the tables that follow. The net effect of foreign exchange rate
fluctuations in 2001 was not significant, and resulted in a foreign exchange rate gain of approximately $1 million.

14

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The
following tables set forth certain results of operations and our total assets by geographic area:

Total Net Revenues by Geographic Area
Results of Operations2001 Compared to 2000

|              |                   | 2001 |    | 2000   |        | Increase
(Decrease) |     
|------------- | ----------------- | ---- | -- | ------ | ------ | ------------------- | ----
|
|United States |                   |     |    | 20,446 |        | (100                | )%  
|Europe        |                   | 17   |    | 21     |        | (19                 | )%  
|Caribbean     |                   | 45   |    | 44     |        | 2                   | %   
|              |                   |      |    |        |        |                     |     
|              | Total net revenue |      | 62 |        | 20,511 |                     | (100
|              |                   |      |    |        |        |                     |     

Total Net Income by Geographic Area
Results of Operations2001 Compared to 2000

|              |                  | 2001 |    | 2000 |     | Increase
(Decrease) |    
|------------- | ---------------- | ---- | -- | ---- | --- | ------------------- | ---
|
|United States |                  |     |    | 320  |     | (100                | )% 
|Europe        |                  | 33   |    | 22   |     | 50                  | %  
|Caribbean     |                  | 1    |    | (44  | )   | 102                 | %  
|              |                  |      |    |      |     |                     |    
|              | Total net income |      | 34 |      | 298 |                     | (89
|              |                  |      |    |      |     |                     |    

Total Assets by Geographic Area

|              |              | 2001 |     | 2000 |     | Increase
(Decrease) |   
|------------- | ------------ | ---- | --- | ---- | --- | ------------------- | --
|
|United States |              |     |     |     |     |                    |   
|Europe        |              | 203  |     | 211  |     | (4                  | )%
|Caribbean     |              | 286  |     | 277  |     | 3                   | % 
|              |              |      |     |      |     |                     |   
|              | Total assets |      | 489 |      | 488 |                     |  
|              |              |      |     |      |     |                     |   

Results of Operations2000 compared to 1999

Our results of operations for 2000 include those of PDV Holding for the eleven-month period from January 1, 2000 through November 30, 2000. The
table below sets forth our results of operations

15

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for 2000 and 1999 that are attributable to PDV Holding and our results of operations for 2000 and 1999 that are attributable to the rest of our operating subsidiaries:

|                                      |  | Total   |   | PDV Holding |   | Continuing
Operations |  
|------------------------------------- |  | ------- | - | ----------- | - | --------------------- | -
|
|For the year ended December 31, 2000: |  |         |   |             |   |                       |  
|Total net revenues                    |  | 20,511  |   | 20,446      |   | 65                    |  
|Costs of operations                   |  | (20,108 | ) | (20,018     | ) | (90                   | )
|Foreign exchange gain                 |  | 1       |   |            |   | 1                     |  
|Interest income from affiliates       |  | 77      |   | 75          |   | 2                     |  
|Income taxes                          |  | (183    | ) | (183        | ) |                      |  
|                                      |  |         |   |             |   |                       |  
|Net income/(loss)                     |  | 298     |   | 320         |   | (22                   | )
|                                      |  |         |   |             |   |                       |  

|                                      |  | Total   |   | PDV Holding |   | Continuing
Operations |  
|------------------------------------- |  | ------- | - | ----------- | - | --------------------- | -
|
|For the year ended December 31, 1999: |  |         |   |             |   |                       |  
|Total net revenues                    |  | 13,405  |   | 13,300      |   | 105                   |  
|Costs of operations                   |  | (13,309 | ) | (13,214     | ) | (95                   | )
|Foreign exchange gain                 |  | 25      |   |            |   | 25                    |  
|Interest income from affiliates       |  | 89      |   | 87          |   | 2                     |  
|Income taxes                          |  | (49     | ) | (49         | ) |                      |  
|                                      |  |         |   |             |   |                       |  
|Net income                            |  | 161     |   | 124         |   | 37                    |  
|                                      |  |         |   |             |   |                       |  

The
table below sets forth our results of operations for 2000 and 1999:

|                                             |  | 2000    |   | 1999    |   | Increase
(Decrease) |   
|-------------------------------------------- |  | ------- | - | ------- | - | ------------------- | --
|
|Results of Operations2000 Compared to 1999: |  |         |   |         |   |                     |   
|Total net revenues                           |  | 20,511  |   | 13,405  |   | 53                  | % 
|Costs of operations                          |  | (20,108 | ) | (13,309 | ) | 51                  | % 
|Foreign exchange gain                        |  | 1       |   | 25      |   | (96                 | )%
|Interest income from affiliates              |  | 77      |   | 89      |   | (13                 | )%
|Income taxes                                 |  | (183    | ) | (49     | ) | 273                 | % 
|                                             |  |         |   |         |   |                     |   
|Net income                                   |  | 298     |   | 161     |   | 85                  | % 
|                                             |  |         |   |         |   |                     |   

Our
results of operations were heavily dependent upon the results of operations of PDV Holding. In 2000 and 1999, substantially all of our results of operations (representing
approximately 99% of our revenues) were attributable to PDV America and its subsidiaries. For a description of the results of operations of our U.S. activities, see "Item 5. Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in PDV America's annual report on Form 10-K incorporated herein by reference.

16

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|                                                        |  | 2000 |   | 1999 |   | Increase
(Decrease) |   
|------------------------------------------------------- |  | ---- | - | ---- | - | ------------------- | --
|
|Results of Continuing Operations2000 Compared to 1999: |  |      |   |      |   |                     |   
|Total net revenues                                      |  | 65   |   | 105  |   | (38                 | )%
|Costs of operations                                     |  | (90  | ) | (95  | ) | (5                  | )%
|Foreign exchange gain                                   |  | 1    |   | 25   |   | (96                 | )%
|Interest income from affiliates                         |  | 2    |   | 2    |   |                    |   
|                                                        |  |      |   |      |   |                     |   
|Net income/(loss)                                       |  | (22  | ) | 37   |   | 159                 | % 
|                                                        |  |      |   |      |   |                     |   

Our
continuing operations in 2000 and 1999 exclude the operations of PDV Holding that were sold and transferred to Petróleos de Venezuela, effective December 1,
2000. The following paragraphs discuss certain fluctuations in our continuing operations from 1999 to 2000.

Total
net revenues decreased by approximately $40 million from $105 million in 1999 to $65 million in 2000 primarily due to (1) a write-off of an
accounts payable to an affiliate of approximately $57 million that was included in other income in 1999, less (2) an increase in equity in earnings of approximately $11 million
from our 50% interest in our joint venture investments in Europe.

Total
costs of operations decreased by approximately $5 million from $95 million in 1999 to $90 million in 2000 primarily due to the write-off of an
accounts receivable of approximately $4 million in 1999.

The
foreign exchange gain in 1999 of approximately $25 million arose from foreign exchange rate movements from our investments in Europe relative to the U.S. dollar. Our foreign
exchange gains are recorded as being attributable to Propernyn, which we account for as a Caribbean entity in the tables
that follow. The net effect of foreign exchange rate fluctuations in 2000 was not significant, and resulted in a foreign exchange rate gain of approximately $1 million.

Interest
income from affiliates did not fluctuate significantly from 1999 to 2000, and was approximately $2 million in both years.

The
following tables set forth certain results of operations and our total assets by geographic area:

Total Net Revenues by Geographic Area
Results of Operations2000 Compared to 1999

|                  |  | 2000   |  | 1999   |  | Increase
(Decrease) |   
|----------------- |  | ------ |  | ------ |  | ------------------- | --
|
|United States     |  | 20,446 |  | 13,300 |  | 54                  | % 
|Europe            |  | 21     |  | 8      |  | 163                 | % 
|Caribbean         |  | 44     |  | 97     |  | (55                 | )%
|                  |  |        |  |        |  |                     |   
|Total net revenue |  | 20,511 |  | 13,405 |  | 53                  | % 
|                  |  |        |  |        |  |                     |   

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Total Net Income by Geographic Area  Results of Operations2000 Compared to 1999

|              |                  | 2000 |     | 1999 |     | Increase
(Decrease) |   
|------------- | ---------------- | ---- | --- | ---- | --- | ------------------- | --
|
|United States |                  | 320  |     | 124  |     | 158                 | % 
|Europe        |                  | 22   |     | 9    |     | 144                 | % 
|Caribbean     |                  | (44  | )   | 28   |     | (257                | )%
|              |                  |      |     |      |     |                     |   
|              | Total net income |      | 298 |      | 161 |                     | 85
|              |                  |      |     |      |     |                     |   

Total Assets by Geographic Area

|              |              | 2000 |     | 1999  |       | Increase
(Decrease) |    
|------------- | ------------ | ---- | --- | ----- | ----- | ------------------- | ---
|
|United States |              |     |     | 8,103 |       |                    |    
|Europe        |              | 211  |     | 259   |       | (19                 | )% 
|Caribbean     |              | 277  |     | 162   |       | 71                  | %  
|              |              |      |     |       |       |                     |    
|              | Total assets |      | 488 |       | 8,524 |                     | (94
|              |              |      |     |       |       |                     |    

New Accounting Standards

In July 2001, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards No. 141, "Business
Combinations" ("SFAS No. 141"). SFAS No. 141 addresses financial accounting and reporting for business combinations and requires that all business combinations initiated after
June 30, 2001 be accounted for under the purchase method. Use of the pooling of interests method is no longer permitted. The adoption of SFAS No. 141 did not impact Propernyn's
consolidated financial position nor results of operations.

In
July 2001, the FASB issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). SFAS No. 142
addresses financial accounting and reporting for acquired goodwill and other in intangible assets, and requires that goodwill and intangible assets with an indefinite life no longer be amortized but,
instead, be periodically reviewed for impairment. The provisions of SFAS No. 142 are fully effective for fiscal years beginning after December 15, 2001. However, certain provisions of
SFAS No. 142 are applicable to goodwill and other intangible assets
acquired in transactions completed after June 30, 2001. The adoption of SFAS No. 142 will not materially impact Propernyn's consolidated financial position or results of operations.

In
June 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"), which addresses
financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 applies to
legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of such assets. SFAS No. 143
requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it was incurred if a reasonable estimate of such fair value can be made. The fair
value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of such asset. The liability is adjusted at the end of
each period to reflect the passage of time and changes in the estimated future cash flows underlying the initial fair value measurement, and such adjustments are reflected in operations. If
Propernyn's

18

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obligation is settled for other than the carrying amount of the liability, Propernyn will recognize a gain or loss on settlement.

Propernyn
is required to, and plans to, adopt SFAS No. 143 on January 1, 2003. In order to accomplish this, Propernyn must identify all its legal obligations for asset
retirement obligations, if any, and determine the fair value of these obligations as of the date of adoption of SFAS No. 143. The determination of fair value is a complex exercise, and
Propernyn will need to gather market information and develop cash flow models in order to make this determination. Additionally, Propernyn will need to develop processes to track and monitor these
obligations. Because of the effort necessary to comply with the adoption of SFAS No. 143, Propernyn has not determined that impact on their consolidated financial statements that may result
from the adoption of SFAS No.143.

In
August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
No. 144"). SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 requires that
long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. SFAS No. 144 requires companies to separately
report discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held
for sale. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The adoption of SFAS No. 144 will not impact Propernyn's consolidated
financial position or results of operations.

The
American Institute of Certified Public Accounts has issued a "Statement of Position" exposure draft on cost capitalization that is expected to require companies to expense the
non-capital portion of major maintenance costs as incurred. The statement is expected to require that any existing
unamortized deferred non-capital major maintenance costs be expensed immediately. The exposure draft indicates that this change will be required to be adopted for the fiscal years
beginning after June 15, 2002, and that the effect of expensing existing unamortized deferred non-capital major maintenance costs will be reported as a cumulative effect of an
accounting change in the consolidated statement of income. Propernyn has not determined the impact of its financial statements that may result from this statement of position.

