Use these links to rapidly review the documentTable of Contents Item 7. Major Shareholders and Related Party Transactions

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

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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 No. 001-12142

|Petróleos de Venezuela, S.A.                                        
|--------------------------------------------------------------------
|(Exact Name of Registrant as Specified in Its Charter)              
|Venezuelan National Petroleum Company                               
|Translation of Registrant's Name into English                       
|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 Registered
|------------------------------------------------------------ |  | -----------------------------------------
|Guarantee 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:

| | PDVSA Finance Ltd. 6.450% Notes due 2004 |  | PDVSA Finance Ltd. 8.750% Notes due 2004
| | ---------------------------------------- |  | ----------------------------------------
| | PDVSA Finance Ltd. 6.650% Notes due 2006 |  | PDVSA Finance Ltd. 9.375% Notes due 2007
| | PDVSA Finance Ltd. 6.800% Notes due 2008 |  | PDVSA Finance Ltd. 9.750% Notes due 2010
| | PDVSA Finance Ltd. 8.500% Notes due 2012 |  | PDVSA Finance Ltd. 7.400% Notes due 2016
| | PDVSA Finance Ltd. 9.950% Notes due 2020 |  | PDVSA Finance Ltd. 7.500% Notes due 2028

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: 51,204 shares of the
common stock of Petróleos de Venezuela, S.A. 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.



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PETROLEOS DE VENEZUELA, S.A.

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.                                         | Identity of Directors, Senior Management and Advisers     
|Item 2.                                         | Offer Statistics and Expected Timetable                   
|Item 3.                                         | Key Information                                           
|Item 4.                                         | Information on the Company                                
|Item 5.                                         | Operating and Financial Review and Prospects              
|Item 6.                                         | Directors, Senior Management and Employees                
|Item 7.                                         | Major Shareholders and Related Party Transactions         
|Item 8.                                         | Financial Information                                     
|Item 9.                                         | The Offer and Listing                                     
|Item 10.                                        | Additional Information                                    
|Item 11.                                        | Quantitative and Qualitative Disclosures about Market Risk
|PART III                                       
|Item 17.                                        | Financial Statements                                      
|Item 18.                                        | Financial Statements                                      
|Item 19.                                        | Exhibits                                                  
|SIGNATURES                                     
|ANNEX A                                        

i

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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.

With
respect to our obligations as co-registrant of PDVSA Finance Ltd.'s 6.450% Notes due 2004, 6.650% Notes due 2006, 6.800% Notes due 2008, 7.400% Notes due 2016,
7.500% Notes due 2028, 8.750% Notes due 2004, 9.375% Notes due 2007, 9.750% Notes due 2010, 9.950% Notes due 2020 and 8.500% Notes due 2012 (collectively, the "PDVSA Finance Notes"), PDVSA
Finance Ltd.'s annual report on Form 20-F for the year ended December 31, 2001, as first filed with the U.S. Securities and Exchange Commission (Commission file
No. 333-9678) on June 14, 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 the expected results of exploration, exploitation and production activities, refining processes, petrochemicals, gas, Orimulsion®
and coal activities and related capital expenditures and investments, the expected results of joint venture projects, the anticipated demand for new or improved products, environmental compliance and
remediation and related capital expenditures, sales, taxes, dividends and contributions to Venezuela, 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. Exploration activities are subject to risks arising from the inherent difficulty of predicting the presence, yield and
quality of hydrocarbon deposits, as well as unknown or unforeseen difficulties in extracting, transporting or processing any hydrocarbons found or doing so on an economic basis. 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., our wholly owned subsidiary, for the year ended December 31, 2001 incorporated by reference herein
also contains forward-looking statements. For a discussion of these statements contained in PDV America's annual report, see "Factors Affecting Forward-looking Statements" on page 1 thereof.

The
annual report on Form 20-F of PDVSA Finance Ltd., our wholly owned subsidiary, for the year ended December 31, 2001 incorporated by reference herein
also contains forward-looking statements. For a discussion of the factors affecting these statements contained in PDVSA Finance's annual report, see "Factors Affecting Forward-looking Statements" on
page ii thereof.

ii

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As used in this annual report, references to "dollars" or "$" are to the lawful currency of the United States and references to "Bolivars" or "Bs." are to the
lawful currency of Venezuela. 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 term "Petróleos de Venezuela" refers to Petróleos de Venezuela, S.A. and the terms "we," "our," "us" and "PDVSA" refer to
Petróleos de Venezuela, S.A. and its consolidated subsidiaries.

Other miscellaneous terms

Unless the context indicates otherwise, the following terms have the meanings shown below:



1

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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 and operating data of PDVSA as of the end of and for each of the
five-year period ended December 31, 2001. The following table should be read in conjunction with the consolidated financial statements of PDVSA as of December 31, 2001 and
2000, and for each of the years in the three-year period ended December 31, 2001, which have been prepared in accordance with accounting principles generally accepted in the United
States. The consolidated financial statements as of and for the years ended December 31, 2001 and 2000 have been audited by KPMG Alcaraz Cabrera Vázquez (a member firm of KPMG
International), independent accountants. The consolidated financial statements as of and for the year ended December 31, 1999 have been audited by Espiñera, Sheldon y Asociados
(a member firm of PricewaterhouseCoopers, L.L.P.), independent accountants. The consolidated financial statements as of December 31, 2001 and 2000, and for each of the years in the
three-year period ended December 31, 2001, and the reports of KPMG Alcaraz Cabrera Vázquez and Espiñera, Sheldon y

2

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Asociados thereon, which are based partially upon the reports of other auditors, are included elsewhere herein. See "Item 18. Financial Statements."

|                                                                         |                                                                                         | At or for the Year Ended December 31, |       
|------------------------------------------------------------------------ | --------------------------------------------------------------------------------------- | ------------------------------------- | ------
|
|
|Income Statement Data:                                                   |                                                                                         |                                       |       
|Sales of crude oil and products                                          |                                                                                         |                                       |       
|                                                                         | Exports and international markets                                                       |                                       | 42,682
|                                                                         | In Venezuela                                                                            |                                       | 1,701 
|Petrochemical and other sale                                             |                                                                                         | 1,403                                 |       
|                                                                         |                                                                                         |                                       |       
|                                                                         | Net sales                                                                               |                                       | 45,786
|Bonuses(1)                                                               |                                                                                         |                                      |       
|Equity in earnings of nonconsolidated investees                          |                                                                                         | 464                                   |       
|                                                                         |                                                                                         |                                       |       
|Total revenues                                                           |                                                                                         | 46,250                                |       
|Total costs and expenses                                                 |                                                                                         | 37,977                                |       
|                                                                         | Operating income                                                                        |                                       | 8,273 
|Financing expenses                                                       |                                                                                         | 509                                   |       
|                                                                         |                                                                                         |                                       |       
|                                                                         | Income before income tax, minority interests and cumulative effect of accounting change |                                       | 7,764 
|Provision for income tax                                                 |                                                                                         | (3,766                                | )     
|Minority interests                                                       |                                                                                         | (5                                    | )     
|Income before cumulative effect of accounting changes                    |                                                                                         | 3,993                                 |       
|Cumulative effect of accounting change(2)                                |                                                                                         |                                      |       
|                                                                         |                                                                                         |                                       |       
|                                                                         | Net income                                                                              |                                       | 3,993 
|                                                                         |                                                                                         |                                       |       
|Balance Sheet Data:                                                      |                                                                                         |                                       |       
|Cash and cash equivalents                                                |                                                                                         | 925                                   |       
|Notes and accounts receivable                                            |                                                                                         | 3,280                                 |       
|Total assets                                                             |                                                                                         | 57,542                                |       
|Short-term debt (including current portion of long-term debt)(3)         |                                                                                         | 1,000                                 |       
|Long-term debt and capital lease obligations (excluding current portion) |                                                                                         | 7,544                                 |       
|Stockholder's equity                                                     |                                                                                         | 37,098                                |       
|Capital Stock                                                            |                                                                                         | 39,094                                |       
|Other Financial Data:                                                    |                                                                                         |                                       |       
|Net cash provided by operating activities                                |                                                                                         | 6,954                                 |       
|Net cash used in investing activities                                    |                                                                                         | (5,125                                | )     
|Net cash (used in) provided by financing activities                      |                                                                                         | (4,161                                | )     
|Capital expenditures                                                     |                                                                                         | 3,524                                 |       
|Depreciation and depletion                                               |                                                                                         | 2,624                                 |       
|Debt/Equity(4)                                                           |                                                                                         | 23                                    | %     
|Total payments to shareholder                                            |                                                                                         | 12,097                                |       
|                                                                         |                                                                                         |                                       |       
|                                                                         | Dividends(5)                                                                            |                                       | 4,862 
|                                                                         | Production tax                                                                          |                                       | 3,792 
|                                                                         | Income taxes(6)                                                                         |                                       | 3,443 

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|                                                                   |                                                                                  | At or for the Year Ended December 31,                          |                                                      
|------------------------------------------------------------------ | -------------------------------------------------------------------------------- | -------------------------------------------------------------- | -----------------------------------------------------
|
|
|Operating Data:                                                    |                                                                                  |                                                                |                                                      
|Production                                                         |                                                                                  |                                                                |                                                      
|Condensate                                                         |                                                                                  |                                                                | 48                                                   
|Light crude oil (API gravity of 30° or more)                       |                                                                                  |                                                                | 1,135                                                
|Medium crude oil (API gravity of between 21° and 30°)              |                                                                                  |                                                                | 1,018                                                
|Heavy crude oil (API gravity of less than 21°)                     |                                                                                  |                                                                | 893                                                  
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   | Total crude oil                                                                  |                                                                |                                                      
|Liquid petroleum gas                                               |                                                                                  |                                                                | 173                                                  
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  | Total crude oil and liquid petroleum gas                       |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|Net natural gas (MMCFD)(1)                                         |                                                                                  |                                                                | 4,093                                                
|                                                                   |                                                                                  |                                                                |                                                      
|Total crude oil, liquid petroleum gas and net natural gas (BOE)(2) |                                                                                  |                                                                | 3,973                                                
|                                                                   |                                                                                  |                                                                |                                                      
|Sales volumes exported                                             |                                                                                  |                                                                |                                                      
|                                                                   | Exports of crude oil with 30° or greater API                                     |                                                                |                                                      
|                                                                   | Exports of crude oil with less than 30° API                                      |                                                                |                                                      
|                                                                   | Exports of refined petroleum products                                            |                                                                |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  | Total                                                          |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|Average export prices per unit ($ per barrel)                      |                                                                                  |                                                                |                                                      
|                                                                   | Exports of crude oil with 30° or greater API                                     |                                                                | $                                                    
|                                                                   | Exports of crude oil with less than 30° API                                      |                                                                | $                                                    
|                                                                   | Exports of refined petroleum products                                            |                                                                | $                                                    
|                                                                   | Weighted average export prices (3)                                               |                                                                | $                                                    
|Average production costs ($ per BOE)                               |                                                                                  |                                                                |                                                      
|                                                                   | Production cost per BOE of production, excluding operating service agreements(4) |                                                                | $                                                    
|                                                                   | Production cost per BOE of production(4)                                         |                                                                | $                                                    
|                                                                   | Depreciation and depletion cost per BOE of production                            |                                                                | $                                                    
|Proved reserves(5)                                                 |                                                                                  |                                                                |                                                      
|                                                                   | Crude oil (MMB)                                                                  |                                                                |                                                      
|                                                                   |                                                                                  | Condensate                                                     |                                                      
|                                                                   |                                                                                  | Light crude oil (API gravity of 30° or more)                   |                                                      
|                                                                   |                                                                                  | Medium crude oil (API gravity of between 21° and 30°)          |                                                      
|                                                                   |                                                                                  | Heavy crude oil (API gravity of between 11° and 21°)           |                                                      
|                                                                   |                                                                                  | Extra-heavy crude oil (API gravity of less than 11°)(6)        |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  |                                                                | Total crude oil                                      
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  |                                                                | Of which, relating to Operating Service Agreements(7)
|                                                                   |                                                                                  | Natural gas (BCF)(8)                                           |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  | Proved reserves of crude oil and natural gas (MMBOE)(6)        |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  | Remaining reserve life of proved crude oil reserves (years)(9) |                                                      
|Net crude oil refining capacity(10)                                |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  | Venezuela (including Isla Refinery)                            |                                                      
|                                                                   |                                                                                  | United States                                                  |                                                      
|                                                                   |                                                                                  | Europe                                                         |                                                      
|                                                                   |                                                                                  |                                                                |                                                      
|                                                                   |                                                                                  |                                                                | Total                                                
|                                                                   |                                                                                  |                                                                |                                                      

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Exchange rates

The following table sets forth certain information concerning the exchange rate of the Bolivar to the dollar based on daily rates of exchange established by the
Central Bank of Venezuela pursuant to a foreign exchange agreement. See note 1(d) and note 2 to our consolidated financial statements, included under "Item 18. Financial Statements."

|                  |  | Year ended December 31,
|----------------- |  | -----------------------
|
|1997              |  | 502.84                 
|1998              |  | 563.17                 
|1999              |  | 647.53                 
|2000              |  | 698.23                 
|2001              |  | 770.09                 
|December, 2001    |  |                        
|January, 2002     |  |                        
|February, 2002(2) |  |                        
|March, 2002       |  |                        
|April, 2002       |  |                        
|May, 2002         |  |                        

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3.D  Risk factors

Our business depends substantially on international prices for oil and oil products and such prices are volatile. A decrease in such prices could materially and adversely
affect our business.