5.B  Liquidity and Capital Resources

Cash Flows from Operating Activities

For the year ended December 31, 2001, our net cash flows provided by operating activities totaled approximately $21 million, reflecting principally
$34 million of net income, $12 million in depreciation and amortization, $7 million in equity in earnings of affiliates in excess of distribution, $9 million in unrealized
foreign exchange gain on long-term debt and notes payable to affiliates and net change in other items of approximately $9 million. Net changes in other items were due mainly to an
increase in the inventories and a decrease in amounts due to affiliates.

Cash Flows from Investing Activities

For the year ended December 31, 2001, consolidated net cash used by our investing activities totaled $18 million, attributable mainly to
$47 million of loans to affiliates offset by $37 million of proceeds from notes receivable from affiliates, $16 million of capital expenditures and $7 million in returns of
investments in and advances to other affiliates.

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Cash Flows from Financing Activities

There were no financing activities for the year ended December 31, 2001.

Item 6. Directors, Senior Management and Employees

6.A  Directors and senior management

In accordance with Dutch law governing closed limited liability companies and in accordance with our articles of association, we are managed by a board of
management acting under the instruction of the supervisory board that has full power and executive authority to manage our affairs. The supervisory board is responsible for reviewing our annual
accounts and preparing an annual report that is presented at our annual shareholder's meeting. Our Shareholder's meetings may be convened by the supervisory board or the board of management. Each
board of management member has authority to represent Propernyn in dealings with third parties.

Members
of the supervisory board and of the board of management are appointed by and serve at the discretion of our shareholder. The current members are:

Name

Age

Position with Propernyn B.V.

Date AppointedLuis Dávila

48

Supervisory Board Member

2000Alexander Cárdenas

47

Supervisory Board Member

2000Julián Fleszczynski

54

Supervisory Board Member, Board of Management Member and Chief Executive Officer

2000Carlos Yánez

49

Board of Management Member and Chief Financial and Accounting Officer

2000Francisco Bello

48

Board of Management Member

2001


Certain
information on the current members of our supervisory board and board of management is set forth below:

Luis Dávilais a member of Propernyn's Supervisory Board. He holds a Bachelor's degree in Political Science and
Administration from the Central University of Venezuela in 1977. He is also currently the Chief Financial Officer of Petróleos de Venezuela, a Director of Interven, S.A., a member of
the Supervisory Board of Propernyn B.V., a Director of AB Nynäs petroleum, a member of the Shareholders Committee of Ruhr Oel GmbH, Principal Director of Citgo Petroleum Corporation, as
well as President of the Employees Savings Funds and the PDVSA's Pension Fund, which positions he has held since June 2000. Mr. Dávila has also served as a Principal
Director and the President of PDVSA Finance Ltd. since January 2000. Prior to serving in such capacities, Mr. Dávila served as Petróleos de
Venezuela's Financial Planning and Control Manager from September 1999 to June 2000, as Petróleos de Venezuela's Asset Portfolio Manager from April 1999 to
September 1999 and as Petróleos de Venezuela's Corporate Outsourcing and Structured Finance Manager from 1997 to 1999. Mr. Dávila started his career in the
petroleum industry at Corpoven, S.A. in 1982, and served in various managerial finance positions within Corpoven, S.A. until 1997, including as Corporate Treasurer, Financial Planning Manager,
International Financing Manager, Financial Systems Planning Manager and Budget Supervisor.

Alexander Cárdenasis a member of Propernyn's Supervisory Board. He graduated from the Universidad Simón
Bolívar with a degree in Chemical Engineering in 1977 and obtained a Master's Degree in Business Administration from the University of Cornell in the United States in 1982. He began his
career in the oil industry in 1977, in Maraven S.A., where he worked in various technical

20

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positions in the commerce and supply divisions. In 1986, Mr. Cárdenas joined Interven, S.A. as Strategic Planning Analyst. He was also a business manager at CITGO. In 1991,
Mr. Cárdenas was engaged in a brief assignment in PDV USA in New York, as manager in charge of purchases, and in that same year he was also assigned to Germany to occupy the
position of sub-manager of the Gelsenkirchen Complex at Ruhr Oel. In 1992, he was appointed as sub-manager in charge of refining and in 1995 as general manager in charge of
supply and refining, in each case, at the Gelsenkirchen Complex at Ruhr Oel. In 1996, Mr. Cárdenas returned to Interven, S.A. as a business manager. In 1998, he was appointed as
General Manager of International Businesses of Interven, S.A. In March 1999, he was appointed Managing Director of Interven, S.A. and in January 2001 he was appointed General Manager of
PDV Europa.

Julián Fleszczynskiis our Chief Executive Officer and is a member of our Supervisory Board and Board of Management. He
holds a Bachelor of Arts degree from the Florida State University in the United States (1972), and a Master's degree in Hydrocarbon Economy from the Simón Bolivar University
(1979). He is also currently the Treasurer of Petróleos de Venezuela, the President of PDV Insurance Company Ltd., Director of the Sociedad de Fomento de Inversiones Petroleras,
C.A., Principal Director of APJ International Ltd., Vice President of Multinational Finance Company Ltd. and Director of PDV Sweeny Inc. Since July 2000,
Mr. Fleszczynski has also served as PDVSA Finance Ltd.'s Principal Director and Vice President. Mr. Fleszczynski served as Corporación Venezolana de
Petróleo's Financial Planning and Control Manager from March 1999 to June 2000 and as Senior Financial Advisor of PDV America, Inc. from December 1996 to
March 1999. Since 1986 he served in various managerial positions at Meneven S.A. and Corpoven, S.A. affiliates such as District Finance Manager, Budget and Evaluation Manager, Financial
Planning, Deputy General Manager of Corporate Finance Department and Project Manager of the Corporate Financial Systems. He started his career in the petroleum industry in 1974 with Menegrande Oil
Company (later known as Meneven S.A.).

Carlos Yánezis our Chief Financial and Accounting Officer and a member of our Board of Management. He graduated from the
Central University of Venezuela with a degree in Economics (1985). He is also currently the Financial Planning and Control Manager of Petróleos de Venezuela. Since July 2000, he
has also served as PDVSA Finance Ltd.'s Principal Director and Financial Manager. Mr. Yanez served as Finance Manager at the Petróleo de Venezuela's Exploration &
Production Division from January 1999 to June 2000, and has served in managerial roles since 1989. Mr. Yanez was Comptroller at Maraven, S.A. in 1997, Finance Manager at Bitumenes
del Orinoco S.A. from 1996 to 1998, Finance Manager at Intevep, S.A. from 1995 to 1996 and Financial Planning Manager in PDV UK, London from 1992 to 1995. Mr. Yanez started his career in the
petroleum industry in 1977 with Intevep, S.A.

Francisco Bellois a member of our Board of Management. He graduated from Santa María University in 1978 with a degree in
Accounting and is a certified internal auditor from the U.S. Internal Auditors Institute. Mr. Bello has also attended specialized finance and management courses at London Business School,
University of Michigan and the Wharton Business School. Mr. Bello began his career in the petroleum industry in 1982 at Meneven, S.A. where he served as Financial Accounting Supervisor in
Caracas' Finance Department until May 1985, after which he was assigned to Anaco as the Audit Superintendent. In 1987, he was named Financial and Operational Audit Superintendent of the El
Palito Refinery, and in 1988, he held the Accounting Advisor position in Caracas' Corporate Finance Department. He served at PDV-UK from 1990 to 1992, after which he was appointed
Investment and Insurance Manager in Caracas' Corpoven Treasury Management. From 1994 to 1996, he was PDVSA's Financial Audit Manager. In 1997, he was assigned to Interven, S.A. as Audit Manager. In
1998, he was appointed Administration and Process Manager of Interven, S.A., a position which he still holds today.

21

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6.B  Compensation

All of our supervisory board members and board of management members are also directors or executive officers of Petróleos de Venezuela, and are
compensated by Petróleos de Venezuela. For the year ended December 31, 2001, our supervisory board members and board of management members received no compensation from Propernyn
for their services in such capacities.

6.C  Board practices

The dates of appointment of the current members of our supervisory board and board of management are as set forth under "Item 6.A Directors and senior
management." Our supervisory board and board of management members do not have set terms of appointment. We have not entered into any service or employment contracts with any of our supervisory board
and board of management members and executive officers.

6.E  Share ownership

As of June 1, 2002, we had 1,113 shares of common stock outstanding. All of our issued and outstanding shares of common stock are owned by
Petróleos de Venezuela.

Item 7. Major Shareholders and Related Party Transactions

7.A  Major shareholders

We are a wholly owned subsidiary of Petróleos de Venezuela, the wholly owned national oil company of the Bolivarian Republic of Venezuela. As a
result, Petróleos de Venezuela directly nominates and selects the members of our supervisory board and our board of management. The current members of our supervisory board and board of
management are also executive officers of Petróleos de Venezuela. The Bolivarian Republic of Venezuela is not legally liable for our obligations or Petróleos de
Venezuela's obligations.

7.B  Related party transactions

In 2000, Propernyn made loans to PDVSA and its affiliates for a total amount of $116.9 million. The loans bear no interest and are payable upon demand in
dollars. The principal balance of the loans receivable was $115.3 million at December 31, 2001. See also note 3 to our consolidated financial statements, included under "Item 18.
Financial Statements."

22

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Item 8. Financial Information

8.A  Consolidated Statements and Other Financial Information

8.A.1    See Item 18.

8.A.2    See Item 18.

8.A.3    See Independent Auditors' Report on page F-1 included under "Item 18. Financial Statements."

8.A.7    Legal proceedings

We and our subsidiaries and joint ventures are involved in various claims and lawsuits arising in the ordinary course of business. We record accruals for
potential losses when our management believes that such losses are probable and reasonably estimated. If such lawsuits and claims were to be determined
in a manner adverse to us or any of our subsidiaries involved and in amounts greater than our accruals, such determinations could have a material adverse effect on the our results of operations in a
given reporting period. However, in the opinion of our management, based on the management's current assessment, the ultimate resolution of these lawsuits and claims would not exceed its estimated
potential losses by a material amount. In addition, insurance coverage is available for potential losses with respect to such lawsuits and claims. For details and a description of various lawsuits and
claims in which subsidiaries of PDV America are involved, see "Item 3. Legal Proceedings" and "Items 1 and 2. Business and PropertiesEnvironment and Safety" of PDV America's annual report
on Form 10-K, incorporated herein by reference.

Item 9. The Offer and Listing

9.A      Offer and listing details

Our guarantee of PDV America's notes are not traded separately from such notes. PDV America's notes are traded principally on the New York Stock Exchange and are
also listed on the Luxembourg Stock Exchange.

Item 10. Additional Information

10.D     Exchange controls

There are no governmental laws, decrees, regulations or other legislation of The Netherlands Antilles that restrict the export or import of capital, or that
affect the remittance of dividends or other payments to non-residents of The Netherlands Antilles who hold our shares. In addition, there are no limitations imposed by the laws of The
Netherlands Antilles or our memorandum and articles of association with respect to the right of non-residents of The Netherlands Antilles to hold or vote our shares.

10.E     Taxation

Under current Dutch tax laws, all payments made by us pursuant to our obligations under our guarantees of PDV America's senior notes to any holder of such notes
may be made free of withholding or deduction of, for or on account of, any taxes of whatever nature imposed, levied,

23

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withheld or assessed by The Netherlands or any political subdivision or taxing authority thereof or therein.

Under
current Dutch tax laws, payments made by us pursuant to our obligations under our guarantees of PDV America's senior notes to any holder of such notes will not be subject to any
Dutch taxes in respect of any benefit derived or deemed to be derived or any gain realized from any rights that such holder has pursuant to our guarantees of PDV America's notes, provided that all of
the following conditions are satisfied:



10.H    Documents on display

The documents that are exhibits to or incorporated by reference in this annual report can be read at the U.S. Securities and Exchange Commission's public
reference facilities at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.

Item 11. Quantitative and Qualitative Disclosures About Market Risks

We are exposed to market risks, primarily related to hydrocarbon price fluctuations, interest rate fluctuations and foreign currency exchange risks. We do not use
derivatives instruments to protect us from these risks. See note 1 (Commodity and Interest Rate Derivatives) to our consolidated financial statements, included under "Item 18. Financial
Statements."

24

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PART III

Item 17. Financial Statements

We have responded to Item 18 in lieu of this item.

Item 18. Financial Statements

See pages F-1 through F-34, included under "Item 18. Financial Statements," incorporated herein by reference.

The
following financial statements, together with the report of Deloitte & Touche LLP thereon, are filed as a part of this annual report:

|                                                                                                                                  |                                                                                                                   | Page       
|--------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | -----------
|Independent Auditors' Report                                                                                                      |                                                                                                                   | F-1        
|Consolidated Financial Statements:                                                                                                |                                                                                                                   |            
|                                                                                                                                  | Consolidated Balance Sheets as of December 31, 2001 and 2000                                                      |            
|                                                                                                                                  | Consolidated Statements of Income and Comprehensive Income for each of the three years in the                     |            
|period ended December 31, 2001                                                                                                    |                                                                                                                   |            
|                                                                                                                                  | Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2001           |            
|                                                                                                                                  | Consolidated Statements of Shareholder's Equity for each of the three years in the period ended December 31, 2001 |            
|Notes to the Consolidated Financial Statements                                                                                    |                                                                                                                   | F-9  F-30 
|Financial Statement ScheduleCondensed Consolidated Financial Information of the Registrant                                       |                                                                                                                   | F-31  F-33
|Financial Statements ScheduleValuation and Qualifying Accounts for each of the three years in the period ended December 31, 2001 |                                                                                                                   | F-34       

Item 19. Exhibits

|Exhibit 99.1 |  | Annual Report on Form 10-K of PDV America, Inc. for the year ended December 31, 2001 as first filed with the U.S. Securities and Exchange Commission (Commission File No. 001-12138) on March 29,
2002 (incorporated herein by reference).
|------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | PROPERNYN B.V.
| |  | --------------
| |  | By:           

Date:
June 14, 2002

26

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ANNEX A  Measurement Conversion Table

|1 barrel                       |  | = |  | 42 U.S. gallons                                 |  |   |  |                                                                                                                       
|------------------------------ |  | - |  | ----------------------------------------------- |  | - |  | ----------------------------------------------------------------------------------------------------------------------
|barrel of oil equivalent       |  | = |  | 1 barrel of crude oil                           |  | = |  | 5,800 cubic feet of gas (based on the actual average equivalent energy content of PDVSA's proved natural gas reserves)
|1 barrel of crude oil per day  |  | = |  | approximately 50 tons of crude oil per year     |  |   |  |                                                                                                                       
|1 cubic meter                  |  | = |  | 33.315 cubic feet                               |  |   |  |                                                                                                                       
|1 metric ton                   |  | = |  | 1,000 kilograms                                 |  | = |  | approximately 2,205 pounds                                                                                            
|1 metric ton of crude oil      |  | = |  | 1 metric ton of crude oil                       |  | = |  | approximately 7.3 barrels of crude oil (assuming a specific gravity of 33°)                                           
|1 metric ton of oil equivalent |  | = |  | approximately 1,125 cubic meters of natural gas |  |   |  |                                                                                                                       

Glossary of Certain Oil and Gas Terms

Unless
the context indicates otherwise, the following terms used in this annual report have the meanings set forth below:

|"API gravity"           |  | An indication of the density of crude oil or other liquid hydrocarbons as measured by a system recommended by the American Petroleum Institute (API), measured in degrees. The lower the API gravity, the heavier the
compound. For example, asphalt has an API gravity of 8° and gasoline has an API gravity of 50°.
|----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|"barrels" or "bbl"      |  | Barrels of crude oil, including condensate and natural gas liquids.                                                                                                                                                                                                                                                  
|"BPD"                   |  | Barrels of oil per day.                                                                                                                                                                                                                                                                                              
|"condensate"            |  | Light carbon substances produced with natural gas that condenses into liquid at normal temperatures and pressures associated with surface production equipment.                                                                                                                                                      
|"crude oil"             |  | Crude oil containing condensate.                                                                                                                                                                                                                                                                                     
|"distillate"            |  | Liquid hydrocarbons, distilled from crude or condensate.                                                                                                                                                                                                                                                             
|"extra-heavy crude oil" |  | Crude with an API average of less than 11°.                                                                                                                                                                                                                                                                          
|"feedstocks"            |  | Partially refined petroleum that is added to the crude slate and converted into petroleum products.                                                                                                                                                                                                                  
|"MMB"                   |  | Millions of barrels.                                                                                                                                                                                                                                                                                                 
|"MBPD"                  |  | Thousands of barrels per day.                                                                                                                                                                                                                                                                                        
|"olefins"               |  | A class of unsaturated hydrocarbons.                                                                                                                                                                                                                                                                                 
|"sour crude"            |  | Any crude whose long residue has a sulfur content of 1% or higher.                                                                                                                                                                                                                                                   

A-1

---

PROPERNYN B.V. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2001 AND 2000

AND FOR EACH OF THE THREE YEARS IN

THE PERIOD ENDED DECEMBER 31, 2001

AND INDEPENDENT AUDITORS' REPORT

---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                 |  | Pages    
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---------
|Independent Auditors' Report                                                                                                     |  | F-1      
|Consolidated Financial Statements                                                                                                |  |          
|Consolidated Balance Sheets as of December 31, 2001 and 2000                                                                     |  | F-2      
|Consolidated Statements of Income and Comprehensive Income for each of the three years in the period ended December 31, 2001     |  | F-3      
|Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2001                          |  | F-4F-6  
|Consolidated Statements of Shareholder's Equity for the each of the three years in the period ended December 31, 2001            |  | F-7      
|Notes to the Consolidated Financial Statements                                                                                   |  | F-8F-29 
|Financial Statement ScheduleCondensed Consolidated Financial Information of the Registrant                                      |  | F-30F-32
|Financial Statement ScheduleValuation and Qualifying Accounts for each of the three years in the period ended December 31, 2001 |  | F-33     

---



INDEPENDENT AUDITORS' REPORT

To
the Board of Directors and Shareholder of Propernyn B.V.:

We
have audited the accompanying consolidated balance sheets of Propernyn B.V. and subsidiaries (the "Company") as of December 31, 2001 and 2000, and the related consolidated
statements of income and comprehensive income, shareholder's equity and cash flows for each of the three years in the period ended December 31, 2001. Our audits also included the financial
statement schedules listed in the index to the consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Propernyn B.V. and subsidiaries at December 31, 2001 and
2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

|/s/DELOITTE & TOUCHE |  |  | 
|-------------------- |  |  | 

Curaçao,
Netherlands Antilles
April 3, 2002

F-1

---



PROPERNYN B.V. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2001 AND 2000        (Thousands of U.S. dollars)

|                                                                                                           |                                   | 2001                      |         | 2000    |       
|---------------------------------------------------------------------------------------------------------- | --------------------------------- | ------------------------- | ------- | ------- | ------
|ASSETS                                                                                                     |                                   |                           |         |         |       
|CURRENT ASSETS:                                                                                            |                                   |                           |         |         |       
|                                                                                                           | Cash and cash equivalents         |                           | $       | 24,771  |       
|                                                                                                           | Accounts receivable, net          |                           |         | 4,675   |       
|                                                                                                           | Due from affiliates               |                           |         | 5,989   |       
|                                                                                                           | Inventories                       |                           |         | 14,978  |       
|                                                                                                           | Prepaid expenses and other assets |                           |         | 269     |       
|                                                                                                           |                                   |                           |         |         |       
|                                                                                                           |                                   | Total current assets      |         |         | 50,682
|FIXED ASSETS:                                                                                              |                                   |                           |         |         |       
|                                                                                                           | NOTES RECEIVABLE FROM AFFILIATES  |                           |         | 115,315 |       
|                                                                                                           | PROPERTY, PLANT AND EQUIPMENTNET |                           |         | 128,682 |       
|                                                                                                           | INVESTMENTS IN AFFILIATES         |                           |         | 195,214 |       
|                                                                                                           |                                   |                           |         |         |       
|                                                                                                           | Total fixed assets                |                           |         | 439,211 |       
|                                                                                                           |                                   |                           |         |         |       
|                                                                                                           | TOTAL                             |                           | $       | 489,893 |       
|                                                                                                           |                                   |                           |         |         |       
|LIABILITIES AND SHAREHOLDER'S EQUITY                                                                       |                                   |                           |         |         |       
|CURRENT LIABILITIES:                                                                                       |                                   |                           |         |         |       
|                                                                                                           | Due to affiliates                 |                           | $       | 53,790  |       
|                                                                                                           | Accounts payable                  |                           |         | 4,858   |       
|                                                                                                           | Income taxes payable              |                           |         | 233     |       
|                                                                                                           | Other current liabilities         |                           |         | 2,321   |       
|                                                                                                           |                                   |                           |         |         |       
|                                                                                                           |                                   | Total current liabilities |         |         | 61,202
|NOTES PAYABLE TO AFFILIATES                                                                                |                                   |                           | 187,624 |         |       
|COMMITMENTS AND CONTINGENCIES (Note 13)                                                                    |                                   |                           |         |         |       
|SHAREHOLDER'S EQUITY:                                                                                      |                                   |                           |         |         |       
|Common stock, $55.71 (Nfl. 100) par value, authorized 5,000 shares and 1,113 shares issued and outstanding |                                   |                           | 62      |         |       
|Additional capital                                                                                         |                                   |                           | 107,532 |         |       
|Retained earnings                                                                                          |                                   |                           | 199,217 |         |       
|Accumulated other comprehensive loss                                                                       |                                   |                           | (65,744 | )       |       
|                                                                                                           |                                   |                           |         |         |       
|Total shareholder's equity                                                                                 |                                   |                           | 241,067 |         |       
|                                                                                                           |                                   |                           |         |         |       
|TOTAL                                                                                                      |                                   | $                         | 489,893 |         | $     
|                                                                                                           |                                   |                           |         |         |       

See
notes to consolidated financial statements

F-2

---



PROPERNYN B.V. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR EACH  OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001        (Thousands of U.S.
dollars)

|                                                                                                                                         |                 | 2001 |        | 2000 |   | 1999       |        
|---------------------------------------------------------------------------------------------------------------------------------------- | --------------- | ---- | ------ | ---- | - | ---------- | -------
|REVENUES:                                                                                                                                |                 |      |        |      |   |            |        
|Net sales                                                                                                                                |                 | $    | 22,892 |      | $ | 20,221,910 |        
|Sales to affiliates                                                                                                                      |                 |      | 21,377 |      |   | 182,764    |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|                                                                                                                                         |                 |      | 44,269 |      |   | 20,404,674 |        
|Equity in earnings/(losses) of affiliates                                                                                                |                 |      | 16,286 |      |   | 84,957     |        
|Other income (expense)net                                                                                                               |                 |      | 1,850  |      |   | 21,135     |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|                                                                                                                                         |                 |      | 62,405 |      |   | 20,510,766 |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|COST OF SALES AND EXPENSES:                                                                                                              |                 |      |        |      |   |            |        
|Cost of sales and operating expenses (including purchases of approximately $11.6 million, $9.0 billion and $5.0 billion from affiliates) |                 |      | 43,673 |      |   | 19,711,644 |        
|Selling, general and administrative expenses                                                                                             |                 |      | 1,284  |      |   | 209,727    |        
|Interest expense:                                                                                                                        |                 |      |        |      |   |            |        
|                                                                                                                                         | Capital leases  |      |        |     |   |            | 10,138 
|                                                                                                                                         | Related parties |      |        |     |   |            | 45,121 
|                                                                                                                                         | Other           |      |        |     |   |            | 130,295
|Write-off current asset receivable                                                                                                       |                 |      |       |      |   |           |        
|Minority interest                                                                                                                        |                 |      |       |      |   | 1,782      |        
|Foreign exchange (gain)/loss                                                                                                             |                 |      | (616   | )    |   | (1,211     | )      
|                                                                                                                                         |                 |      |        |      |   |            |        
|                                                                                                                                         |                 |      | 44,341 |      |   | 20,107,496 |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|INCOME BEFORE INTEREST INCOME AND INCOME TAXES                                                                                           |                 |      | 18,064 |      |   | 403,270    |        
|INTEREST INCOME FROM AFFILIATES                                                                                                          |                 |      |       |      |   | 76,996     |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|INCOME BEFORE INCOME TAXES AND EXTRA-ORDINARY INCOME                                                                                     |                 |      | 18,064 |      |   | 480,266    |        
|INCOME TAXES                                                                                                                             |                 |      | 103    |      |   | 182,753    |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|INCOME BEFORE EXTRA-ORDINARY INCOME                                                                                                      |                 |      | 17,961 |      |   | 297,513    |        
|EXTRA-ORDINARY INCOME, NET OF TAXES                                                                                                      |                 |      | 16,044 |      |   |           |        
|                                                                                                                                         |                 |      |        |      |   |            |        
|NET INCOME                                                                                                                               |                 |      | 34,005 |      |   | 297,513    |        
|OTHER COMPREHENSIVE INCOME (LOSS):                                                                                                       |                 |      |        |      |   |            |        
|Minimum pension liability adjustment, net of deferred taxes of $(2,012) in 2000 and $2,012 in 1999                                       |                 |      |       |      |   | 3,214      |        
|Foreign currency translation adjustments                                                                                                 |                 |      | (9,382 | )    |   | (12,752    | )      
|                                                                                                                                         |                 |      |        |      |   |            |        
|COMPREHENSIVE INCOME                                                                                                                     |                 | $    | 24,623 |      | $ | 287,975    |        
|                                                                                                                                         |                 |      |        |      |   |            |        