PDVSA's
business, financial condition, results of operations and prospects depend largely on international prices for crude oil and refined petroleum products. Prices of oil and refined
petroleum products are cyclical and highly volatile, and have, historically, fluctuated widely due to various factors that are beyond our control, including:



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Historically,
OPEC members have entered into agreements to reduce their production of crude oil. Such agreements have sometimes increased global crude oil prices by decreasing the global
supply of crude oil. Venezuela is a party to and has complied with such production agreement quotas and we expect that Venezuela will continue to comply with such agreements in the future. Since 1998,
OPEC's production quotas have resulted in a worldwide decline in crude oil production and substantial increases in international crude oil prices.

A
reduction in our crude oil production or export activities or a decline in the prices of crude oil and refined petroleum products for a substantial period of time may materially and
adversely affect our results of operations, cash flows and financial results.

Risks related to Venezuela's ownership, regulation and supervision of PDVSA.

We
are owned by Venezuela. The Venezuelan government regulates and supervises our operations, and the President of Venezuela appoints the members of our board of directors by an
executive decree. However, Venezuela is not legally liable for our obligations, including our guarantees of indebtedness of our subsidiaries, or the obligations of our subsidiaries.

We
have been operated as an independent commercial entity since our formation. However, because we are controlled by the Venezuelan government, we cannot assure you that the Venezuelan
government will not in the future intervene in our commercial affairs in a manner that could adversely affect our business.

At
the end of February 2002, PDVSA personnel initiated labor actions against political decisions of the Venezuelan government relating to PDVSA matters. These protests resulted in
a brief period of disruption in production at certain PDVSA refineries and shipping terminals in Venezuela. Although operations returned to normal, a prolonged labor action could have a material
adverse effect on our operating activities. We have no control over the occurrence of such developments and cannot assure you that similar events will not occur in the future.

We do not own any of the hydrocarbon reserves that we develop and operate.

Under Venezuelan law, the hydrocarbon reserves that we develop and operate belong to Venezuela and not to us. The exploration and exploitation of these
hydrocarbon reserves are reserved to Venezuela.

Petróleos
de Venezuela was formed to coordinate, monitor and control operations related to Venezuela's hydrocarbon reserves. While Venezuelan law requires that Venezuela
retain exclusive ownership of Petróleos de Venezuela, it does not require the country to continue to conduct its crude oil exploration and exploitation activities through us. See also
"Item 7.A Major shareholders."

Our business requires substantial capital expenditures.

The exploration and development of hydrocarbon reserves, production, processing and refining and the maintenance of machinery and equipment require substantial
capital investments. We must continue to invest capital to maintain or to increase the number of hydrocarbon reserves that we operate and the amount of crude oil that we produce and process. We cannot
assure you that we will be able to maintain our production levels or generate sufficient cash flows or that we will have access to sufficient investments, loans or other financing alternatives to
continue our refining, exploration and development activities at or above our present levels.

6

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

As an integrated oil and gas company, we are 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. See "Item 4.B Business overviewExploration and Production."

These
risks may lower our production levels, increase our production costs and expenses, or cause damage to our property or 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 risks described above. These risks may materially and
adversely affect our operations and financial results. 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.

Item 4.    Information on the Company

4.A  History and development of the company

Petróleos de Venezuela is the national oil company of Venezuela, which controls PDVSA through the Ministry of Energy and Mines.
Petróleos de Venezuela was formed by the Venezuelan government in 1975 pursuant to the Organic Law Reserving to the State, the Industry and Commerce of Hydrocarbons ("The
Nationalization Law"). Through its subsidiaries, Petróleos de Venezuela supervises, controls and develops the petroleum, petrochemical, gas, coal and Orimulsion® industries
in Venezuela. These activities are complemented by Petróleos de Venezuela's operating companies established abroad, which are responsible for refining and marketing activities in North
America, Europe and the Caribbean. See also "Item 7.A Major shareholders."

PDVSA's
oil-related activities are governed by the Hydrocarbons Law, which came into effect in January 2002. PDVSA's gas-related activities are regulated
by the Organic Law of Gas Hydrocarbons of September 1999 and its regulations dated June 2000.

Since
its formation, Petróleos de Venezuela has been operated as a commercial entity, vested with commercial and financial autonomy. Petróleos de Venezuela
and its domestic subsidiaries are organized under the Commercial Code of Venezuela, which sets forth the basic corporate legal framework
applicable to all Venezuelan companies. We are domiciled in Venezuela and are governed by the laws of Venezuela.

Petróleos
de Venezuela's registered office is located at Avenida Libertador, La Campiña, Apdo. 169, Caracas 1010-A, Venezuela, and our telephone
number is 011-58-212-708-1111.

4.B  Business overview

We engage 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. Our 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.

Through
our exploration, production and upgrading executive office, we manage our exploration and production activities, our Orinoco Belt projects and the activities of our subsidiaries,
Bitor, Carbozulia and CVP. PDVSA enters into joint venture agreements to pursue projects in the Orinoco Belt with international oil companies to extract and upgrade extra-heavy crude oil and to
develop

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Orinoco Belt's extra-heavy crude oil reserves. Through Bitor and Carbozulia, PDVSA manages the production of Orimulsion®, a fuel for electric generation created by emulsifying bitumen in
water, and the production of coal in the state of Zulia in Western Venezuela. CVP coordinates activities related to exploration and production in new areas under profit sharing agreements with private
sector oil companies.

Our
downstream operations are conducted through our refining, supply and marketing executive office, through which we:



In
the United States, we conduct our crude oil refining and refined petroleum product operations through our wholly owned subsidiary, PDV Holding, which, through PDV America, owns 100%
of CITGO. CITGO refines, markets and transports gasoline, diesel fuel, jet fuel, heating oil, petrochemicals, lubricants, asphalt and other refined petroleum products in the United States, markets jet
fuel directly to airlines and produces a variety of agricultural, automotive and industrial lubricants, waxes and private label lubricants for independent distributors, mass marketers and industrial
customers as well as other clients. In addition, CITGO sells petrochemicals and industrial products directly to various manufacturers and industrial companies throughout the United States. In 2001,
CITGO produced a total of 24.7 billion gallons of petroleum products. PDV Holding also owns 100% of PDVMR (through CITGO) and 50% of Chalmette Refining (through PDV Chalmette), each of which is
primarily engaged in the refining of crude oil. In October 1998, we entered into agreements with Phillips Petroleum to form Merey Sweeny, a joint venture to process crude oil in the United
States, and with Amerada Hess to form Hovensa, a joint venture to process crude oil in the U.S. Virgin Islands. We are, through our U.S. subsidiaries, one of the largest refiners of crude oil in the
United States, based on our aggregate net ownership interest in crude oil refining capacity at December 2001.

In
Europe, we conduct our crude oil refining and refined petroleum product activities through PDV Europa, which owns our 50% interest in Ruhr, a company operating in Germany and owned
jointly with Veba Oel, and our 50% interest in Nynäs, a company operating in Belgium, Sweden and the United Kingdom and owned jointly with Fortum Oil and Gas OY. Through Ruhr, we refine
crude oil and market and transport gasoline, diesel fuel, heating oil, petrochemicals, lubricants, asphalt and other refined petroleum products. Through Nynäs, we refine crude oil and
market and transport asphalt, specialty products, lubricants and other refined petroleum products.

We
conduct our petrochemical activities through Pequiven, which has three petrochemical complexes in Venezuela and is currently involved in 17 joint ventures with private sector
partners.

8

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PDVSA
Finance was established in 1998 to serve as our principal vehicle for corporate financing through the issuance of unsecured debt.

Our
other important subsidiary is Intevep, through which we manage our research and development activities. Additionally, PDVSA manages an educational center, CIED, which is responsible
for the training and development of our personnel.

See
"Item 4.C Organizational structure" for a list of our significant subsidiaries.

According
to a comparative study published by Petroleum Intelligence Weekly in 2001, based on a combination of operating criteria and other data for 2000, including reserves, production,
refining capacity and refined petroleum product sales, we were the world's second largest vertically integrated oil and gas company, ranked sixth in the world in production and proved reserves of
crude oil and fourth in the world in refining capacity and product sales. Venezuela has been exporting crude oil without interruption since 1914. In 2001, we accounted for approximately 26% of
Venezuelan gross domestic product, approximately 80% of its exports and approximately 48% of its fiscal revenues.

Business strategy

Our business strategy is to pursue the development of Venezuela's hydrocarbon resources with the support of both national and foreign private capital, to maximize
shareholder value and ensure our financial strength. PDVSA's business plan for the years 2002-2007 focuses on the exploration, production, refining and marketing of hydrocarbons.
Additionally, it promotes investment from the private sector in the overall development of the gas and petrochemical industry, in the industrialization of refining streams and in
Orimulsion® and coal. PDVSA also seeks to maintain high safety and health standards in conducting its business, and aims to achieve effective and timely integration of business
technologies in its operations.

As
part of our business strategy, we intend to:

With respect to exploration, production and upgrading activities



With respect to refining and marketing



With respect to gas



With respect to petrochemicals



The
implementation of our business plan includes the following initiatives:



9

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10

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Exploration and Production

Venezuela's proved crude oil reserves have continued to increase over the years, with a cumulative production of crude oil from 1914 through December 31,
2001 totaling approximately 54.6 billion barrels. Venezuela's commercial production of crude oil is concentrated in the Western Zulia Basin and the Western BarinasApure Basin in
Western Venezuela, and in the Monagas and Anzoategui states in the Eastern Basin. The large number of fields in production in these three basins are broadly distributed geographically and, as a
result, substantially diversifies our production risk. The impact of a loss of production in any one field would be relatively minor when compared to Venezuela's total production. The Western and
Eastern basins have produced 40.1 billion and 14.5 billion barrels, respectively, of crude oil to date. Substantial portions of the sedimentary basins in Venezuela have not yet been
explored.