See
notes to consolidated financial statements

F-3

---



PROPERNYN B.V. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS FOR        EACH OF THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001        (Thousands of U.S. dollars)

|                                                                                                    |                                                                                           | 2001 |        | 2000   |   | 1999    |         
|--------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---- | ------ | ------ | - | ------- | --------
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                               |                                                                                           |      |        |        |   |         |         
|Net income                                                                                          |                                                                                           | $    | 34,005 |        | $ | 297,513 |         
|Adjustments to reconcile net income to net cash provided by operating activities:                   |                                                                                           |      |        |        |   |         |         
|                                                                                                    | Depreciation and amortization                                                             |      |        | 11,625 |   |         | 279,628 
|                                                                                                    | Provision for losses on accounts receivable                                               |      |        |       |   |         | (1,516  
|                                                                                                    | Deferred income taxes                                                                     |      |        |       |   |         | 77,329  
|                                                                                                    | Loss on sale of investments                                                               |      |        |       |   |         |        
|                                                                                                    | Distributions in excess of equity in earnings of affiliates                               |      |        | (7,491 | ) |         | 37,343  
|                                                                                                    | Unrealized foreign exchange (gain)/loss on long term debt and notes payable to affiliates |      |        | (9,382 | ) |         | (9,538  
|                                                                                                    | Other adjustments                                                                         |      |        |       |   |         | (2,711  
|Change in operating assets and liabilities, exclusive of acquisitions and dispositions of business: |                                                                                           |      |        |        |   |         |         
|                                                                                                    | Accounts receivable                                                                       |      |        | (762   | ) |         | (475,153
|                                                                                                    | Due from affiliates                                                                       |      |        | (17    | ) |         | (1,139  
|                                                                                                    | Inventories                                                                               |      |        | (1,729 | ) |         | (54,404 
|                                                                                                    | Prepaid expenses and other current assets                                                 |      |        | (68    | ) |         | 1,167   
|                                                                                                    | Other assets                                                                              |      |        | (3     | ) |         | (46,261 
|                                                                                                    | Accounts payable and other current liabilities                                            |      |        | 1,192  |   |         | 623,138 
|                                                                                                    | Income taxes payable and receivable                                                       |      |        | (8     | ) |         | 76,148  
|                                                                                                    | Due to affiliates                                                                         |      |        | (7,165 | ) |         | (90,996 
|                                                                                                    | Other liabilities                                                                         |      |        | 770    |   |         | (17,196 
|                                                                                                    |                                                                                           |      |        |        |   |         |         
|Net cash provided by operating activities                                                           |                                                                                           |      | 20,967 |        |   | 693,352 |         
|                                                                                                    |                                                                                           |      |        |        |   |         |         

See
notes to consolidated financial statements

F-4

---



PROPERNYN B.V. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS FOR  EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001        (Thousands of U.S. dollars)

|                                                        |  | 2001 |         | 2000 |   | 1999     |  
|------------------------------------------------------- |  | ---- | ------- | ---- | - | -------- | -
|CASH FLOWS FROM INVESTING ACTIVITIES:                   |  |      |         |      |   |          |  
|Capital expenditures on property, plant and equipment   |  |      | (15,520 | )    |   | (113,022 | )
|Proceeds from sales of property, plant and equipment    |  |      |        |      |   | 4,427    |  
|Loans to affiliates                                     |  |      | (46,803 | )    |   | 198      |  
|Proceeds from notes receivable from affiliates          |  |      | 36,719  |      |   | 250,000  |  
|Decrease in restricted cash                             |  |      |        |      |   | 3,015    |  
|Loans to LYONDELL.CITGO Refining LP                     |  |      |        |      |   | (7,023   | )
|Investment in LYONDELL-CITGO  Refining LP              |  |      |        |      |   | (13,400  | )
|Investments in and advances to other affiliates         |  |      | 7,235   |      |   | 155,861  |  
|Proceeds from sale of Petro-Chemical Transport          |  |      |        |      |   |         |  
|Cash of PDV Holding, Inc. and subsidiaries at sale      |  |      |        |      |   | (252,645 | )
|                                                        |  |      |         |      |   |          |  
|Net cash provided by/(used in) investing activities     |  |      | (18,369 | )    |   | 27,411   |  
|                                                        |  |      |         |      |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                   |  |      |         |      |   |          |  
|Net (repayments of) proceeds from revolving bank loans  |  |      |        |      |   | (462,000 | )
|Net (repayments of) proceeds from short term bank loans |  |      |        |      |   | (16,000  | )
|Payments on term bank loan                              |  |      |        |      |   | (39,935  | )
|Proceeds from issuance of senior notes                  |  |      |        |      |   |         |  
|Payments on UHS business purchase liability             |  |      |        |      |   |         |  
|Proceeds from issuance of taxable bonds                 |  |      |        |      |   |         |  
|(Payments on) proceeds from notes payable to affiliates |  |      |        |      |   |         |  
|Proceeds from issuance of tax-exempt bonds              |  |      |        |      |   | (63,291  | )
|Payments of capital lease obligations                   |  |      |        |      |   | (7,954   | )
|Proceeds from issuance of bank note                     |  |      |        |      |   |         |  
|Repayments of other debt                                |  |      |        |      |   | (5,329   | )
|Payments on private placement senior notes              |  |      |        |      |   | (250,000 | )
|Proceeds from return of capital                         |  |      |        |      |   |         |  
|                                                        |  |      |         |      |   |          |  
|Net cash used in financing activities                   |  |      |        |      |   | (844,509 | )
|                                                        |  |      |         |      |   |          |  
|(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS        |  |      | 2,598   |      |   | (123,746 | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR            |  |      | 22,173  |      |   | 145,919  |  
|                                                        |  |      |         |      |   |          |  
|CASH AND CASH EQUIVALENTS, END OF YEAR                  |  | $    | 24,771  |      | $ | 22,173   |  
|                                                        |  |      |         |      |   |          |  

See
notes to consolidated financial statements

F-5

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PROPERNYN B.V. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS FOR        EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001        (Thousands of U.S. dollars)

|                                                                                                                      |  | 2001 |     | 2000 |   | 1999      | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | ---- | - | --------- | 
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                     |  |      |     |      |   |           | 
|Cash paid during the year for:                                                                                        |  |      |     |      |   |           | 
|Interest (net of amount capitalized)                                                                                  |  | $    | 241 |      | $ | 140,898   | 
|                                                                                                                      |  |      |     |      |   |           | 
|Income taxes (net of refunds)                                                                                         |  | $    | 952 |      | $ | 55,459    | 
|                                                                                                                      |  |      |     |      |   |           | 
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:                                                                |  |      |     |      |   |           | 
|Investment in LYONDELLCITGO Refining LP (Note 2)                                                                     |  |      |    |      |   |          | 
|                                                                                                                      |  |      |     |      |   |           | 
|Sale of investment in PDV Holding, Inc. in exchange for set-off of loans payable and a distribution payable to Parent |  |      |    |      | $ | 3,315,100 | 
|                                                                                                                      |  |      |     |      |   |           | 

See
notes to consolidated financial statements(Concluded)

F-6

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PROPERNYN B.V. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY FOR  EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001        (Thousands of U.S. Dollars)

|                                          |  | Common
Stock |    | Additional
Capital |   | Retained
Earnings |  | Accumulated
Other
Comprehensive
Income/(Loss) |            | Total
Shareholder's
Equity |  
|----------------------------------------- |  | ------------ | -- | ------------------ | - | ----------------- |  | --------------------------------------------- | ---------- | -------------------------- | -
|BALANCE, JANUARY 1, 1999                  |  | $            | 62 |                    | $ | 107,532           |  | $                                             | 1,374,211  |                            | $
|Net income                                |  |              |   |                    |   |                  |  |                                               | 160,753    |                            |  
|Other comprehensive loss:                 |  |              |    |                    |   |                   |  |                                               |            |                            |  
|-Minimum pension liability adjustment     |  |              |   |                    |   |                  |  |                                               |           |                            |  
|-Foreign currency translation adjustments |  |              |   |                    |   |                  |  |                                               |           |                            |  
|BALANCE, DECEMBER 31, 1999                |  |              | 62 |                    |   | 107,532           |  |                                               | 1,534,964  |                            |  
|Distribution                              |  |              |   |                    |   |                  |  |                                               | (1,667,265 | )                          |  
|Net income                                |  |              |   |                    |   |                  |  |                                               | 297,513    |                            |  
|Other comprehensive income (loss):        |  |              |    |                    |   |                   |  |                                               |            |                            |  
|-Foreign currency translation adjustments |  |              |   |                    |   |                  |  |                                               |           |                            |  
|-Minimum pension liability adjustment     |  |              |   |                    |   |                  |  |                                               |           |                            |  
|                                          |  |              |    |                    |   |                   |  |                                               |            |                            |  
|BALANCE, DECEMBER 31, 2000                |  |              | 62 |                    |   | 107,532           |  |                                               | 165,212    |                            |  
|Net income                                |  |              |   |                    |   |                  |  |                                               | 34,005     |                            |  
|Other comprehensive income (loss):        |  |              |    |                    |   |                   |  |                                               |            |                            |  
|-Foreign currency translation adjustments |  |              |   |                    |   |                  |  |                                               |           |                            |  
|                                          |  |              |    |                    |   |                   |  |                                               |            |                            |  
|BALANCE, DECEMBER 31, 2001                |  | $            | 62 |                    | $ | 107,532           |  | $                                             | 199,217    |                            | $
|                                          |  |              |    |                    |   |                   |  |                                               |            |                            |  

See
notes to consolidated financial statements

F-7

---



PROPERNYN B.V. AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationPropernyn B.V. (the "Company") is a Dutch Corporation and a wholly owned subsidiary of
Petróleos de Venezuela, S.A. ("PDVSA"), the national oil company of the Bolivarian Republic of Venezuela. The Company's wholly-owned subsidiaries include PDV Europa B.V. and
subsidiaries ("PDVE"), Propernyn N.V. and subsidiaries ("PNV") and Bonaire Petroleum Corporation N.V. ("BOPEC"). Prior to November 3, 2000, the Company was a wholly owned subsidiary of Venedu
Holding N.V. and prior to December 1, 2000, the Company held an investment in PDV Holding, Inc. ("PDVH"). See note below on significant events during 2000.