Principal Oil-Producing Basins in Venezuela

LOGO

11

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The following table shows our proved reserves, proved and developed reserves, 2001 production and the ratio of proved reserves to annual production in each of the principal basins at
December 31, 2001:

PDVSA's Proved Reserves and Production by Basin

|                         |                       | Proved
reserves(1)                                    |        | Proved/
developed
reserves                            |       | 2001 Production                       |       | Ratio of proved
reserves/annual
production
|------------------------ | --------------------- | ----------------------------------------------------- | ------ | ----------------------------------------------------- | ----- | ------------------------------------- | ----- | ------------------------------------------
|                         |                       | (MMB at Dec. 31,
2001, except as
otherwise
indicated) |        | (MMB at Dec. 31,
2001, except as
otherwise
indicated) |       | (MBPD, except as otherwise indicated) |       | (years)                                   
|Basin                    |                       |                                                       |        |                                                       |       |                                       |       |                                           
|Western Zulia:           |                       |                                                       |        |                                                       |       |                                       |       |                                           
|                         | Crude Oil             |                                                       | 21,546 |                                                       | 6,720 |                                       | 1,567 | (2)                                       
|                         | Natural Gas (BOE)     |                                                       | 6,279  |                                                       | 1,959 |                                       | 239   | (3)                                       
|Western Barinas  Apure: |                       |                                                       |        |                                                       |       |                                       |       |                                           
|                         | Crude Oil             |                                                       | 1,887  |                                                       | 972   |                                       | 109   | (2)                                       
|                         | Natural Gas (BOE)     |                                                       | 38     |                                                       | 19    |                                       | 1     | (3)                                       
|Eastern:                 |                       |                                                       |        |                                                       |       |                                       |       |                                           
|                         | Total Crude Oil (4)   |                                                       | 54,350 |                                                       | 9,680 |                                       | 1,681 | (2)                                       
|                         | Extra-Heavy Crude Oil |                                                       | 35,558 |                                                       | 1,963 |                                       | 354   |                                           
|                         | Natural Gas (BOE)     |                                                       | 19,251 | (5)                                                   | 3,429 |                                       | 466   | (3)                                       
|                         |                       | Total Crude Oil (4)                                   |        | 77,783                                                |       | 17,372                                |       | 3,357                                     
|                         |                       | Total Natural Gas (BOE)                               |        | 25,568                                                | (5)   | 17,898                                |       | 706                                       

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12

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The following table shows the location, 2001 production volume, discovery year, proved reserves and the ratio of proved reserves to annual
production for each of PDVSA's ten largest oil fields as of December 31, 2001:

PDVSA's Proved Reserves and Production by Field

|Name of field    |  | Location   |  | 2001
Production |  | Year of
discovery |  | Proved reserves        |  | Ratio of
proved
reserves/
annual
production
|---------------- |  | ---------- |  | --------------- |  | ----------------- |  | ---------------------- |  | -------------------------------------------
|                 |  | (State of) |  | (MBPD)          |  |                   |  | (MMB at
Dec. 31, 2001) |  | (years)                                    
|Tía Juana        |  | Zulia      |  | 302             |  | 1925              |  | 5,027                  |  | 46                                         
|Bachaquero       |  | Zulia      |  | 233             |  | 1930              |  | 2,400                  |  | 28                                         
|Lagunillas       |  | Zulia      |  | 198             |  | 1925              |  | 2,468                  |  | 34                                         
|Urdaneta Oeste   |  | Zulia      |  | 140             |  | 1955              |  | 1,597                  |  | 31                                         
|Boscán           |  | Zulia      |  | 105             |  | 1946              |  | 1,392                  |  | 36                                         
|Bloque VII Ceuta |  | Zulia      |  | 134             |  | 1956              |  | 1,883                  |  | 39                                         
|Jobo             |  | Monagas    |  | 38              |  | 1956              |  | 1,079                  |  | 78                                         
|Mulata           |  | Monagas    |  | 246             |  | 1941              |  | 2,329                  |  | 26                                         
|El Furrial       |  | Monagas    |  | 383             |  | 1986              |  | 2,054                  |  | 15                                         
|Sta. Barbara     |  | Monagas    |  | 159             |  | 1941              |  | 1,489                  |  | 26                                         



We use geological and engineering data to estimate our proved crude oil and natural gas reserves, including proved developed and undeveloped reserves. Such data
is capable of demonstrating with reasonable certainty whether such reserves are recoverable in future years from known reservoirs, under existing economic and operating conditions. We expect to
recover proved developed crude oil and natural gas reserves principally from new wells and acreage that has not been drilled using currently available equipment and operating methods. Our estimates of
reserves are not precise and are subject to revision. We review these crude oil and natural gas reserves annually to take into account, among other things, production levels, field reviews, the
addition of new reserves from discoveries, year-end prices and economic and other factors. Proved reserve estimates may be materially different from the quantities of crude oil and natural
gas that are ultimately recovered.

Crude
oil and natural gas represented 75% and 25%, respectively, of our total estimated proved crude oil and natural gas reserves on an oil equivalent basis at December 31, 2001.

Crude Oil.We had estimated proved crude oil reserves at December 31, 2001 totaling approximately 77.8 billion
barrels (including an estimated 37 billion barrels of heavy and extra-heavy crude oil in the Orinoco Belt). We also had estimated proved reserves of natural gas totaling approximately 148,295
BCF (including an estimated 14,153 BCF in the Orinoco Belt). The average API gravity of our estimated proved crude oil reserves was 16.5° as compared to an average API gravity of
23.8° for our crude oil produced in 2001. Based on 2001 production levels, estimated proved reserves of crude oil, including heavy and extra-heavy crude oil reserves that will require
significant future development costs to produce and refine, have a remaining life of approximately 64 years.

From
December 31, 1995 to December 31, 2001, our estimated proved reserves of crude oil increased by 11.5 billion barrels and our estimated proved reserves of
natural gas increased by 0.82 billion barrels of oil equivalent ("BOE"). In 2001, 2000 and 1999, our proved crude oil reserve replacement ratio was 108%, 169% and 165% respectively. These
variations resulted from revisions to

13

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the expected recovery rate of oil in place and the application of secondary recovery technology to existing crude oil deposits.

Natural Gas.We have substantial proved developed reserves of natural gas amounting to 103,807 BCF (or 17,898 MMBOE) at
December 31, 2001. Our natural gas reserves are composed of associated gas that are developed incidental to the development of our crude oil reserves. A large proportion of our
proved natural gas reserves are developed. During 2001, approximately 32% of the natural gas that we produced was reinjected for well pressure maintenance purposes.

The
following table shows our proved crude oil and natural gas reserves and proved developed crude oil and natural gas reserves, all located in Venezuela (see note 18 to our
consolidated financial statements, included under "Item 18. Financial Statements"):

PDVSA's Proved Reserves

|                                                                     |                                                  | Year Ended December 31,                               |       
|-------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------------- | ------
|
|Proved Reserves(1):                                                  |                                                  |                                                       |       
|Crude oil (MMB)                                                      |                                                  |                                                       |       
|                                                                     | Condensate                                       |                                                       | 1,723 
|                                                                     | Light (API gravity of 30° or more)               |                                                       | 10,345
|                                                                     | Medium (API gravity of between 21° and 30°)      |                                                       | 12,891
|                                                                     | Heavy (API gravity of between 11° and 21°)       |                                                       | 17,266
|                                                                     | Extra-heavy (API gravity of less than 11°)(2)    |                                                       | 35,558
|                                                                     |                                                  |                                                       |       
|                                                                     |                                                  | Total crude oil                                       |       
|                                                                     |                                                  |                                                       |       
|                                                                     |                                                  | Of which, assigned to Operating Service Agreements(3) |       
|Natural gas (BCF)(4)                                                 |                                                  | 148,295                                               |       
|                                                                     |                                                  |                                                       |       
|Proved reserves of crude oil and natural gas (MMBOE)(3)(5)           |                                                  | 103,351                                               |       
|                                                                     |                                                  |                                                       |       
|Remaining reserves life of crude oil (years)(6)                      |                                                  | 64                                                    | x     
|Proved Developed Reserves:                                           |                                                  |                                                       |       
|Crude oil (MMB)                                                      |                                                  |                                                       |       
|                                                                     | Condensate                                       |                                                       | 747   
|                                                                     | Light (API gravity of 30° or more)               |                                                       | 3,590 
|                                                                     | Medium (API gravity of between 21° and 30°)      |                                                       | 5,568 
|                                                                     | Heavy (API gravity of between 11° and 21°)       |                                                       | 5,504 
|                                                                     | Extra-heavy (API gravity of less than 11°)(2)(7) |                                                       | 1,963 
|                                                                     |                                                  |                                                       |       
|                                                                     |                                                  | Total crude oil(7)                                    |       
|                                                                     |                                                  |                                                       |       
|                                                                     |                                                  | Of which, assigned to Operating Service Agreements(3) |       
|                                                                     |                                                  |                                                       |       
|Percentage of proved crude oil reserves(8)                           |                                                  | 22                                                    | %     
|Natural gas (BCF)(4)                                                 |                                                  | 103,807                                               |       
|                                                                     |                                                  |                                                       |       
|Percentage of proved natural gas reserves(9)                         |                                                  | 70                                                    | %     
|Proved developed reserves of crude oil and natural gas (MMBOE)(2)(3) |                                                  | 35,270                                                |       
|                                                                     |                                                  |                                                       |       

14

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---

Operations

We maintain an active exploration and development program designed to increase our proved crude oil reserves and production capacity. We have been successful in
our efforts to increase our proved crude oil and natural gas reserves in each of the last 20 years. Beginning in 1992, we commenced a program designed to attract and incorporate private sector
participation into our exploration and production activities. We currently conduct our exploration and development activities in the Western Zulia Basin, the Western BarinasApure Basin
and the Eastern Basin in the Monagas and Anzoategui states. We are currently conducting extensive exploration and development activities in the Orinoco Belt of the Eastern Basin and in the other
basins, either independently or together with foreign partners through joint venture associations. See "Item 4.B Business overviewInitiatives Involving Private Sector Participation."

In
2001, our exploration expenditures were used principally to fund the drilling of 11 exploratory wells and acquisition of 2,748 km2 of 3D seismic lines and 577 km of 2D seismic lines.
Additionally, nine exploratory wells were drilled and 33 km2 of 3D seismic lines were acquired pursuant to our operating services agreements. In 2001, we added 357 MMB proved crude oil reserves (46
MMB from newly discovered reserves and 311 MMB from development wells), compared to 209 MMB in 2000 (5 MMB from newly discovered reserves and 204 MMB from development wells) and 184 MMB in 1999 (84
MMB from newly-discovered wells and 100 MMB from development wells). In 2001, we invested $2,100 million in 479 development wells and other facilities.

15

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The
following table summarizes our drilling activities for the periods indicated:

PDVSA's Exploration and Development

|             |                              | Year Ended December 31,
|------------ | ---------------------------- | -----------------------
|
|Exploration: |                              |                        
|             | Wells spud                   |                        
|             | Wells carry-over             |                        
|             |                              |                        
|             |                              | Total                  
|             |                              |                        
|             | Wells completed              |                        
|             | Wells suspended              |                        
|             | Wells under evaluation       |                        
|             | Wells in progress            |                        
|             | Dry or abandoned wells       |                        
|             |                              |                        
|             |                              | Total                  
|             |                              |                        
|Development: |                              |                        
|             | Development wells drilled(1) |                        

---

Pursuant to operating services agreements relating to the Orinoco Belt, 9 exploration wells and 349 development wells were drilled in 2001, and 15
exploration wells and 453 development wells were drilled in 2000.

In
2001, our crude oil production averaged 3,094 MBPD (includes 52 MBPD attributable to our participation in the Orinoco Belt projects) with an average API gravity of 23.8°.
This production level represented approximately 78% of PDVSA's estimated year end crude oil production capacity of 3,990 MBPD (includes 488 MBPD of crude oil production capacity attributable to our
Orinoco Belt projects). In 2001, our average production costs of crude oil during were approximately $3.38 per BOE, or $2.17 per BOE excluding the production and costs attributable to our operating
service agreements, and the average of our depreciation and depletion costs was $0.38 per BOE. See "Item 3.A Selected financial data."

At
December 31, 2001, we operated approximately 19,583 oil wells and three gas wells. At such date, we had 37,659 gross kms2 of undeveloped acreage and 177,829 gross kms2 of
acreage under development, including 49,194 kms2 developed pursuant to our operating service agreements.

On
average, during 2001, our natural gas production was 6,000 MMCFD (or 1,034 MBPD on an oil equivalent basis), of which 1,907 MMCFD, or 32%, was reinjected for purposes of maintaining
reservoir pressure. The net natural gas production of 4,093 MMCFD was consumed in production of liquid natural gas (8%), as fuel in refinery and production operations (39%), in petrochemical
operations (11%) and the remainder (42%) was sold to third parties for power generation, aluminum, iron and other manufacturing industries and domestic uses. Approximately 75% of the 2001 natural gas
production and of total estimated proved net natural gas reserves are located in the Eastern Basin. A significant portion of this production is transported through our pipeline systems for use by
industries in the coastal and central regions of Venezuela.

16

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The
following table summarizes our historical average net daily crude oil and natural gas production by type and by basin and average sales price and production cost for the periods
specified:

PDVSA's Average Production, Sales Price and Production Cost

|                                                                               |                                             | Years Ended December 31,
|------------------------------------------------------------------------------ | ------------------------------------------- | ------------------------
|
|
|Crude oil:                                                                     |                                             |                         
|                                                                               | Condensate                                  |                         
|                                                                               | Light (API gravity of 30° or greater)       |                         
|                                                                               | Medium (API gravity of between 21° and 30°) |                         
|                                                                               | Heavy (API gravity of less than 21°)        |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|                                                                               | Liquid petroleum gas                        |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|Natural gas:                                                                   |                                             |                         
|                                                                               | Gross production (MMCFD)                    |                         
|                                                                               | Less:                                       |                         
|                                                                               |                                             | Reinjected (MMCFD)      
|                                                                               |                                             |                         
|                                                                               | Net natural gas (MMCFD)                     |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|Crude oil production by basin:                                                 |                                             |                         
|                                                                               | Western Zulia Basin                         |                         
|                                                                               | Western Barinas  Apure Basin               |                         
|                                                                               | Eastern Basin                               |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|Natural gas gross production by basin (MMCFD):                                 |                                             |                         
|                                                                               | Western Zulia Basin                         |                         
|                                                                               | Western Barinas  Apure Basin               |                         
|                                                                               | Eastern Basin                               |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|                                                                               |                                             |                         
|Average sales price(2):                                                        |                                             |                         
|                                                                               | Crude oil ($ per barrel)                    |                         
|                                                                               | Gas ($ per MCF)                             |                         
|Average production cost ($ per BOE)(3)                                         |                                             | $                       
|Average production cost ($ per BOE), excluding operating service agreements(3) |                                             | $                       

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17

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Initiatives Involving Private Sector Participation

As part of the process encouraging private initiatives and investment in the oil industry, and pursuant to Article 5 of the Nationalization Law, with the
approval of the National Congress, we are permitted to enter into operating and association agreements with private entities. Since 1992, we have undertaken projects with the private sector in
connection with our exploration and development activities. See note 8(c) to our consolidated financial statements, included under "Item 18. Financial Statements."

Private Sector Participation

LOGO



During 1992, 1993 and 1997, PDVSA auctioned the rights to and entered into agreements with several international companies. The purpose of these agreements was to
reactivate the operation of thirty-three oil fields which no longer met our minimum rate of return on investment threshold, using secondary and tertiary recovery techniques. The auctions conducted
during 1992 and 1993 are referred to in this annual report as the "first and second rounds" and the auction conducted in 1997 is referred to in this annual report as the "third round."

The
terms of the operating agreements entered into require the international oil company investors to make capital investments in the form of assets necessary to increase production in
the relevant oil fields. These investors would then recover their investments by collecting operating fees and stipends from PDVSA, amounts to be determined based on pricing formulas derived from the
amount of crude oil delivered to PDVSA during the term of the operating agreement. The operating

18

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agreements also provide that PDVSA would own the capital assets employed in the production, retain title on the hydrocarbons produced and has no further obligations as to any remaining value of the
assets existing in the fields. See note 8(c) to our consolidated financial statements, included under "Item 18. Financial Statements."



The
following table sets forth information with respect to the contracts awarded to reactivate the fields under the operating service agreements:

PDVSA's Operating Service Agreements
As of December 31, 2001

|Area                    |           | Consortium (Operator)                                                     |  | Proved Crude
Oil Reserves
(MMB) (1)
|----------------------- | --------- | ------------------------------------------------------------------------- |  | -----------------------------------
|First and Second Rounds |           |                                                                           |  |                                    
|Boscan                  |           | Chevron Global Technology Services Co.                                    |  | 1,444.6                            
|Urdaneta / West         |           | Shell Venezuela S.A.                                                      |  | 845.2                              
|DZO                     |           | B.P. Venezuela Holdings, Ltd.                                             |  | 381.4                              
|Oritupano / Leona       |           | Perez Companc S.A., Union Pacific Resources, Servicios Corod de Venezuela |  | 281.3                              
|Colon                   |           | Tecpetrol Venezuela, CMS Oil and Gas, Coparex                             |  | 135.8                              
|Quiamare / LA Ceiba     |           | Repsol-YPF Venezuela, S.A., Ampolex Venezuela Inc., Tecpetrol Venezuela   |  | 89.1                               
|Quiriquire              |           | Repsol-YPF Venezuela, S.A.                                                |  | 73.4                               
|Pedernales              |           | Perenco                                                                   |  | 121.9                              
|Uracoa/Bombal           |           | Benton Oil & Gas, Vinccler                                                |  | 85.0                               
|Sanvi / Güere           |           | Teikoku Oil De Sanvi Güere, C.A.                                          |  | 100.8                              
|Guarico East            |           | Teikoku Oil De Venezuela C.A.                                             |  | 73.3                               
|Jusepin                 |           | Total Oil and Gas de Venezuela, B.V., B.P. Venezuela Holding, Ltd.        |  | 151.3                              
|Guarico West            |           | Union Pacific Resources, Repsol-YPF Venezuela, S.A.                       |  | 40.4                               
|Falcon East             |           | Vinccler                                                                  |  | 9.1                                
|Falcon West             |           | West Falcon Samson                                                        |  | 3.0                                
|                        |           |                                                                           |  |                                    
|                        | Sub Total |                                                                           |  |                                    
|                        |           |                                                                           |  |                                    

19

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|Third Round      |           |                                                                                                                         |  |      
|---------------- | --------- | ----------------------------------------------------------------------------------------------------------------------- |  | -----
|Boquerón         |           | B.P. Venezuela Holding, Ltd., Preussag Energie GmbH                                                                     |  | 100.2
|LL-652           |           | Chevron Global Technology, Statoil, B.P. Venezuela Holding, Ltd.,
Petróleo y Gas Inversiones, C.A.                      |  | 363.4
|Dación           |           | Lasmo Dacion, B.V., Lasmo Caracas, B.V., Lasmo Oriente, B.V.                                                            |  | 258.9
|Intercampo norte |           | China National Petroleum Corp.                                                                                          |  | 177.0
|Caracoles        |           | China National Petroleum Corp.                                                                                          |  | 105.2
|B2X 68/79        |           | Nimir Petroleum Company Limited, Ehcopek Petróleo, S.A., Cartera de Inversiones Petroleras II, C.A.                     |  | 108.5
|Mene grande      |           | Repsol-YPF Venezuela, S.A.                                                                                              |  | 98.1 
|Mata             |           | Inversora Mata, Perez Companc de Venezuela, S.A. Petrolera Mata                                                         |  | 82.8 
|B2X 70/80        |           | Pancanadian Petroleum Venezuela, S.A., Nimir Petroleum Company Limited                                                  |  | 70.2 
|Kaki             |           | Inemaka, Inversiones Polar, Petróleo y Gas Inversiones, C.A.                                                            |  | 38.6 
|Ambrosio         |           | Perenco, Petróleo y Gas Inversiones, C.A.                                                                               |  | 52.2 
|Onado            |           | Compañía General Combustibles, Carmanah Resources,
Korea Petroleum, Bco Popular Del Ecuador                             |  | 53.9 
|La Concepción    |           | Perez Compac de Venezuela, S.A. Williams Companies, Inc.                                                                |  | 128.3
|Cabimas          |           | Preussag Energy GmbH, Suelopetrol                                                                                       |  | 45.8 
|Casma Anaco      |           | Cosa-Ingenieros Consultores, Cartera de Inversiones Venezolanas, Phoenix International, C.A., Rosewood North Sea, Open. |  | 13.7 
|Maulpa           |           | Inemaka, Inversiones Polar, Petróleo y Gas Inversiones, C.A.                                                            |  | 31.4 
|Acema            |           | Coroil, Perez Companc de Venezuela, S.A., Petrolera Coroil                                                              |  | 35.8 
|La Vela          |           | C.V.P., S.A.                                                                                                            |  |     
|                 |           |                                                                                                                         |  |      
|                 | Sub Total |                                                                                                                         |  |      
|                 |           |                                                                                                                         |  |      
|                 |           | Total                                                                                                                   |  |      
|                 |           |                                                                                                                         |  |      

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20

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In July 1995, the Venezuelan Congress approved the profit sharing arrangements pursuant to which private sector oil companies were offered the right to
explore, exploit and develop light and medium crude oil, on an equity basis in ten designated blocks with a total area of 13,774 km2, pursuant to the terms of the profit sharing agreements entered
into by such companies and CVP, our subsidiary appointed to coordinate, control and supervise these agreements. Under the profit sharing agreements, CVP has the right to participate, at its option,
with an ownership interest between 1% and 35% in the development of any recoverable reserves with commercial potential. Eight oil fields were awarded to 14 companies in 1996. The awards were based on
the percentage of pretax earnings ranging up to 50% that the bidders were willing to share with the Venezuelan government. Our business plan currently contemplates an aggregate average daily
production from the fields in these new areas of 460 MBPD by 2010. The profit sharing agreements provide for the creation of a Control Committee, as the ultimate authority for approval and control,
and which shall make fundamental decisions of national interest for Venezuela in connection with the execution of these agreements.

To
date, the private sector companies have not carried out significant commercial operations pursuant to the profit sharing agreements. The activities conducted in 2001 were comprised
principally of completing the minimum exploratory work, continuing exploration efforts, and approving plans for evaluation and delineation. The activities related to the minimum exploratory work are
conducted solely by the private sector companies. In 2001, PDVSA invested an aggregate of $880 million in connection with these profit sharing agreements, including an investment of
$103 million to drill three exploratory wells and to conduct geological and engineering studies and environmental audits. Significant discoveries have been made in four of the eight oil fields
explored. During 2001 and 2000, the profit sharing agreements relating to the areas of Delta Centro, Guanare, Guarapiche and Punta Pescador were terminated in advance in accordance with their
provisions. See note 8(b) to our consolidated financial statements, included under "Item 18. Financial Statements."

CVP
owns shares representing 35% participation interest in the joint ventures formed pursuant to profit sharing agreements in the following oil fields:

|Field                |  | CVP partners                          |  | Mixed companies                             
|-------------------- |  | ------------------------------------- |  | --------------------------------------------
|Delta Centro         |  | Burlington, Union Pacific, Benton (1) |  | Administradora General Delta Centro, S.A.   
|Golfo de Paria Este  |  | Ineparia                              |  | Administradora del Golfo de Paria Este, S.A.
|Golfo de Paria Oeste |  | Conoco, AGIP, OPIC                    |  | Compañía Agua Plana, S.A.                   
|Guanare              |  | ELF, Conoco (1)                       |  | Administradora Petrolera Guanare, S.A.      
|Guarapiche           |  | Maxus (Repsol) (1)                    |  | Administradora General Guarapiche, S.A.     
|La Ceiba             |  | ExxonMobil, Veba, Nippon              |  | Administradora Petrolera La Ceiba, C.A.     
|Punta Pescador       |  | Amoco, Total Fina, Veba (2)           |  | Administradora General Punta Pescador, S.A. 
|San Carlos           |  | Pérez Companc                         |  | Compañía Anónima Mixta San Carlos, S.A.     

---



The Venezuelan Congress approved the creation of four vertically integrated joint venture projects in the Orinoco Belt for the exploitation and upgrading of
extra-heavy crude oil of average API gravity of 9° and marketing of the upgraded synthetic crude oil with API gravities ranging from 16° to 32°. These joint venture
projects have been implemented through association agreements between us and

21

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the various participating entities. The term of each association agreement is approximately 35 years after commencement of commercial production, and, upon termination, the foreign
participant's ownership is transferred to us. Each of the projects is assigned an area that is expected to contain sufficient recoverable extra-heavy oil to meet planned output during the life of the
association. For the foreign partners, the projects represent a significant opportunity to increase production and proved crude oil reserves. For us, the projects represent an opportunity to develop
the Orinoco Belt's extra-heavy crude oil reserves.