Principles of ConsolidationThe consolidated financial statements for the year 2001 include the accounts of the Company,
Propernyn N.V. and its wholly-owned subsidiaries (Baproven Limited ("Baproven"), a Bahamian corporation and its subsidiaries, Bahamas Oil Refining Company International Limited, Borco Towing Company
Limited, Freeport Trading Company Limited (dormant) and Marine Agents and Brokers Limited (dormant)), Bonaire Petroleum Corporation ("BOPEC") N.V., PDV Europa B.V. and its wholly-owned subsidiaries
(PDV Supply Europe B.V., PDV Fuels The Netherlands B.V. and PDV Fuels S.A.).

In
addition to the subsidiaries mentioned above, the comparative figures for 2000 (eleven months) and 1999 (full year) include the results of operations and cash flows of the Company's
former subsidiaries including PDV Holding, Inc., and its wholly-owned subsidiary PDV America, Inc. ("PDV America") and its wholly-owned subsidiaries (CITGO Petroleum Corporation
("CITGO") and subsidiaries and VPHI Midwest, Inc. ("Midwest") and its wholly-owned subsidiary, PDV Midwest Refining, L.L.C. ("PDVMR"), PDV Chalmette, Inc. and its 50% equity interest in
Chalmette Refining, L.L.C.
("Chalmette"), PDV Texas, Inc. and its 50% equity interest in Sweeny Coker L.L.C., the general partner which owns 1% of the Sweeny joint venture (as defined below), and PDV Sweeny, Inc.,
and its 49.5% equity interest in the Sweeny joint venture, and Cit-Con Oil Corporation, which is 65% owned by CITGO. The Company and its subsidiaries are collectively referred to as the
"Companies". All material intercompany transactions and accounts have been eliminated.

The
Companies' investments are accounted for by the equity method. The excess of the carrying value of CITGO's investments over the equity in the underlying net assets of the investments
was amortized on a straight-line basis over 40 years, which was based upon the estimated useful lives of the affiliates' assets.

Significant events during 2000Effective November 3, 2000, the Company's former parent, Venedu
Holding N.V. ("Venedu') sold and transferred its investment in the Company to PDVSA in exchange for forgiveness of debt and set-off of other obligations.

Effective
December 1, 2000, the Company sold and transferred all shares in PDVH to PDVSA, in exchange for the set-off of loans payable by the Company to PDVSA of
$1,647.9 million and a set-off of a distribution payable to PDVSA on that date of $1,667.2 million. No gain or loss arose upon the

F-8

---

sale, as the purchase price was equal to the carrying value of the Company's investment in PDVH at that date. Information summarizing the financial position of PDVH at the date of sale is as follows:

(000s Omitted)Current assets

$
2,918,121Noncurrent assets


5,367,195Current liabilities


2,242,204Noncurrent liabilities


2,727,995


Selected
financial information, which summarizes the results of PDVH's consolidated operations that are included in the Company's consolidated statements of income, is as follows (the
year 2000 includes the eleven months ended November 30, 2000):

2000

1999(000s Omitted)Revenues

$
20,445,788

$
13,300,165Gross profit


778,963


503,529Net income


319,908


124,319


Description of BusinessThe Companies manufacture or refine and market quality transportation fuels as well as lubricants,
refined waxes, petrochemicals, asphalt and other industrial products.

The
Company, through PDVE, has a 50 percent interest in Ruhr Oel GmbH ("Ruhr") which operates refineries in Germany that refines crude for its joint venture partners. PDVE also
has a 50 percent interest in AB Nynäs Petroleum ("Nynäs"), which produces and markets bitumen naphtenic specialties and other petroleum products for the European
market.

The
Company's Caribbean holdings (BOPEC and PNV) operate two transshipment facility sites; provide oil storage services for PDVSA affiliates and tug services for ships; operate land tank
storage facilities with an aggregate capacity of approximately 30 million barrels and sell oil products to the Bahamian domestic market.

PDV
Supply Europe B.V., PDV Fuels The Netherlands B.V. and N.V. PDV Fuels S.A. (subsidiaries of PDV Europa B.V.) were inactive in 1999, 2000 and 2001. In 2002 the activities of PDV
Supply Europe B.V. and PDV Fuels The Netherlands B.V. will be merged with PDV Europa B.V., while N.V. PDV Fuels S.A. will be liquidated.

As
described above, prior to December 1, 2000 the Company's wholly owned subsidiaries included PDV Holding, Inc. The principal operations of that subsidiary included:



F-9

---



Use of U.S. GAAPThe consolidated financial statements have been prepared using accounting principles generally accepted in
the United States of America ("U.S. GAAP").

Estimates, Risks and UncertaintiesThe preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue RecognitionRevenue from sales of products is recognized upon transfer of title to products sold, based upon the terms
of delivery.

Foreign currenciesThe Company's functional and reporting currency is the U.S. dollar. The functional currency of the
Company's subsidiaries are also, with the exception of PDVE, the U.S. dollar. PDVE's balance sheets and income statements are recorded in Dutch guilders and are translated at the exchange rates in
effect at the balance sheet date and the average exchange rates during the year, respectively, with the cumulative translation adjustment included in accumulated other comprehensive income (loss), a
component of shareholder's equity. Other assets and liabilities denominated in currencies other than the U.S. dollar are translated at the exchange rate in effect at the balance sheet date and these
remeasurement gains and losses are included in operations, except for exchange differences on investments in the group companies and related financing thereof, which are included in the accumulated
other comprehensive income (loss).

Impairment of Long-Lived AssetsThe Companies periodically evaluate the carrying value of long-lived
assets to be held and used when events and circumstances warrant such a review. The

F-10

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carrying value of a long-lived asset is considered impaired when the separately identifiable anticipated undiscounted net cash flow from such asset is less than its carrying value.

In
that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using
the anticipated net cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except the fair
market values are reduced for the disposal costs.

Supply and Marketing ActivitiesThe Companies engage in the buying and selling of crude oil to supply their refineries. The
net results of this activity are recorded in cost of sales. The Companies also engage in the buying and selling of refined products to facilitate the marketing of their refined products. The results
of this activity are recorded in cost of sales and sales.

Refined
product exchange transactions that do not involve the payment or receipt of cash are not accounted for as purchases or sales. Any resulting volumetric exchange balances are
accounted for as inventory in accordance with the Companies' last-in, first-out ("LIFO") method. Exchanges that are settled through payment or receipt of cash are accounted for
as purchases or sales.

Excise TaxesThe Companies collect excise taxes on sales of gasoline and other motor fuels. Excise taxes of approximately $0,
$2.9 billion and $3.1 billion were collected from customers and paid to various governmental entities in 2001, 2000 and 1999, respectively. Excise taxes are not included in sale
revenues.

Cash and Cash EquivalentsCash and cash equivalents consist of highly liquid short-term investments and bank
deposits with initial maturities of three months or less.

InventoriesCrude oil and refined product inventories are stated at the lower of cost or market and cost is determined using
the LIFO method. Materials and supplies are valued using the average cost method.

Property, Plant and EquipmentProperty, plant and equipment are reported at cost, less accumulated depreciation. Depreciation
is based upon the estimated useful lives of the related assets using the straight-line method. Depreciable lives are generally as follows: buildings and leasehold10 to
25 years; machinery and equipment3 to 25 years; and vehicles3 to 10 years.

Upon
disposal or retirement of property, plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in
income.

The
Companies capitalize interest on projects when construction entails major expenditures over extended time periods. Such interest is allocated to property, plant and equipment and
amortized over the estimated useful lives of the related assets. Capitalized interest approximated $0,$4 million and $7 million in 2001,
2000 and 1999, respectively.

Commodity and Interest Rate DerivativesIn June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). In June 2000 Statement of Financial Accounting Standard
No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities", an amendment of SFAS No. 133, was issued. The statement, as amended and interpreted, establishes
accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives, at fair value, as either assets or liabilities in the
statement of

F-11

---

financial position with an offset either to shareholder's equity and other comprehensive income or income depending upon the classification of the derivative. The Company adopted SFAS No. 133
effective January 1, 2001. The adoption had no impact on the Company "s consolidated financial position, results of operations and cash flows since it had no derivatives at that date.

Refinery MaintenanceCosts of major refinery turnaround maintenance at CITGO and PDVMR's refineries were charged to operations
over the estimated period between turnarounds. Turnaround periods ranged approximately from one to eight years. Unamortized costs were included in other assets. Amortization of refinery turnaround
costs at CITGO and PDVMR's refineries was included in depreciation and amortization expense. Amortization was $0,$62, million and $58 million
for 2001, 2000 and 1999, respectively. Ordinary maintenance was expensed as incurred.

The
American Institute of Certified Public Accountants has issued a "Statement of Position" exposure draft on cost capitalization that is expected to require companies to expense the
non-capital portion of major maintenance costs as incurred. The statement is expected to require that any existing unamortized deferred non-capital major maintenance costs be
expensed immediately. The exposure draft indicates that this change will be required to be adopted for fiscal years beginning after June 15, 2002, and that the effect of expensing existing
unamortized deferred non-capital major maintenance costs will reported as a cumulative effect of an accounting change in the consolidated statement of income. The Company has not
determined the impact on its financial statements that may result from this Statement of Position.

Environmental ExpendituresEnvironmental expenditures that relate to current or future revenues are expensed or capitalized as
appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future revenue generation are expensed. Liabilities are recorded when
environmental assessments and/or cleanups are probable, and the costs can be reasonably estimated. Environmental liabilities are not discounted to their present value. Subsequent adjustments to
estimates, to the extent required, may be made as more refined information becomes available.

Income TaxesThe Company and PDVE file a consolidated tax return in the Netherlands; all other subsidiaries generally
file individual local income tax returns. PDVH files a consolidated U.S. Federal income tax return, which includes all of its wholly-owned subsidiaries. The Company accounts for income taxes using an
asset and liability approach, in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes".

New Accounting StandardsIn July 2001, the Financial Accounting Standards Board (the "FASB") issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS No. 141"). SFAS No. 141 addresses financial accounting and reporting for business combinations and requires
that all business combinations initiated after June 30, 2001 be accounted for under the purchase method. Use of the pooling of interests method is no longer permitted. The adoption of SFAS
No. 141 did not impact the Company's consolidated financial position nor results of operations.

In
July 2001, the FASB issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). SFAS No. 142
addresses financial accounting and reporting for acquired goodwill and other in intangible assets, and requires that goodwill and intangible assets
with an indefinite life no longer be amortized but, instead, be periodically reviewed for impairment. The provisions of SFAS No. 142 are fully effective for fiscal years beginning after

F-12

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December 15, 2001. However, certain provisions of SFAS No. 142 are applicable to goodwill and other intangible assets acquired in transactions completed after June 30,
2001.The adoption of SFAS No. 142 will not materially impact the Company's consolidated financial position or results of operations.

In
June 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"), which addresses
financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 applies to
legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of such assets. SFAS No. 143
requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it was incurred if a reasonable estimate of such fair value can be made. The fair
value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of such asset. The liability is adjusted at the end of
each period to reflect the passage of time and changes in the estimated future cash flows underlying the initial fair value measurement, and such adjustments are reflected in operations. If the
Company's obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. The Company is required to, and plans to, adopt SFAS
No. 143 on January 1, 2003. In order to accomplish this, the Company must identify all its legal obligations for asset retirement obligations, if any, and determine the fair value of
these obligations as of the date of adoption of SFAS No. 143. The determination of fair value is a complex exercise, and Company will need to gather market information and develop cash flow
models in order to make this determination. Additionally, the Company will need to develop processes to track and monitor these obligations. Because of the effort necessary to comply with the adoption
of SFAS No. 143, the Company has not determined that impact on their consolidated financial statements that may result from the adoption of SFAS No.143.

In
August 2001, the FASB issued SFAS No144 "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144
addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is
recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. SFAS No144 requires companies to separately report discontinued operations and
extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less costs to sell. The adoption of SFAS No. 144 will not impact the Company's consolidated financial position or results of
operations.

ReclassificationsCertain reclassifications have been made to the 1999 and 2000 financial statements to conform with the
classifications used in 2001.