The
approval by the Venezuelan Congress of each of these associations sets forth the conditions under which each of the projects may operate and requires that the associations pay the
standard Venezuelan corporate tax rate of 34% (as compared to a tax rate of 67.7%, revised to 50% in January 2002, that is applicable to our Venezuelan subsidiaries engaged in the production of
hydrocarbon and related activities). In addition, in May 1998, the Ministry of Energy and Mines and PDVSA Petróleo signed agreements to provide relief from the
162/3% production tax, establishing instead a tax rate band ranging from 1% to 162/3%, measured based on accumulated revenues and total investment.

The
four joint venture projects in the Orinoco Belt are as follows:



The
Orinoco Belt projects differ primarily by the quantity and quality of output. For our foreign joint ventures without a U.S. Gulf Coast refinery (i.e., the Hamaca and Sincor joint
ventures), the projects are designed to produce a synthetic crude oil that can be sold to third-party refiners who would otherwise process light sweet conventional crude oil. For our foreign joint
ventures with refining

22

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capacity on the U.S. Gulf Coast (i.e., the Petrozuata and Cerro Negro joint ventures), the projects are designed to produce synthetic crude oil that is suitable for a dedicated refinery.

The
following table sets forth for each association in the Orinoco Belt, the parties, estimated proved reserves in the areas associated with the projects and estimated production:

PDVSA's Orinoco Belt Proved Reserves

|Project     |  | Private Sector Participants |  | PDVSA's
Interest |  | Gross
Proved
Reserves |  | Estimated
Production of
Upgraded
Crude Oil |  | Expected
Average API of Upgraded
Crude Oil
|----------- |  | --------------------------- |  | ---------------- |  | --------------------- |  | ------------------------------------------ |  | ------------------------------------------
|
|Petrozuata  |  | Conoco                      |  | 49.9             |  | 2,647                 |  | 102                                        |  | 20-23                                     
|Sincor      |  | Total Fina, Statoil         |  | 38.0             |  | 3,596                 |  | 170                                        |  | 30-32                                     
|Hamaca      |  | Texaco, Phillips Petroleum  |  | 30.0             |  | 1,079                 |  | 170                                        |  | 25-27                                     
|Cerro Negro |  | ExxonMobil, Veba Oel        |  | 41.7             |  | 3,448                 |  | 105                                        |  | 16                                        



In October 2000, we entered into operating service agreements with three National Universities: Universidad de Oriente (Eastern University), Universidad
del Zulia (Zulia University), and Universidad Central de Venezuela (Central University of Venezuela). In these agreements, we auctioned the right to reactivate, rehabilitate and develop fields located
in three geographical areas. The purpose of these agreements with the National Universities is to provide training and industry experience to Venezuelan university students, especially geophysics,
petroleum engineering and geology students.

Each
field will be developed by separate entities that are 51% owned by us and 49% owned by the respective universities. These fields are: Socororo, located in Anzoategui State (operated
by Petroucv, S. A.); Mara Este, located in the Zulia State (operated by Oleoluz, S. A.); and Jobo, located in Monagas State (operated by Petroudo, S. A.). The total assigned area for all these fields
is approximately 523 km2. As of December 31, 2001, these fields have estimated proved reserves of approximately 246.5 MMB of crude oil, with an average API gravity of 8° to
22° API. We anticipate an average daily production from these fields of 46 MBPD by 2007 and our business plan anticipates a total investment of approximately $1.1 billion in these
fields over the next 20 years.

Refining and Marketing



Our downstream strategy has focused on the expansion and upgrading of our refining operations in Venezuela, the United States and Europe, allowing us to increase
our production of refined petroleum products and upgrade our product slate toward higher-margin refined petroleum products. We have also increased the complexity of our refining capacity in Venezuela
and made extensive investments to convert our worldwide refining assets from simple conversion to deep conversion capabilities. Deep conversion capabilities in our Venezuelan refineries have enabled
us to improve yields by allowing a greater percentage of higher value products to be produced. Such capabilities have resulted in an increase in our gasoline and distillate yield from 35% in 1976 to
70% in 2001, and has allowed us to reduce our fuel oil production from 60% to 23% during the same period, resulting in an improved export product portfolio.

23

---

We
conduct refining activities in Venezuela, the Caribbean, the United States and Europe. Our net interest in refining capacity has grown from 2,362 MBPD in 1991 to 3,085 MBPD at
December 31, 2001. The following diagram presents a summary of PDVSA's refining operations in 2001:

PDVSA's Refining System

LOGO

24

---

The
following table sets forth the refineries in which we hold an interest, the rated crude oil refining capacity and our net interest at December 31, 2001:

PDVSA's Refining Capacity

|                               |                                      | Owner                   |                    | PDVSA
Interest |     | Total Rated
Crude Oil
Refining
Capacity |     | PDVSA
Net Interest in
Refining
Capacity
|------------------------------ | ------------------------------------ | ----------------------- | ------------------ | -------------- | --- | --------------------------------------- | --- | ---------------------------------------
|
|Venezuela                      |                                      |                         |                    |                |     |                                         |     |                                        
|                               | Paraguaná Refining Complex, Falcón   |                         | PDVSA              |                | 100 |                                         | 940 |                                        
|                               | Puerto La Cruz, Anzoategui           |                         | PDVSA              |                | 100 |                                         | 203 |                                        
|                               | El Palito, Carabobo                  |                         | PDVSA              |                | 100 |                                         | 130 |                                        
|                               | Bajo Grande, Zulia                   |                         | PDVSA              |                | 100 |                                         | 15  |                                        
|                               | San Roque, Anzoategui                |                         | PDVSA              |                | 100 |                                         | 5   |                                        
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|                               |                                      | Total Venezuela         |                    |                |     |                                         |     | 1,293                                  
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|Netherlands Antilles (Curaçao) |                                      |                         |                    |                |     |                                         |     |                                        
|                               | Isla (1)                             |                         | PDVSA              |                | 100 |                                         | 335 |                                        
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|United States                  |                                      |                         |                    |                |     |                                         |     |                                        
|                               | Lake Charles, Louisiana              |                         | CITGO              |                | 100 |                                         | 320 |                                        
|                               | Corpus Christi, Texas                |                         | CITGO              |                | 100 |                                         | 157 |                                        
|                               | Paulsboro, New Jersey                |                         | CITGO              |                | 100 |                                         | 84  |                                        
|                               | Savannah, Georgia                    |                         | CITGO              |                | 100 |                                         | 28  |                                        
|                               | Houston, Texas (2)                   |                         | LYONDELL-CITGO     |                | 41  |                                         | 265 |                                        
|                               | Lemont, Illinois                     |                         | PDVMR              |                | 100 |                                         | 167 |                                        
|                               | Chalmette, Louisiana (3)             |                         | Chalmette Refining |                | 50  |                                         | 184 |                                        
|                               | Saint Croix, U.S. Virgin Islands (4) |                         | Hovensa            |                | 50  |                                         | 495 |                                        
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|                               |                                      | Total United States     |                    |                |     |                                         |     | 1,700                                  
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|Europe                         |                                      |                         |                    |                |     |                                         |     |                                        
|                               | Gelsenkirchen, Germany (5)           |                         | Ruhr               |                | 50  |                                         | 226 |                                        
|                               | Schwedt, Germany (5)                 |                         | Ruhr               |                | 19  |                                         | 210 |                                        
|                               | Neustadt, Germany (5)                |                         | Ruhr               |                | 13  |                                         | 246 |                                        
|                               | Karlsruhe, Germany (5)               |                         | Ruhr               |                | 12  |                                         | 275 |                                        
|                               | Nynäshamn, Sweden (6)                |                         | Nynäs              |                | 50  |                                         | 22  |                                        
|                               | Antwerp, Belgium (6)                 |                         | Nynäs              |                | 50  |                                         | 14  |                                        
|                               | Gothenburg, Sweden (6)               |                         | Nynäs              |                | 50  |                                         | 11  |                                        
|                               | Dundee, Scotland (6)                 |                         | Nynäs              |                | 50  |                                         | 10  |                                        
|                               | Eastham, England (6)                 |                         | Nynäs              |                | 27  |                                         | 26  |                                        
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|                               |                                      | Total Europe            |                    |                |     |                                         |     | 1,040                                  
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|                               |                                      | Total outside Venezuela |                    |                |     |                                         |     | 3,075                                  
|                               |                                      |                         |                    |                |     |                                         |     |                                        
|                               |                                      | Worldwide Total         |                    |                |     |                                         |     | 4,368                                  
|                               |                                      |                         |                    |                |     |                                         |     |                                        

---

25

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In order to maintain our competitiveness within international markets, we expect to invest approximately $3,035 million from 2002 through
2007 in Venezuela to improve our refining systems and to adapt our systems to meet environmental regulations and domestic and international product quality requirements. We intend to implement
AQUACONVERSION®, a PDVSA-owned technology for heavy crude oil processing, at the Isla Refinery in Curaçao. We are also expanding our delayed coking plants located at the
refining complex in Paraguaná, Venezuela. Additionally, we are participating in projects aimed at the manufacture of gasoline. For example, the three fluid catalytic craker units
located at our Amuay, Cardón and El Palito refineries are being modified to manufacture gasoline. A low sulfur gasoline production unit (currently in the engineering phase) is expected
to be operational in the first quarter of 2005, using oil products and technology, developed by Intevep, a wholly owned subsidiary of PDVSA. Finally, on March 13, 2001, we entered into a
contract for approximately $300 million with a Venezuelan-Japanese Consortium led by the Japanese JGC Corporation (formed by the Japanese Chiyoda Corporation and the Venezuelan companies,
Jantesa and Vepica) to construct naphtha hydro treatment facilities and diesel hydro sulphuration and environmental units in a refinery located in Puerto La Cruz, referred to in this annual report as
the VALCOR project. This project is budgeted at $700 million and is anticipated to be capable of producing 45MBPD of gasoline and 30MBPD of diesel blending components for the local market and
for export.



Our refineries in Venezuela are located at Amuay, Cardón, Puerto La Cruz, El Palito, Bajo Grande and San Roque, with rated crude oil refining
capacities of 635 MBPD, 305 MBPD, 203 MBPD, 130 MBPD, 15 MBPD and 5 MBPD, respectively. We integrated our operations at the Amuay and Cardón refineries to form the
Paraguaná Refining Complex, one of the world's largest refining complexes. We also operate the Isla Refinery in Curaçao, which we lease on a long-term basis
from the Netherlands Antilles government. The lease expires in 2014. Through these refineries, we produce reformulated gasoline and distillates to meet the U.S. and other international market
requirements.



Through our wholly owned subsidiaries, CITGO and PDVMR, we produce light fuels and petrochemicals primarily through our refineries in Lake Charles, Louisiana;
Corpus Christi, Texas; and Lemont, Illinois. Our asphalt refining operations are carried out through refineries in Paulsboro, New Jersey; and Savannah, Georgia. At December 31, 2001, the rated
crude oil refining capacities at each of the above refineries were 320 MBPD, 157 MBPD, 167 MBPD, 84 MBPD and 28 MBPD, respectively.

CITGO's
largest supplier of crude oil is PDVSA. CITGO has entered into long-term crude oil supply agreements with PDVSA with respect to the crude oil requirements for each of
CITGO's refineries. These crude oil supply agreements require PDVSA to supply minimum quantities of crude oil and other feedstocks to CITGO for a fixed period, usually 20 to 25 years. These
crude supply agreements contain force majeure provisions which entitle the supplier to reduce the quantity of crude oil and feedstocks delivered under the crude supply agreements under specified
circumstances.

The
Lake Charles refinery has a rated refining capacity of 320 MBPD and is capable of processing large volumes of heavy crude oil into a flexible slate of refined products, including
significant quantities of high-octane unleaded gasoline and reformulated gasoline. Its main petrochemical products are propylene and benzene. Its industrial products include sulphur,
residual fuels and petroleum coke. This refinery has one of the highest capacity levels for higher value-added products production in the United States, with a multiple stream capacity that allows it
to continue operating with one or more units shut down. This refinery has a Solomon Process Complexity Rating of 17.7 (as compared to an average of 13.9 for U.S. refineries in Solomon
Associates, Inc.'s most recently available survey). The Solomon Process Complexity Rating is an industry measure of a refinery's ability to produce higher value

26

---

products. A higher Solomon Process Complexity Rating indicates a greater capability to produce such products.

The
Corpus Christi refinery has a refining capacity of 157 MBPD and a processing technology that enables it to produce premium grades of gasoline that exceed that of most of its U.S.
competitors and to reduce sulfur levels in refined petroleum products. This refinery has a Solomon Process Complexity Rating of 16.3. The Corpus Christi refinery's main petrochemical products include
cumene, cyclohexane, and aromatics (including benzene, toluene and xylene).

The
Lemont refinery processes heavy crude oil into a flexible slate of refined products. The refinery has a rated refining capacity of 167 MBPD and has a Solomon Process Complexity
Rating of 11.7. This refinery is one of the most recently designed and constructed refineries in the United States. It is a flexible deep conversion facility that produces primarily gasoline, diesel,
jet fuel and petrochemicals. The average API gravity of the composite crude slate run at the Lemont refinery is approximately 26 degrees.

The
refineries in Paulsboro, New Jersey and Savannah, Georgia are specialized asphalt refineries. The Paulsboro refinery, which is particularly suited to process asphalt, also has
facilities to process low sulfur, light crude oil whenever favorable conditions exist.

Through
LYONDELL-CITGO, a joint venture owned 41.25% by PDVSA and 58.75% by Lyondell, we have a net interest in refining capacity of 109 MBPD in a refinery located in Houston, Texas with
a refining capacity of 265 MBPD. PDVSA supplies a substantial amount of the crude oil processed by this refinery under a long-term crude oil supply agreement that expires in the year 2017.
Under this agreement, LYONDELL-CITGO purchased approximately $1.5 billion of crude oil and feedstocks at market related prices from PDVSA in 2001. CITGO purchases substantially all of the
gasoline, diesel and jet fuel produced at this refinery under a long-term contract.

Various
disputes exist between LYONDELL-CITGO and its partners and their respective affiliates concerning the interpretation of agreements between the parties relating to the operation
of the refinery.

In
April 1998, PDVSA, pursuant to its contractual rights, declared force majeure and reduced deliveries of crude oil to LYONDELL-CITGO. On October 1, 2000, the force
majeure condition was terminated and PDVSA deliveries of crude oil returned to contract levels. On February 9, 2001, PDVSA notified LYONDELL-CITGO that, effective February 1, 2001, it
had again declared force majeure under the long-term crude oil supply agreement described above. As of December 31, 2001, PDVSA deliveries of crude oil to LYONDELL-CITGO have not
been reduced due to PDVSA's declaration of force majeure. On January 22, 2002, PDVSA notified LYONDELL-CITGO that, pursuant to the February 9, 2001 declaration of force majeure,
effective March 1, 2002, PDVSA expects to deliver approximately 20% less crude oil than volume of crude oil contracted to be delivered, and that force majeure will be in effect until at least
June 2002. LYONDELL-CITGO has commenced an action against Petróleos de Venezuela and PDVSA Petróleo in the Southern District of New York. LYONDELL-CITGO alleges
that Petróleos de Venezuela wrongfully declared force majeure events and reduced shipments of extra-heavy crude oil to LYONDELL-CITGO. See "Item 8.A.7 Legal proceedings."

Through
Chalmette Refining, an equal share joint venture between PDVSA and ExxonMobil, we have a net interest in refining capacity of 92 MBPD in a refinery located in Chalmette,
Louisiana. The Chalmette refinery processes upgraded extra-heavy crude oil to be produced by our Cerro Negro joint venture. PDVSA (through PDV Chalmette) has an option to purchase up to 50% of the
refined products produced at the Chalmette refinery. PDVSA (through CITGO) exercised its option through December 2000. ExxonMobil, which operates both the Cerro Negro joint venture and the
Chalmette refinery, purchased substantially all of the refined products produced by the Chalmette refinery at

27

---

market prices during 2001. See "Item 4.B Business overviewInitiatives Involving Private Sector ParticipationOrinoco Belt Extra-Heavy Crude Oil Projects".

In
October 1998, we had entered into agreements with Phillips Petroleum to form Merey Sweeny, a joint venture to process crude oil in the United States, and with Amerada Hess to
form Hovensa, a joint venture to process crude oil in the U.S. Virgin Islands.

Pursuant
to the Sweeny joint venture, PDV Holding and Phillips Petroleum own an integrated coker and vacuum crude distillation unit within an existing refinery owned by Phillips
Petroleum in Sweeny, Texas. Each party owns a 50% equity interest in this facility, which is composed of a 58 MBPD coker and a 110 MBPD vacuum crude distillation unit. Phillips will purchase heavy
crude oil from us to be processed in the Sweeny refinery pursuant to a processing agreement. Revenues from the Sweeny joint venture will consist of fees paid by Phillips Petroleum to the joint venture
under the processing agreement and any revenues from the sale of coke to third parties. See note 6 to our consolidated financial statements, included under "Item 18. Financial Statements."

Pursuant
to the Hovensa joint venture, we purchased a 50% interest in a refinery in the U.S. Virgin Islands previously owned by Hess Oil Virgin Islands Corporation, with a current
refining capacity of approximately 495 MBPD. The joint venture has entered into long-term supply contracts with PDVSA for up to 60% of its crude oil requirements and will construct a coker
facility to process heavy crude oils. It is anticipated that construction of this coker facility will be completed by July 2002.



Through Ruhr, a joint venture owned 50% by PDVSA and Veba Oel, we have equity interests in refineries 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. Ruhr also owns two petrochemical
complexes (Gelsenkirchen and Münchmünster). The Gelsenkirchen complex, which includes modern, large-scale units that are integrated with the crude oil refineries located
in the same complex, primarily produces olefins, aromatic products, ammonia and methanol. The Münchmünster complex, integrated with the nearby Bayear Oil refinery,
primarily produces olefins. Ruhr's petrochemical complexes have an average production capacity of approximately 3.8 million metric tons per year of olefins, aromatic products, methanol, ammonia
and various other petrochemical products.

Through
Nynäs, a joint venture owned 50.001% by PDV Europa and 49.999% by Fortum Oil and Gas OY, we own interests in 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 these refineries at December 31, 2001 was 11 MBPD, 6 MBPD, 7 MBPD
and 5 MBPD, respectively. The Nynäs refineries are specially designed to process heavy sour crude oil. Nynäs also owns a 50% interest in a refinery in Eastham, England.
The Eastham refinery is a specialized asphalt refinery in which our net interest crude oil refining capacity at December 31, 2001 was 7 MBPD.

The
Nynäs refineries in Nynäshamn produce asphalt and naphthenic specialty oils. The Dundee, Gothenbeug, Antwerp and Eastham refineries are specialized
asphalt refineries. Nynäs purchases crude oil from us 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.

The
following table sets forth our aggregate refinery capacity, input supplied by us (out of our own production or bought in the open market), product yield and utilization rate for the
three-year period ended December 31, 2001.

28

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PDVSA's Refinery Production

|                                          |                          | Year Ended December 31,
|----------------------------------------- | ------------------------ | -----------------------
|
|
|Total refining capacity                   |                          | 4,368                  
|                                          |                          |                        
|PDVSA's net interest in refining capacity |                          | 3,085                  
|                                          |                          |                        
|Refinery input(1):                        |                          |                        
|                                          | Crude oil                |                        
|                                          |                          | PDVSA(2)               
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          | Other                  
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          | Other feedstocks         |                        
|                                          |                          | PDVSA                  
|                                          |                          | Other                  
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|                                          | Total refinery input(3)  |                        
|                                          |                          | PDVSA                  
|                                          |                          | Other                  
|                                          |                          |                        
|                                          |                          |                        
|                                          |                          |                        
|Product yield(4):                         |                          |                        
|                                          | Gasoline/Naphtha         |                        
|                                          | Distillate               |                        
|                                          | Low sulfur residual      |                        
|                                          | High sulfur residual     |                        
|                                          | Asphalt/Coke             |                        
|                                          | Naphthenic specialty oil |                        
|                                          | Petrochemicals           |                        
|                                          | Other                    |                        
|                                          |                          |                        
|                                          |                          | Total product yield    
|                                          |                          |                        
|Utilization(5)                            |                          | 81                     

---

29

---

In 2001, we supplied substantially all of the crude oil requirements to our Venezuelan refineries (approximately 1,060 MBPD), 229 MBPD of crude
oil to our leased refinery in Curaçao and an aggregate of 1,255 MBPD of crude oil to refineries owned by our international subsidiaries or in which we otherwise have an interest. Of the
total volumes supplied by us to our international affiliates, 202 MBPD were purchased by PDVSA in the global market and supplied to our European affiliates. Additionally, CITGO and PDVMR purchased a
total of 290 MBPD of crude oil from PDVSA for processing in their refineries.



In 2001, we exported 2,065 MBPD of crude oil or 67% of our total crude oil production and 697 MBPD of refined petroleum products produced in Venezuela. Of total
exports of crude oil and refined petroleum products, 1,497 MBPD (54%) were sold to the United States and Canada. During the period from January through December 2001, according to the Petroleum
Supply Monthly dated February 2002, we were the third largest aggregate supplier of crude oil and refined petroleum products in the United States.

Of
our total crude oil exports in 2001, an aggregate of 1,190 MBPD (58%) were exported to the United States and Canada; 573 MBPD (28%) to the Caribbean and Central America; 151 MBPD (7%)
to Europe and 151 MBPD (7%) to South America and other destinations.

Of
our total refined petroleum products produced in Venezuela in 2001, approximately 458 MBPD were used in the domestic market and 697 MBPD were exported. Of the total exports of refined
petroleum products in 2001, 307 MBPD (44%) were sold to the United States and Canada; 220 MBPD (32%) to the Caribbean and Central America and 170 MBPD (24%) to South America and other destinations.

30

---

The
following tables set forth the composition and average prices of our exports of crude oil and refined petroleum products for the three-year period ended
December 31, 2001:

PDVSA's Export Volumes

|                  |                                                      | Year Ended December 31,
|----------------- | ---------------------------------------------------- | -----------------------
|
|
|Crude oil(1):     |                                                      |                        
|                  | Light (API gravity of 30o or more)                   |                        
|                  | Medium (API gravity of between 21o and 30o)          |                        
|                  | Heavy and extra-heavy (API gravity of less than 21o) |                        
|                  |                                                      |                        
|                  |                                                      |                        
|                  |                                                      |                        
|Refined products: |                                                      |                        
|                  | Gasoline/Naphtha                                     |                        
|                  | Distillate(2)                                        |                        
|                  | Low sulfur residual                                  |                        
|                  | High sulfur residual                                 |                        
|                  | Liquid petroleum gas                                 |                        
|                  | Other                                                |                        
|                  |                                                      |                        
|                  |                                                      |                        
|                  |                                                      |                        
|                  |                                                      |                        
|                  |                                                      |                        

---

31

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The following table sets forth the average prices of our exports of crude oil and refined petroleum products from Venezuela for the three-year period ended
December 31, 2001:

PDVSA's Average Export Prices

|                        |  | Year Ended December 31,
|----------------------- |  | -----------------------
|
|
|Crude oil(1)            |  | 18.95                  
|Refined products        |  | 23.94                  
|Liquefied petroleum gas |  | 19.55                  
|Average for the year    |  | 20.21                  

---

32

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The following table sets forth the geographic breakdown of our exports by types of crude oil, identifying sales to affiliates and third parties
for the three-year period ended December 31, 2001:

PDVSA's Total Crude Oil and Refined Products Export Volumes

|                                                       |                                               | Year Ended December 31,      
|------------------------------------------------------ | --------------------------------------------- | -----------------------------
|
|
|Crude oil:                                             |                                               |                              
|                                                       | All types                                     |                              
|                                                       |                                               |                              
|                                                       |                                               | United States and Canada     
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               | Europe                       
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               | Caribbean and Central America
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               | South America and others     
|                                                       |                                               |                              
|                                                       |                                               |                              
|                                                       | Light(API gravity of 30o or greater)(1)       |                              
|                                                       |                                               |                              
|                                                       |                                               | United States and Canada     
|                                                       |                                               | Others                       
|                                                       | Medium/Heavy(API gravity of less than 30°)(2) |                              
|                                                       |                                               |                              
|                                                       |                                               | United States and Canada     
|                                                       |                                               | Others                       
|Refined petroleum products:                            |                                               |                              
|                                                       |                                               |                              
|                                                       |                                               | United States and Canada     
|                                                       |                                               | Others                       
|Total crude oil and refined petroleum products exports |                                               |                              
|                                                       |                                               |                              
|Average sales price per barrel(in $):                  |                                               |                              
|                                                       | Light (API gravity of 30o or greater)         |                              
|                                                       | Medium/Heavy (API gravity of less than 30o)   |                              
|                                                       | Refined petroleum products                    |                              

---

33

---

The following table sets forth our consolidated sales volume of crude oil and refined petroleum products for the three-year period ended
December 31, 2001:

PDVSA's Consolidated Sales Volume

|                                |  | Year Ended December 31,
|------------------------------- |  | -----------------------
|
|
|Refined petroleum products      |  | 2,586                  
|Crude oil                       |  | 1,892                  
|                                |  |                        
|Total                           |  | 4,478                  
|                                |  |                        
|Average Price/Barrel ($/barrel) |  | 28.21                  



Sales of Crude Oil to Affiliates.We supply our international refining affiliates with crude oil and feedstocks either
produced by us or purchased in the open market. Some of our U.S. affiliates have entered into long-term supply contracts with us that require us to supply minimum quantities of crude oil
and other feedstocks to such affiliates for a fixed period of typically 20 to 25 years. These contracts are scheduled to expire in or after 2006.