2.    INVESTMENT IN LYONDELL-CITGO REFINING COMPANY LTD.

LYONDELL-CITGO Refining LP ("LYONDELL-CITGO") owns and operates a 265 MBPD refinery in Houston, Texas and is owned by subsidiaries of CITGO (41.25%) and Lyondell
Chemical

F-13

---

Company (58.75%) ("the Owners"). This refinery processes heavy crude oil supplied by PDVSA under a long-term supply contract that expires in 2017. CITGO purchases substantially all of the
gasoline, diesel and jet fuel produced at the refinery under a long-term contract (Note 3).

In
April 1998, PDVSA, pursuant to its contractual rights, declared force majeure and reduced deliveries of crude oil to LYONDELL-CITGO; this required LYONDELL-CITGO to obtain
alternative sources of crude oil supply in replacement, which resulted in lower operating margins. On October 1, 2000, the force majeure condition was terminated and PDVSA deliveries of crude
oil returned to contract levels.

On
December 31, 1999, CITGO converted $32.7 million of $60.0 million of outstanding loans to investments in LYONDELL-CITGO. The loans bore interest at market rates
of approximately 6.9% at November 30, 2000.

F-14

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CITGO accounts for its investment in LYONDELL-CITGO using the equity method of accounting and records its share of the net earnings of LYONDELL-CITGO based on allocations of income
agreed to by the owners. Information related to CITGO's investment in LYONDELL-CITGO is as follows:

|                                                                                                                  |              | 2000 |        | 1999     
|----------------------------------------------------------------------------------------------------------------- | ------------ | ---- | ------ | ---------
|
|Equity in net income                                                                                              |              | $    | 31,769 |          
|Cash distributions received                                                                                       |              |      | 78,506 |          
|Summary of operating results (full year except for 2000, which is for the eleven months ended November 30, 2000): |              |      |        |          
|                                                                                                                  | Revenue      |      | $      | 3,718,000
|                                                                                                                  | Gross profit |      |        | 213,000  
|                                                                                                                  | Net income   |      |        | 102,000  

3. RELATED PARTY TRANSACTIONS

In 2000 the Company made loans to PDVSA and affiliates for a total amount of $116.9 million. The loans bear no interest and are payable upon demand in
United States dollars. The principal balance of the loans receivable was $115.3 million at December 31, 2001.

Interest
income related to various PDVH notes receivable from PDVSA and affiliates for 2000 and 1999 was $72 million and $83 million, respectively.

In
1992, a service agreement between PDVE and PDVSA Marketing International S.A. ("PMI") was established. Based on this agreement, PDVE will provide PMI with support and assistance
regarding its European activities. The service fees paid by PMI are based on a fixed and reimbursable basis. In 2001, 2000 and 1999 the compensation service fees were $0.9 million,
$2.0 million and $1.8 million, respectively. At December 31, 2001 and 2000, $0.8 million and $3.0 million, respectively, was included in due from affiliates.

Ruhr
owns refineries, which are operated for the benefit of its joint venture partners. Crude is supplied by the partners and the resulting products are returned to the partners. Ruhr
receives a fee equal to its operational costs.

Baproven
Limited ("Baproven"), a subsidiary of PNV, had purchases of approximately $0.1 million, $2 million and $1 million and sales of storage and ancillary
services of approximately $11.5 million, $18.6 million, and $15.3 million with affiliates during 2001, 2000 and 1999, respectively.

BOPEC
had sales of services regarding tank storage (and related activities) and marine activities to PDVSA and its subsidiaries approximating $9.9 million, $8.7 million and
$8.4 million during 2001, 2000 and 1999, respectively. At December 31, 2001 and 2000, $0.8 million and $1.5 million, respectively, are included in due from affiliates.

CITGO
purchases approximately one-half of the crude oil processed in its refineries from subsidiaries of PDVSA under long-term supply agreements. These supply
agreements extend through the year 2006 for the Lake Charles refinery, 2010 for the Paulsboro refinery, 2012 for the Corpus Christi refinery and 2013 for the Savannah refinery. CITGO purchased
$3.0 billion and $1.7 billion of crude oil, feedstocks and other products from wholly owned subsidiaries of PDVSA in 2000 (11 months), and 1999, respectively, under these and
other purchase agreements. During 2000 and 1999, PDVSA deliveries of crude oil to CITGO were less than contractual base volumes due to the PDVSA declaration of force majeure pursuant to all four
long-term crude oil supply contracts described above.

F-15

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As
a result, CITGO has been required to obtain alternative sources of crude oil, which has resulted in lower operating margins. On October 1, 2000, the force majeure condition was
terminated and PDVSA deliveries of crude oil returned to contract levels.

Additionally,
during the second half of 1999, PDVSA did not deliver naptha pursuant to one of the contracts and has made contractually specified payments in lieu thereof.

The
crude oil supply contracts incorporate formula prices based on the market value of a number of refined products deemed to be produced from each particular crude oil, less
(i) certain deemed refining costs adjustable for inflation, (ii) certain actual costs, including transportation charges, import duties and taxes and (iii) a deemed margin, which
varies according to the grade of crude oil. In October 1998, an affiliate of PDVSA acquired a 50% equity interest in a joint venture, which owns and operates a refinery in St. Croix, U.S.
Virgin Islands ("HOVENSA") and has the right under a product sales agreement to assign periodically to CITGO, or other related parties, its option to purchase 50% of the refined products produced by
HOVENSA (less a certain portion of such products that HOVENSA will market directly in the local and Caribbean markets). In addition, under the product sales agreement, the PDVSA affiliate has
appointed CITGO as its agent in designating which of its affiliates shall from time to time take deliveries of the refined products available to it. The product sales agreement will be in effect for
the life of the joint venture, subject to termination events based on default or mutual agreement. Pursuant to the above arrangement, CITGO acquired approximately 122 MBPD and 118 MBPD of refined
products from HOVENSA during 2000 (11 months) and 1999, respectively, approximately one-half of which was gasoline.

CITGO
also purchases refined products from various other affiliates including LYONDELL-CITGO and Chalmette under long-term contracts. These agreements incorporate various
formula prices based on published market prices and other factors. Such purchases totaled $4.0 billion and $2.8 billion for 2000 (11 months) and 1999, respectively.

CITGO
had refined product, feedstock, and other product sales of $187 million and $190 million to affiliates in 2000 (11 months) and 1999, respectively. CITGO' sales
of crude oil to affiliates aggregated $4 million and $37 million in 2000, (11 months) and 1999, respectively.

Pursuant
to a refinery agreement with PDVMR, on May 1, 1997, CITGO has been appointed operator of the PDVMR refinery. The term of the agreement is 60 months and shall be
automatically renewed for periods of 12 months (subject to early termination as provided in the agreement).

PDVMR
is party to a Contract For Purchase and Sale of Crude Oil dated April 23, 1997, with Maraven S.A. ("Maraven"), a corporation organized and existing, at the date of the
contract, under the laws of the Bolivarian Republic of Venezuela, and CITGO. In accordance with the contract, Maraven (or its successor) is obligated to provide a base volume of up 100,000 barrels per
day of Venezuelan crude and CITGO as operator is responsible for administering the purchase of additional volume of crude for the refinery. The Venezuelan crude is priced in accordance with a formula
based upon posted crude prices less a quality differential. Maraven (or its successor), CITGO and PDVMR can change the amount and type of crude supplied.

The
term of the agreement is sixty months with renewal periods of twelve months. PDVMR purchased approximately 13,000 barrels per day and 31,000 barrels per day under this contract in
2000 (11 months) and 1999, respectively.

PDVMR
sells certain refinery by-products and utilities to The Needle Coker Company ("Needle") and buys back hydrogen, naphtha and steam. Sales to Needle were approximately
$10 million and

F-16

---

$9 million in 2000 (11 months) and 1999, respectively. Purchases from Needle were approximately $8 million and $6 million in 2001 (11 months) and 2000,
respectively.

During
1995, PDV America entered into a service agreement with PDVSA to provide financial and foreign agency services. Income from these services was $0 and $0.9 million in 2000
(11 months) and 1999, respectively.

4. ACCOUNTS RECEIVABLE

|                                          |  | 2001 |       | 2000 |  
|----------------------------------------- |  | ---- | ----- | ---- | -
|
|Trade                                     |  | $    | 5,128 |      | $
|Other                                     |  |      |      |      |  
|                                          |  |      |       |      |  
|                                          |  |      | 5,128 |      |  
|Less allowance for uncollectible accounts |  |      | (453  | )    |  
|                                          |  |      |       |      |  
|                                          |  | $    | 4,675 |      | $

Allowances
for uncollectible accounts are established based on several factors, which include, but are not limited to, analysis of specific customers, historical trends, current economic
conditions and other information.

CITGO
sales were made on account, based on pre-approved unsecured credit terms established by CITGO management. CITGO also has a proprietary credit card program, which allows
commercial customers to purchase fuel at CITGO branded outlets.

CITGO
has two limited purpose subsidiaries, CITGO Funding Corporation and CITGO Funding Corporation II, which have nonrecourse agreements to sell trade accounts and credit card
receivables. Under the terms of the agreements, new receivables are added to the pool as collections reduce previously sold receivables. The amounts sold at any one time are limited to a maximum of
$225 million of trade accounts receivable (increased from $125 million through an amendment in April 2000) and $150 million of credit card receivables. Fees and expenses of
$16.2 million and $15.2 million related to the agreements were recorded as other expense during 2000 (11 months) and 1999, respectively. In 2000, CITGO realized a gain of
$5 million resulting from the reversal of the allowance for uncollectible accounts related to certain receivables sold.

5.    INVENTORIES

|                       |  | 2001 |        | 2000
|---------------------- |  | ---- | ------ | ----
|
|Refined product        |  | $    | 624    |     
|Crude oil              |  |      | 10,447 |     
|Materials and supplies |  |      | 3,907  |     
|                       |  |      |        |     
|                       |  | $    | 14,978 |     
|                       |  |      |        |     

F-17

---

6.    PROPERTY, PLANT AND EQUIPMENT

|                                               |  | 2001 |          | 2000 |  
|---------------------------------------------- |  | ---- | -------- | ---- | -
|
|Land                                           |  | $    | 21,637   |      | $
|Building and leaseholds                        |  |      | 3,806    |      |  
|Machinery and equipment                        |  |      | 302,269  |      |  
|Office furniture and equipment                 |  |      | 1,404    |      |  
|Construction in process                        |  |      | 4,593    |      |  
|                                               |  |      |          |      |  
|                                               |  |      | 333,709  |      |  
|Less accumulated depreciation and amortization |  |      | (205,027 | )    |  
|                                               |  |      |          |      |  
|                                               |  | $    | 128,682  |      | $
|                                               |  |      |          |      |  

Depreciation
expense for 2001, 2000 and 1999 was $12 million,$218 million and $230 million, respectively.

Other
income (expense)-net includes gains and losses on disposals and retirements of property, plant and equipment. Such net losses were approximately
$0,$10 million and $18 million in 2001, 2000, and 1999, respectively.

7.    INVESTMENT IN AFFILIATES

PDVEIn accordance with Dutch accounting standards, if a company accounts for its investments using
the equity method and the company has no significant influence on (the decisions of) investments, a non-distributable statutory reserve must be formed for the equity of net income of
entities in which those interests are held. The statutory reserve is reduced by the dividends to which the investor is entitled, or which can be collected without restriction in the Netherlands. The
amount of non-distributable statutory reserves at December 31, 2001 and 2000 were $57.7 million and $54.9 million, respectively.



The Ruhr joint venture owns and operates four refineries in Germany for the benefit of the joint venture partners. Under the agreements with the joint venture
partners, Ruhr is reimbursed for the actual cost of refining, designed to achieve no profit or loss at Ruhr. The Company's investment in Ruhr at December 31, 2001 and 2000 was
$122 million and $130 million, respectively.