Such
contracts incorporate price formulas based on the market value of a slate of refined petroleum products deemed to be produced from each particular grade of crude oil or feedstocks,
less certain deemed refining costs, certain actual costs, including transportation charges, import duties and taxes, and a fixed margin, which varies according to the grade of crude oil or other
feedstocks delivered. Fixed margins and deemed costs are adjusted periodically by a formula that is primarily based on the rate of inflation. Because deemed operating costs and the slate of refined
petroleum products deemed to be produced for a given barrel of crude oil or other feedstocks do not necessarily reflect the actual costs and yields in any period, the actual refining margin earned by
the purchaser under the various contracts will vary depending on, among other things, the efficiency with which such purchaser conducts its operations during such period. These contracts are designed
to reduce the inherent earnings volatility of the refining and marketing operations of our international refining affiliates. Other supply contracts between us and our U.S. affiliates provide for the
sale of crude oil at market prices.

Some
of the above contracts provide that, under certain circumstances, if supplies are interrupted, we are required to compensate the affected affiliate for any additional costs incurred
in securing crude oil or other feedstocks. These crude oil supply contracts may be terminated by mutual agreement, by either party in the event of a material default, bankruptcy or similar financial
hardship on the part of the other party or, in certain cases, if we no longer hold, directly or indirectly, 50% or more of the ownership interests in the related affiliate.

Sales of Crude Oil to Third Parties.Most of our export sales of crude oil to third parties, including customers in the
United States with which we maintain long-standing commercial relationships, are made at market prices pursuant to our general terms and conditions, and priced in dollars. Among our
customers are major oil companies and other medium-sized companies. Although our general terms and conditions do not require specified volumes to be bought or sold, historically, a majority of our
customers have taken shipments on a regular basis at a relatively constant volume throughout the year.

34

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Sales of Refined Products.We conduct all our retail sales in the United States through CITGO. CITGO's major products are
light fuels (including gasoline, jet fuel and diesel fuel), industrial products and petrochemicals, asphalt, and lubricants and waxes. Gasoline sales accounted for 58% of CITGO's total sales in 2001.
CITGO markets CITGO-branded gasoline through over 15,000 independently owned and operated retail outlets, located throughout the United States, primarily east of the Rocky Mountains.

CITGO
also markets jet fuel directly to airline customers at over 24 airports, diesel fuel in wholesale rack sales to distributors and in bulk through contract sales (primarily as
heating oil in the Northeast region of the United States) or on a spot basis, petrochemicals in bulk to a variety of U.S. manufacturers as raw materials for finished goods, including sulfur, cycle
oils, liquid petroleum gas, petroleum coke and residual fuel oil, asphalt to independent contractors for use in the construction and resurfacing of roadways, and over 350 different types, grades and
container sizes of lubricant and wax products.

Crude Oil and Refined Product Purchases.CITGO owns no crude oil reserves or production facilities and must therefore rely on
purchases of crude oil and feedstocks for its refinery operations. We are CITGO's largest supplier of crude oil, and CITGO has entered into long-term crude oil supply agreements with us
with respect to the crude oil requirements for each of CITGO's refineries. CITGO also purchases crude oil in the market. In addition, because CITGO's refinery operations do not produce sufficient
refined petroleum products to meet the demands of its branded distributors, CITGO purchases refined petroleum products, primarily gasoline, from third party refiners. CITGO also purchases refined
petroleum products from various other affiliates including LYONDELL-CITGO, PDVMR, Chalmette Refining and Hovensa pursuant to long-term contracts. In 2001, CITGO purchased 424 MBPD of
refined petroleum products under these contracts. In addition, CITGO occasionally purchases on a spot basis refined petroleum products from our Venezuelan refineries.



We supply crude oil to our European affiliates pursuant to various supply agreements. The crude oil that we supply to our European affiliates exceeds, as a
percentage of total supply, our aggregate net ownership interest in such entities' combined refining capacity. In 2001, we supplied to the European refineries in which we held an interest 242 MBPD of
crude oil, of which 40 MBPD were exported from Venezuela and 202 MBPD were purchased in world markets.

The
crude oil processed at the Ruhr Oel refineries is supplied 50% by us and 50% by Veba Oel pursuant to a joint venture agreement and a long-term supply contract. Pursuant
to these agreements,
Ruhr does not acquire title to any crude oil or refined petroleum products. Instead, the crude oil supplied by us or Veba Oel remains owned by us or Veba Oel, as applicable, throughout the refining
process. Our share of the refined petroleum 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 us and Veba Oel.

We
receive 50% of the revenues from Veba Oel's sales of the refined petroleum products processed at the Ruhr Oel refineries, less attributable operating and marketing costs. This
arrangement effectively provides Ruhr Oel with constant break-even results. We supply crude oil to the Ruhr Oel refineries and receive revenues from the sale of refined petroleum products
attributable to such crude oil.

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. Nynäs

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does not own crude oil reserves or production facilities and, therefore, must purchase crude oil for its refining operations. Nearly all crude oil purchased by Nynäs is supplied by us
pursuant to long-term supply contracts. We supply Nynäs only with high sulfur, extra-heavy Venezuelan crude oil.

Nynäs
markets asphalt products through an extensive marketing network in several European countries. Scandinavia, the United Kingdom and Continental Europe are the source
of 24%, 22% and 24%, respectively, of Nynäs' consolidated revenues for 2001. 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. Nynäs also maintains a terminal system network in Scandinavia.



We have begun implementing our market development strategy for Latin America and the Caribbean, through CITGO Latin America, CITGO's wholly owned subsidiary.
Through CITGO Latin America, we are introducing the PDV and CITGO brands into various Latin American markets, including through wholesale and retail sales of lubricants, gasoline and distillates. In
2001, CITGO Latin America set up an office in Guayaquil, Ecuador, further advancing its presence in Latin American markets. CITGO-branded products were given a boost this year with the branding of
service stations in Puerto Rico, the first CITGO-branded service stations located outside of the United States. The PDV brand was recently launched in Argentina and Brazil.



The following table shows our sales of refined petroleum products and natural gas of the Venezuelan domestic market:

PDVSA's Local Market Sales

|                                |                         | Year Ended December 31,
|------------------------------- | ----------------------- | -----------------------
|
|
|Refined Products:               |                         |                        
|                                | Liquefied petroleum gas |                        
|                                | Motor gasolines         |                        
|                                | Diesel                  |                        
|                                | Other                   |                        
|                                |                         |                        
|                                |                         | Total                  
|                                |                         |                        
|Natural gas (BOE)               |                         |                        
|Natural gas (MMCF)              |                         |                        
|Unit Sale Prices:               |                         |                        
|Refined products ($ per barrel) |                         | $                      
|Natural gas ($/BOE)             |                         | $                      
|Natural gas ($/MCF)             |                         | $                      

Since
December 1993, the Venezuelan government has permitted private sector participants to market lubricants in Venezuela.

Since
January 1997, through our subsidiary Deltaven, we have been marketing and distributing retail gasoline and other refined petroleum products under the PDV brand in the
Venezuelan local

36

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market. Deltaven is also promoting the development of the commercial infrastructure and services for retail clients with the participation of the private sector.

The
retail of price for gasoline is set by the Venezuelan government and represents approximately 54% of the export price for gasoline in 2001.

Effective
November 1997, the Venezuelan government has permitted private sector participants to market gasoline and other refined petroleum products in Venezuela through retail
outlets owned or operated by such participants. At the end of 2001, three private domestic participants, Grupo Trebol, Llanopetrol and CCMonagas, and four private international participants, Shell,
Texaco, ExxonMobil and British Petroleum, were marketing their products in Venezuela. These companies market their brands through 830 retail outlets owned or operated by them, and have a market share
in the gasoline and diesel sector of 53% compared to Deltaven's 47%.

Gas

Venezuela has abundant natural gas deposits that, in 2001, were estimated at 228 trillion cubic feet, of which 148 trillion cubic feet are proved reserves. Of
these reserves, 91% are associated with crude oil deposits and 9% are in the form of free gas. At December 2001, our total production capacity and sales of methane gas were 2,325 MCFD and 2,107
MCFD, respectively. Substantially all of the sales (99%) were to the Venezuelan market.

According
to BP AMOCO Statistical Review of World Energy dated June 2001, Venezuela is the eighth-largest owner of proved reserves in the world and the largest owner of proved
reserves in Latin America. These reserves can easily supply a domestic market of 1,917 MCFD.

Transportation and Infrastructure



Venezuela and the Caribbean.We have an extensive transportation network in Venezuela consisting of approximately 3,113 km in
total of crude oil pipelines (over 28 pipelines), with a throughput capacity of approximately 6,340 MBD of crude oil. These pipelines connect production areas to terminal facilities and refineries. We
have a network of gas pipelines in Venezuela totaling approximately 3,781 km, with a throughput capacity of 2,748 million MM3D. Our network is composed of the Western and East Central systems,
stretching from Lake Maracaibo, in the Zulia state to Punto Fijo, in the Falcón state and from Puerto Ordaz, in the Bolívar state to Barquisimeto, in the Lara state. We
also have a network of 1,179 km of products pipelines with a total flow capacity of approximately 831 MBPD.

We
maintain total crude oil and refined products storage capacity of approximately 30 MMB and 74 MMB in Venezuela, respectively, including tank farms, refineries and shipping terminals,
of which approximately 16.3 MMB is available at our refineries. Our terminal facilities are comprised of nine maritime ports as well as two river ports. Construction is currently under way on our new
terminal facilities at the Jose complex.

In
addition to the storage and terminal facilities in Venezuela, we also maintain additional storage and terminal facilities in the Caribbean, located in Bonaire, the Bahamas, Trinidad,
Curaçao and Statia, with
an aggregate storage capacity of 50 MMB at December 31, 2001. The Curaçao oil terminal, which is leased from the Netherlands Antilles government, had a storage capacity of
approximately 15 MMB at December 31, 2001.

United States.CITGO owns and operates a crude oil pipeline and three products pipeline systems. CITGO also has equity
interests in three crude oil pipeline companies and five refined product pipeline companies. CITGO's pipeline interests provide it with access to substantial refinery feedstocks

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and reliable transportation to the refined product markets, as well as cash flows from dividends. One of the refined product pipelines in which CITGO has an interest, Colonial Pipeline, is the
largest refined product pipeline in the United States, transporting refined products form the Gulf Coast to mid-Atlantic and Eastern seaboard states.

Europe.Through equity interests in five European pipeline companies, we have interests in four crude oil terminals and four
crude oil pipelines in northwestern Europe, including two pipelines from the Mediterranean coast to Germany. We also own three port facilities in the Rhine-Herne Canal providing barge access to Rhine
and North Sea coastal ports.



At December 31, 2001, PDV Marina, a wholly owned subsidiary of Petróleos de Venezuela, owned and operated 21 tankers with a total capacity
of approximately 1,347 MDWT and an average age at December 31, 2001 of approximately 12 years.