F-18

---

Financial
information of Ruhr is as follows:

|                                              |                        | 2001 |   | 2000   
|--------------------------------------------- | ---------------------- | ---- | - | -------
|
|Summary of financial position at December 31: |                        |      |   |        
|                                              | Current assets         |      | $ | 137,678
|                                              | Noncurrent assets      |      |   | 532,052
|                                              | Current liabilities    |      |   | 149,900
|                                              | Noncurrent liabilities |      |   | 274,833

|                                          |              | 2001 |   | 2000    |  | 1999
|----------------------------------------- | ------------ | ---- | - | ------- |  | ----
|
|Summary of operating results (full year): |              |      |   |         |  |     
|                                          | Revenues     |      | $ | 901,011 |  | $   
|                                          | Gross profit |      |   | 791,902 |  |     
|                                          | Net income   |      |   | 3,742   |  |     

Under
a crude oil supply agreement, Ruhr processed $2.0 billion, $2.5 billion and $1.7 billion of crude oil owned by a wholly-owned subsidiary of PDVSA in 2001, 2000
and 1999, respectively.



Nynäs owns and operates four specialized refineries and owns a 50% interest in a specialized asphalt refinery, all designed to process heavy, sour
crude oil into asphalt and naphtenic specialty oils. Other information provided by Nynäs is as follows:

|                                   |  | 2001 |        | 2000 |   | 1999  
|---------------------------------- |  | ---- | ------ | ---- | - | ------
|
|Investment in Nynäs at December 31 |  | $    | 72,696 |      | $ | 75,769
|Equity in net income               |  |      | 14,415 |      |   | 16,120
|Distributions received from Nynäs  |  |      | 8,638  |      |   | 7,850 

Financial
information of Nynäs is as follows:

|                                              |                        | 2001 |   | 2000   
|--------------------------------------------- | ---------------------- | ---- | - | -------
|
|Summary of financial position at December 31: |                        |      |   |        
|                                              | Current assets         |      | $ | 235,248
|                                              | Noncurrent assets      |      |   | 178,293
|                                              | Current liabilities    |      |   | 111,077
|                                              | Noncurrent liabilities |      |   | 156,065

|                                          |              | 2001 |   | 2000    |  | 1999
|----------------------------------------- | ------------ | ---- | - | ------- |  | ----
|
|Summary of operating results (full year): |              |      |   |         |  |     
|                                          | Revenues     |      | $ | 754,769 |  | $   
|                                          | Gross profit |      |   | 194,827 |  |     
|                                          | Net income   |      |   | 28,586  |  |     

Under
a long-term crude oil supply agreement and vessel transportation contracts, Nynäs purchased            $167 million, $145 million and
$235 million of crude oil from a wholly-owned

F-19

---

subsidiary of PDVSA in 2001, 2000 and 1999, respectively. The terms and pricing formulas are similar to the Company's subsidiaries' crude oil supply agreements (Note 3).

CITGOIn addition to LYONDELL-CITGO (Note 2), CITGO's investments in affiliates consisted of equity interests of 6.8 to
50 percent in joint interest pipelines and terminals, including a 15.79 percent interest in Colonial Pipeline Company; a 49.5 percent partnership interest in Nelson Industrial
Steam Company ("NISCO"), which is a qualified cogeneration facility; and a 49 percent partnership interest in Mount Vernon Phenol Plant.

Information
on CITGO's investments, including LYONDELL-CITGO, included in the company's consolidated financial statements, is as follows:

|                                                     |  | 2000 |         | 1999
|---------------------------------------------------- |  | ---- | ------- | ----
|
|Equity in net income of affiliates                   |  | $    | 44,170  |     
|Dividends and distributions received from affiliates |  |      | 101,987 |     

F-20

---



Selected financial information provided by the affiliates is summarized as follows:

2000

1999(000s Omitted)Summary of operating results (full year except for 2000, which is for the eleven months ended November 30, 2000):Revenues

$
4,717,667

$
3,559,451Gross profit


638,293


567,749Net income


297,259


237,906


PDVMRPDVMR has a 25% interest in Needle, which is accounted for using the equity method. PDVMR
received cash distributions of approximately $0.3 million and $3.0 million in 2000 and 1999, respectively, from Needle.

Selected
financial information provided by Needle is shown below:

2000

1999(000s Omitted)Summary of operating results (full year except for 2000, which is for the eleven months ended November 30, 2000):Revenues

$
67,769

$
61,845Gross profit


3,636


9,509Net earnings


168


6,729


PDV ChalmettePDV Chalmette has a 50% interest in Chalmette refinery, which is accounted for using the
equity method.

Information
included in the Company's consolidated financial statements provided by PDV Chalmette is as follows:

2000

1999(000s Omitted)Equity in net income (loss) of affiliate

$
21,880

$
(27,585
)Dividends and distributions received from affiliate








Selected
financial information provided by Chalmette is summarized as follows:

2000

1999(000s Omitted)Summary of operating results (full year except for 2000, which is for the eleven months ended November 30, 2000):Revenues

$
1,908,036

$
1,295,101Gross profit


325,024


5,270Net income (loss)


43,760


(94,285
)


Inventories
of Chalmette at December 31, 1998 were carried at estimated net market value which was $40.8 million lower than cost. Chalmette incorporated this write down
into the carrying value of its inventory layers, creating a new basis which, under Chalmette's accounting policy, will remain until such layers are liquidated under the LIFO-method of
accounting. During 1999 the physical units of inventory for which the reserve had been provided were sold. The Company's accounting policies with respect to lower of cost or market reserves is to
match the new basis of revalued inventories with sales of the

F-21

---

actual physical units that were revalued. Accordingly, for the year ended December 31, 1999 the Company recorded equity in the net loss of Chalmette of approximately $20.4 million less
than its share of net loss reported by Chalmette.

PDV Sweeny and PDV Texas- PDV Sweeny and PDV Texas have a combined 50% interest in the Sweeny joint venture, which is accounted for using
the equity method.

Information
included in the Company's consolidated financial statements for PDV Sweeny's and PDV Texas' combined investment is as follows:

2000

1999(000s Omitted)Equity in net (loss) income of affiliate

$
(1,448
)
$
(1,793
)


Selected
financial information provided by the affiliate is summarized as follows:

2000

1999(000s Omitted)Summary of operating results (full year except for 2000, which is for the eleven month ended November 30, 2000):Revenues

$
68,401

$
8,358Net (loss) income


(2,897
)

(3,586
)


No
investment in affiliates balances are included in the consolidated balance sheet at December 31, 2001 and 2000 for CITGO, PDVMR, PDV Sweeny and PDV Texas as the Company had
sold all its shares in PDVH to PDVSA on December 1, 2000 (see Note 1).

8. SHORT-TERM BANK LOANS

As of December 31, 1999, CITGO had established $182 million of uncommitted, unsecured, short-term borrowing facilities with various
banks. Interest rates on these facilities are determined daily based upon the Federal funds' interest rates, and maturity options vary up to 30 days. The weighted average interest rates
actually incurred in 2000 and 1999, were 6.4% and 5.5% respectively.

9. NOTES PAYABLE TO AFFILIATES

2001

2000(000s Omitted)Loans from PDVSA

$
187,624

$
204,550


The
Company's loans from PDVSA and other affiliates, bear no interest and are payable upon demand in United States dollars. PDVSA and affiliates have stated their intention not to demand
payment throughout 2002 and therefore such notes have been classified as non-current liabilities.

10. EMPLOYEE BENEFIT PLANS

Pension Plan- BOPEC maintains a pension plan, which provides retirement benefits for eligible employees. The plan is funded by BOPEC's contributions.
The contribution for 2001 was $317,728 (2000: $349,540) and was paid to a Netherlands Antilles insurance company, which administers the plan. The (unaudited) discounted value of the past service
premium calculated, at a rate of 4.3% (2000: 4.8%) per year, as of December 31, 2001 is $1,018,914 (2000: $825,950).

F-22

---

Employee SavingsCITGO sponsors three qualified defined contribution retirement and savings plans covering substantially all
eligible salaried and hourly employees. Participants make voluntary contributions to the plans and CITGO makes contributions, including matching of employee contributions, based on plan provisions.
CITGO charged $16 million and $18 million to operations related to its contributions to these plans in 2000 (11 months) and 1999 respectively.

Pension BenefitsCITGO sponsors three qualified noncontributory defined benefit pension plans, two of which cover eligible
hourly employees and one of which covers eligible salaried employees. CITGO also sponsors three nonqualified defined benefit plans for certain eligible employees. The qualified plans' assets include
corporate securities, a fixed income mutual fund, two collective funds and a short-term investment fund. The nonqualified plans are not funded.

CITGO's
policy is to fund the qualified pension plans in accordance with applicable laws and regulations and not to exceed the tax deductible limits. The nonqualified plans are funded as
necessary to pay retiree benefits. The plan benefits for each of the qualified pension plans are primarily based on an employee's years of plan service and compensation as defined by each plan.

Postretirement Benefits Other Than PensionsIn addition to pension benefits, CITGO also provides certain health care and life
insurance benefits for eligible salaried and hourly employees at retirement. These benefits are subject to deductibles, copayment provisions and other limitations and are primarily funded on a
pay-as-you-go basis. CITGO reserves the right to change or to terminate the benefits at any time.

As
discussed in Note 1 to the consolidated financial statements there are no amounts related to CITGO that are included in the Company's consolidated balance sheet at
December 31, 2001 and 2000. The following sets forth the assumptions in use at December 31, 1999:

Pension Benefits

Other BenefitsWeighted-average assumptions:Discount rate

7.75
%
7.75
%Expected return on plan assets

9.0
%
6.0
%Rate of compensation increase

5.0
%



For
measurement purposes, a 6.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2000. The rate was assumed to decrease gradually to 5.5%
for 2002 and remain at that level thereafter.

F-23

---

The
amounts in the table below are for full year except for 2000, which is the eleven months ended November 30, 2000.

Pension Benefits

Other Benefits2000

1999

2000

1999(000s Omitted)

(000s Omitted)Components of net periodic benefit cost:Service cost

$
14,238

$
19,554

$
5,288

$
6,922Interest cost


18,040


17,899


13,193


13,040Expected return on plan assets


(22,364
)

(22,531
)

(54
)

(57
)Amortization of prior service cost


131


40





Amortization of net gain at date of adoption


(246
)

(268
)




Recognized net actuarial gain


(4,422
)

(1,649
)

(15,816
)

Net periodic benefit cost

$
5,377

$
13,045

$
2,611

$
19,905


Actuarial
gains (or losses) related to the postretirement benefit obligation are recognized as a component of net postretirement benefit cost by the amount the beginning of year
unrecognized net gain (or loss) exceeds 7.5% of the accumulated postretirement benefit obligation.

PDVMR Pension PlansIn accordance with a transfer of assets from a former owner, on May 1, 1997, PDVMR assumed the
responsibility for the former owner's pension plans, which include both a qualified and a nonqualified plan which were frozen at their current levels on April 30, 1997. The plans cover
employees of the former owner who were participants in the plans as of April 30, 1997. As discussed in Note 1 to the consolidated financial statements, there are no amounts related to
CITGO and PDVMR in the Company's consolidated balance sheet at December 31, 2001 and 2000. The following sets forth the assumptions in use at December 31, 1999:

As of
December 31, 1999Weighted-average assumptions:Discount rate

7.75
%Expected return on plan assets

9.50
%


The
amounts in the table below are for the full year except for 2000, which is for the eleven months ended November 30, 2000.

2000

1999000s OmittedComponents of net periodic benefit credit:Interest cost

$
3,504

$
4,298Expected return on plan assets


(5,612
)

(5,996
)Recognized net actuarial loss


50


34Net periodic benefit credit

$
(2,058
)
$
(1,664
)


F-24

---

11. INCOME TAXES

The provisions for income taxes are comprised of the following:

2001

2000

1999(000s Omitted)Current:Federal

$


$
101,312

$
(31,526
)State





3,824


674Dutch


103





Other





288


103


105,424


(30,852
)Deferred





77,329


80,172$
103

$
182,753

$
49,320


F-25

---



The Netherlands statutory tax rate differs from the effective rate due to the following:

|                                         |  | 2001 |   | 2000 |   | 1999 |  
|---------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Netherlands statutory tax rate           |  | 35.0 | % | 35.0 | % | 35.0 | %
|State taxes, net of U.S. federal benefit |  |     |   | 1.8  |   | 2.4  |  
|Dividend exclusions                      |  |     |   | (1.2 | ) | (3.7 | )
|Tax benefit of non-U.S. entities         |  |     |   | (0.3 | ) | (6.1 | )
|Tax settlement                           |  |     |   |     |   | (5.4 | )
|Other                                    |  |     |   | 2.7  |   | 1.2  |  
|                                         |  |      |   |      |   |      |  
|Effective tax rate                       |  | 35.0 | % | 38.0 | % | 23.4 | %
|                                         |  |      |   |      |   |      |  

The
effective tax rate for 1999 was unusually low due primarily to the favorable resolution in that year with the United States of America's Internal Revenue Service ("IRS") of
significant tax issues related to environmental expenditures.

Deferred
income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes, and (b) loss and tax credit carry forwards. There were no deferred tax liabilities or assets as of December 31, 2001 and 2000.

12. EXTRA-ORDINARY INCOME, NET OF TAXES

The extra-ordinary income relates to a forgiveness of a debt owed by PDV Supply Europe B.V. to PDVSA Petróleo y Gas S.A. PDV Supply Europe B.V. was
indebted to PDVSA Petróleo y Gas S.A. for inventories of bunker oil taken over in 1993.

13. COMMITMENTS AND CONTINGENCIES

Litigation and Injury ClaimsVarious lawsuits and claims arising in the ordinary course of business
are pending against the Companies. The Companies record accruals for potential losses when, in management's opinion, such losses are probable and reasonably estimable. If known lawsuits and claims
were to be determined in a manner adverse to the Companies, and in amounts greater than the accruals of the Companies, then such determinations could have a material adverse effect on the results of
operations of the Companies in a given reporting period. However, in management's opinion, the ultimate resolution of these lawsuits and claims will not exceed, by a material amount, the amount of the
accruals and the insurance coverages available to the Companies.

Environmental Compliance and RemediationThe Companies are subject to various environmental laws and regulations which may
require the Companies to take action to correct or improve the effects on the environmental of prior disposal or release of petroleum substances by the Companies or other parties. Maintaining
compliance with environmental laws and regulations in the future could require significant capital expenditures and additional operating costs.

Other Credit and Off-Balance-Sheet Risk Information as of December 31, 2001In August 1993 PDV
America issued Senior Notes (the "Senior Notes") with a $1.0 billion principal amount, interest rates ranging from 7.25% to 7.875%, and with due dates ranging from 1998 to 2003. Interest on the
Senior Notes is payable semiannually, commencing February 1, 1994. The Senior Notes represent senior unsecured indebtedness of PDV America, and are structurally subordinated to the liabilities
of the subsidiaries of PDV America. As of December 31, 2001 the outstanding principal of these Senior Notes

F-26

---

is $500 million. The Senior Notes (and the relating interest and premium, if any) are unconditionally guaranteed by the Company and PDVSA.

Bank
guaranties to third parties for a total amount of approximately $15,997 have been issued on behalf of PDVE.

PDVE
is severally liable for the corporate tax payable by PDVE and its subsidiaries.

A
bank guarantee in connection with litigation for an amount of $159,750 and two bank guarantees in connection with import duties and tugboats activities for an amount of approximately
$45,000 have been issued on behalf of BOPEC.

BOPEC
has obligations regarding contracts in connection with construction in progress for approximately $242,000. Propernyn N.V. through its subsidiary Baproven Limited has commitments
for capital expenditure of approximately $6,305,835.

On
July 1, 2000 a new Warehouse and Throughput (tank storage) agreement between a related party, PDVSA Manufactura y Mercado ("PDVSA M&M"), and BOPEC became effective. According
to this agreement PDVSA M&M guarantees the rental of 2,600,000 barrels of shell tank capacity at a rate of $0.10 per barrel per month. Any rental above this capacity will be charged to PDVSA M&M at a
rate of $0.05 per barrel per month.

14. LEASES

PDVE's annual rental expenses for its building amounts to approximately $154,540.

In
1997, BOPEC signed a contract to purchase water. The contract's term is 60 months and requires a minimum payment of approximately $28,000 per year. BOPEC has a lease agreement
for its transshipment facility site with the government of the Netherlands Antilles and the Island Government of Bonaire. The initial term of the lease is through 2034, and, subject to government
approval, provides for an extension of the lease for an additional 60 years. Future annual rentals will be approximately $80,000 per year. BOPEC, in conjunction with its performance of marine
services, enters into time charters for two tugboats, which require a combined minimum monthly rental expense of $76,084.

Propernyn
N.V. through its subsidiary Baproven Limited was committed to the following significant operating leases:

Tug
lease agreements with Smit Americas which will expire during February 2003. The annual lease expense amounts $2,098,750.

The
Seabed Lease from the Bahamas Government which will expire on June 30, 2057. The Seabed Lease payments are based on a fixed fee ($1,200,000 per year) plus a variable fee
relating to activity at the terminal. The terms of this lease are subject to renegotiations every three years.

F-27

---

Future
minimum lease payments for the noncancellable operating leases are as follows:

Year

Operating
leases
(000s Omitted)2002

4,4762003

4,4482004

2,3482005

2,3482006

2,348Thereafter

63,440


CITGO
leases certain of its Corpus Christi refinery facilities under a capital lease. The basic term of the lease expires on January 1, 2004; however, CITGO may renew the lease
until January 31, 2011, the date of its option to purchase the facilities at a nominal amount. Amortization is included in
depreciation expense. CITGO has various noncancellable operating leases, primarily for product storage facilities, office space, computer equipment and vehicles. Rent expense on all operating leases
totaled $32 million and $35 million in 2000 (11 months) and 1999, respectively. As discussed in note 1, to the consolidated financial statement, there are no amounts
related to PDVH and subsidiaries (including CITGO) as of December 31, 2001 and 2000.

15. FAIR VALUE INFORMATION

The following estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies.
However, considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Companies could realize in a current market exchange.

The
use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts of cash and cash equivalents,
restricted cash and other financial instruments approximate fair values. Due to the related party nature of the notes receivable from and payable to affiliates, it is not practicable to estimate their
fair values.

The
fair value estimates presented herein are based on pertinent information available to management as of the reporting dates. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and current estimates of fair
value may differ significantly from the amounts presented herein.

F-28

---

16. INFORMATION BY GEOGRAPHICAL AREA

|                                                      |               | 2001 |         | 2000    |   | 1999      
|----------------------------------------------------- | ------------- | ---- | ------- | ------- | - | ----------
|
|Revenue:                                              |               |      |         |         |   |           
|                                                      | United States |      | $       |        |   | $         
|                                                      | Europe        |      |         | 17,488  |   |           
|                                                      | Caribbean     |      |         | 44,917  |   |           
|                                                      |               |      |         |         |   |           
|                                                      |               | $    | 62,405  |         | $ | 20,510,766
|                                                      |               |      |         |         |   |           
|Income before income taxes and extra-ordinary income: |               |      |         |         |   |           
|                                                      | United States |      | $       |        |   | $         
|                                                      | Europe        |      |         | 16,874  |   |           
|                                                      | Caribbean     |      |         | 1,190   |   |           
|                                                      |               |      |         |         |   |           
|                                                      |               | $    | 18,064  |         | $ | 480,266   
|                                                      |               |      |         |         |   |           
|Identifiable assets:                                  |               |      |         |         |   |           
|                                                      | United States |      | $       |        |   | $         
|                                                      | Europe        |      |         | 203,431 |   |           
|                                                      | Caribbean     |      |         | 286,462 |   |           
|                                                      |               |      |         |         |   |           
|                                                      |               | $    | 489,893 |         | $ | 488,368   
|                                                      |               |      |         |         |   |           

F-29

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Schedule I

PROPERNYN B.V. AND SUBSIDIARIES        CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF THE REGISTRANT        (Dollars in thousands)        Financial Position of the Registrant

|                                      |                                             | December 31,
|------------------------------------- | ------------------------------------------- | ------------
|
|Assets:                               |                                             |             
|                                      | Investments in and advances to subsidiaries |             
|                                      | Other assets                                |             
|                                      |                                             |             
|                                      |                                             | $           
|                                      |                                             |             
|Liabilities and Shareholder's equity: |                                             |             
|                                      | Notes payable to affiliate                  |             
|                                      | Other liabilities                           |             
|                                      | Shareholder's equity                        |             
|                                      |                                             |             
|                                      |                                             | $           
|                                      |                                             |             

F-30

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Schedule I

PROPERNYN B.V. AND SUBSIDIARIES        CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF THE REGISTRANT(Continued)        (Dollars in thousands)        Results of operations of the
Registrant

|                                   |                                          | Year ended December 31, |       
|---------------------------------- | ---------------------------------------- | ----------------------- | ------
|
|Revenue:                           |                                          |                         |       
|Equity in earnings of subsidiaries |                                          | $                       | 34,211
|                                   |                                          |                         |       
|Expenses:                          |                                          |                         |       
|                                   | Interest                                 |                         |       
|                                   | Foreign currency exchange losses/(gains) |                         |       
|                                   | Other                                    |                         |       
|                                   |                                          |                         |       
|                                   |                                          |                         | 252   
|                                   |                                          |                         |       
|Income before interest income      |                                          |                         | 33,959
|                                   |                                          |                         |       
|Interest income                    |                                          |                         | 149   
|                                   |                                          |                         |       
|Net income before profit taxes     |                                          |                         | 34,108
|Profit taxes                       |                                          |                         | 103   
|                                   |                                          |                         |       
|Net income                         |                                          | $                       | 34,005
|                                   |                                          |                         |       

F-31

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Schedule I

PROPERNYN B.V. AND SUBSIDIARIES        CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF THE REGISTRANT(Continued)        (Dollars in thousands)        Cash Flows of the Registrant

|                                                     |                                                    | Year ended December 31, |       
|---------------------------------------------------- | -------------------------------------------------- | ----------------------- | ------
|
|Net cash provided by/(used in) operating activities  |                                                    | $                       | 59,293
|                                                     |                                                    |                         |       
|Cash (used in)/provided by investing activities:     |                                                    |                         |       
|                                                     | Investment in and advances to subsidiaries         |                         |       
|                                                     |                                                    |                         |       
|Cash used by financing activities:                   |                                                    |                         |       
|                                                     | (Payments)/Proceeds of notes payable to affiliates |                         |       
|                                                     |                                                    |                         |       
|Net (decrease)/increase in cash and cash equivalents |                                                    |                         | (1,000
|Cash and cash equivalentsbeginning of period        |                                                    |                         | 3,547 
|                                                     |                                                    |                         |       
|Cash and cash equivalentsend of period              |                                                    | $                       | 2,547 
|                                                     |                                                    |                         |       

F-32

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PROPERNYN B.V. AND SUBSIDIARIES        FINANCIAL STATEMENT SCHEDULE        VALUATION AND QUALIFYING ACCOUNTS        FOR EACH OF THE YEARS IN THE PERIOD ENDED DECMBER 31, 2001        (Dollars in thousands)

|Description                  |                                 | Balance at Beginning
of year |   | Additions charged to Costs
and Expenses |  | Deductions |        | Decrease due to Sale of PDV
Holding, Inc. |   | Balance at End of Year
|---------------------------- | ------------------------------- | ---------------------------- | - | --------------------------------------- |  | ---------- | ------ | ----------------------------------------- | - | ----------------------
|Year ended December 31, 2001 |                                 |                              |   |                                         |  |            |        |                                           |   |                       
|                             | Allowance for Doubtful Accounts |                              | $ | 617                                     |  | $          | 0      |                                           | $ | (164                  
|Year ended December 31, 2000 |                                 |                              |   |                                         |  |            |        |                                           |   |                       
|                             | Allowance for Doubtful Accounts |                              | $ | 18,367                                  |  | $          | 1,651  |                                           | $ | (3,255                
|Year ended December 31, 1999 |                                 |                              |   |                                         |  |            |        |                                           |   |                       
|                             | Allowance for Doubtful Accounts |                              | $ | 19,667                                  |  | $          | 15,110 |                                           | $ | (16,410               

F-33

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