In
2001, our total average shipments of crude oil and refined petroleum products amounted to 1,081 MBPD, of which 839 MBPD were shipped by our tankers and the remaining quantities were
transported by chartered tankers.

Petrochemicals

We engage in the Venezuelan petrochemical industry through Pequiven. Through Pequiven, our goals include increasing the capacity and flexibility of existing
plants, both for local and international markets, and identifying new products or commercial opportunities, mainly in methanol, plastics and fertilizers. The raw materials currently used by Pequiven
are natural gas and liquefied petroleum gas, reformed naphtha and sulfur which are provided by PDVSA Petróleo, and phosphate rock, which is supplied by a Pequiven's subsidiary, Fosfato
de Venezuela S.A., located in the state of Falcón in northwestern Venezuela.

The
following table sets forth Pequiven's sales, consolidated revenues, net property, plant and equipment and capital expenditures in its wholly owned plants for each of the years
indicated:

Pequiven's Sales, Consolidated Revenues, Net Property, Plant and Equipment and Capital Expenditures

|                                              |  | Year ended December 31,
|--------------------------------------------- |  | -----------------------
|
|
|Sales volume (thousands of metric tons)       |  | 4,167                  
|Consolidated revenues (1)                     |  | 1,070                  
|Net property, plant and equipment at year end |  | 2,221                  
|Capital expenditures                          |  | 46                     

---

Pequiven and its joint ventures operate three petrochemical complexes, with a total combined production capacity of over eight million metric tons
currently. The Morón complex, in the Carabobo
state, primarily produces fertilizers and sulfuric acid. The El Tablazo complex, on the northeast shore of Lake Maracaibo in the Zulia state, produces mainly olefins, chlorine/caustic nitrogen-based
fertilizers, industrial feedstocks and thermoplastic resins. The Eastern Jose complex, located on the north coast of the Anzoategui state, produces methanol, fertilizer, industrial products and
methyl-ter-butyl-ether, or

38

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MTBE. Pequiven also has facilities to produce aromatics in the PDVSA El Palito refinery, located in the Carabobo state. The gross production of Pequiven's wholly owned plants in 2001 and 2000 was
approximately 3.6 million metric tons and 3.9 million metric tons, respectively.

At
present, Pequiven has interests in 17 operational joint ventures, with most of their production facilities located in the three existing petrochemical complexes, and has interests in
new joint ventures in various stages of development. The gross production of these joint ventures in 2001 was approximately 4.97 million metric tons, as compared to 3.1 million metric
tons in 2000. Products of these joint ventures include methanol, MTBE, ethylene, propylene, dripolene, polyethylenes, polypropylene, ethylene oxide, glycols, caustic soda, chlorine, ethylene
dichloride, fertilizers, caprolactam and other specialty products.

In
January 1997, Pequiven and ExxonMobil entered into a preliminary development agreement to assess the possibility of building a polyolefins and glycol complex in Pequiven's Jose
complex. It is expected that this project will require an aggregate investment of approximately $2.3 million and the joint venture would be owned in equal share by ExxonMobil and Pequiven.
Basic engineering and class II cost estimates were concluded during 1999 and both partners are in the pre-development phase and are analyzing enhancements for the project in
anticipation of entering into a definitive development agreement.

In
April 1999, Pequiven signed a joint venture agreement with Koch Industries Inc., Snamprogetti S.P.A. and Polar Uno, C.A. to construct two ammonia and two urea plants in
the Jose complex for a total investment of approximately $1,000 billion. The joint venture company is called FertiNitro and is owned 35% by Pequiven, 35% by Koch, 20% by Snamprogetti and 10% by
Polar. According to the joint venture agreement, Koch and Pequiven will agree to purchase pursuant to long-term offtake contracts 50% of the output of the four plants at market prices. The
plant was completed in April 2001 and began production shortly thereafter.

During
1998, the Venezuelan Congress formally enacted legislation which, among other things, permits us to sell shares of Pequiven or any of our subsidiaries to local or foreign
investors, to cause Pequiven to dispose of Pequiven's interests in subsidiaries and joint ventures, and to sell Pequiven's assets to third parties. The net proceeds of such transactions, if any, would
be used to develop further our petrochemical activities.

We
invested $130 million in the construction of a petrochemical jetty at the Jose complex with capacity to handle refrigerated liquids, bulks solids and containers coming from the
FertiNitro joint venture and the future polyolefins and glycol project. This facility began operating during the first quarter of 2001.

Our
business plan contemplates increasing the aggregate capacity of Pequiven's own plants, and those operated by joint ventures, from 11.7 million metric tons in 2001 to
17.8 million metric tons in 2007. We anticipate that the aggregate investments for these plants will be $4.9 million. We anticipate that $1.0 million in investments will come from
Pequiven's own resources (including bank loans), and our joint venture partners will contribute the remainder.

Through
our subsidiary, Proesca, we are also involved in a number of projects with the private sector to process intermediate refinery streams into higher margin products that will
substitute imports and increase non-traditional exports such as solvents, propylene, waxes and oil tars.

Natural Bitumen

The Orinoco Belt, located along the Orinoco River in Eastern Venezuela, has substantial reserves of natural bitumen, estimated to be in excess of 1 trillion
barrels, an estimated 22% of which can be recovered by conventional petroleum exploitation methods. We are involved in several extra-heavy

39

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crude oil projects in the Orinoco Belt to exploit these reserves. See "Item 4.B Business overviewInitiatives Involving Private Sector ParticipationOrinoco Belt Extra-Heavy
Crude Oil Projects."

Additionally,
through our wholly owned subsidiary, Bitor, we have developed a process of emulsifying natural bitumen in water to create an alternative liquid fuel to generate
electricity, named Orimulsion®, which offers advantages over coal and fuel oil in terms of combustion properties, environmental impact, ease of handling and costs. Field development and
production of the resources needed to manufacture Orimulsion® are currently carried out through operating arrangements and contracts entered into by PDVSA Petróleo and other
parties.

Our
Orimulsion® production capacity is 6.5 million metric tons per year, and the net production in 2001 was approximately 6.2 million metric tons, as compared
to 6.3 million metric tons in 2000. In accordance with our business plan, Bitor plans to increase Orimulsion® production to 20 million metric tons a year by 2007 and is
currently analyzing various projects for the expansion of its development and production capacity that would involve the establishment of joint ventures with several foreign oil companies. An
association agreement was entered into in December 2001, among Bitor, China National Oil and Gas Exploration and Development Corporation and Petrochina Fuel Oil Company Limited to build and
operate additional production capacity up to 6.5 million metric tons by 2004.

Orimulsion®
is marketed worldwide by Bitor through its wholly owned marketing subsidiaries. In Japan, Bitor markets Orimulsion® through its 50%-owned joint
venture with Mitsubishi Corporation. Bitor's
2001 production was sold mainly to customers in Italy (36%), Denmark (18%), China (16%), Japan (14%) and Canada (13%).

The
following table sets forth selected information of Bitor:

Bitor's Production, Sales, Consolidated Revenues, Net Property, Plant and Equipment
and Capital Expenditures

|                                                  |  | Year Ended December 31,
|------------------------------------------------- |  | -----------------------
|
|
|Raw material production                           |  | 4,257                  
|Production                                        |  | 6,226                  
|Orimulsion® sales volume                          |  | 6,173                  
|Consolidated revenues ($ in millions)             |  | 200                    
|Net property, plant and equipment ($ in millions) |  | 561                    
|Capital expenditures ($ in millions)              |  | 43                     

Coal

We are an active participant in the coal mining industry through our wholly owned subsidiary Carbozulia. Venezuela's most important coal deposits are in the
Guasare Basin, which is located in the northwestern state of Zulia. There are approximately three thousand million metric tons of coal resources and four mines in the Guasare Basin. Currently, two
mines in the Guasare Basin are operational and approximately 14% of resources in the basin are being exploited. It is estimated that up to 50% of such resources can be exploited using current
operating methods. Carbozulia has entered into two joint venture agreements with foreign companies to operate the two currently operational mines.

40

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The
following table sets forth Carbozulia's share of coal production, sales and revenues for each of the periods indicated:

Carbozulia's Production, Sales and Consolidated Revenues

|                                      |  | Year Ended December 31,
|------------------------------------- |  | -----------------------
|
|
|Coal production                       |  | 7,571                  
|Coal sales volume                     |  | 7,627                  
|Consolidated revenues ($ in millions) |  | 164                    

Carbozulia's
total coal production is exported, primarily to the United States, France, Holland, Italy, Spain, Germany, Belgium and Sweden.

Research and Development

Intevep is our wholly owned subsidiary responsible for research and technology support. Its overall mission is to create and sustain a competitive advantage for
PDVSA through efficient and effective development, adaptation and application of technology. Intevep contributes substantially, through application of technology, toward the exploration for new oil
and gas reserves, better utilization of existing reserves, increases in production, reduction in operational costs, greater productivity, upgraded processes for heavy and extra-heavy crude oil,
improvements in product quality, improvements in health and safety standards and the development of new petroleum-derived products and innovative processes.

During
2001, we continued to develop products and technologies such as MIS®, used in connection with heavy oil recovery and production; AQUADIESEL® (a
low-emission diesel for public transportation vehicles, successfully tested in Houston); DISOL® (Gas-to-Liquid technology); and conducted early
commercial tests of ISAL® (hydroconversion technology, successfully tested in a U.S. refinery, used to produce low sulfur, high octane gasolines). Further advances were obtained in the
development of AQUACONVERSION®, which is a catalytic process used to produce high-quality diesels and medium distillates from heavy residues, successfully tested in downstream
conversion in a Curaçao refinery; and HDH+ (technology to be used in Petrozuata for treatment and conversion of Orinoco Belt heavy and extra heavy crudes). With respect to environmental
protection, we also developed two new products: INTEBIOS® (a biotreatment technology for the recovery of crude contaminated soils); and BIOLAGUNAS® (a system for phenol removal
from water production streams). For long-term applications, Intevep is also conducting studies in biotechnology and nanotechnology (advanced materials), fuels for advanced vehicles and
alternative sources of energy.

Petroleum Investment Promotion Corporation

In 1995, we established the Petroleum Investment Development Corporation, also known as Sociedad de Fomento de Inversiones Petroleras, or SOFIP, as the entity
responsible for developing investment vehicles, funds and other instruments that will allow local and international investors, including individuals, to invest in projects within the Venezuelan oil
industry where private participation is allowed.

From
1998 through 2001, SOFIP promoted funds whose portfolio consisted of investments in PDVSA's exploration and production projects that involved private sector participation, including
Orinoco Belt extra-heavy crude oil projects and operating service agreements entered into in 1997. This initiative was cancelled during the fourth quarter of 2001 due to adverse financial and
petroleum market conditions. SOFIP ceased activities on December 31, 2001.

41

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Other Projects

In February 2002, with an investment of approximately $375 million, we began offshore drilling activities in a submarine platform in the Orinoco
Delta, from a floating rig named Plataforma Deltana located in the Atlantic Ocean, close to the border with Trinidad and Tobago. This project aims to add new free natural gas reserves to meet internal
and export market requirements. The Plataforma Deltana project will operate approximately 155 miles from the coast of Venezuela's Delta Amacuro territory, over a two-year period. The
estimated production is 4.7 million metric tons per year. The total estimated investment in this project is $1,959 million for the period 2001-2007, of which 60% is expected
to be financed by PDVSA and 40% is expected to be financed by private investors.

LOGO

This
floating rig drills exploration and outline wells, in search of potential hydrocarbon accumulations. The rig can operate at water depths of between 150 feet and 1,500 feet, and
drill down to about 25,000 feet. Because of the nature of the operation, the drilling rig is of a size large enough to house a crew of about one hundred technicians and qualified workers.

This
new venture into the gas business is seen as a potential contribution to meet the need for diversifying energy sources that help shape Venezuela's economic development. Similarly,
the success of this project would further strengthen Venezuela's commercial competitiveness by improving its position in the global market, which has been progressively migrating towards the use of
natural gas, as a clean non-polluting fuel.

Environmental and Safety Matters



The majority of Petróleos de Venezuela's subsidiaries, both in Venezuela and abroad, are subject to various environmental laws and regulations
under which they may be required to make significant expenditures to modify their facilities and to prevent or remedy the environmental effects of waste disposal and spills of pollutants. In the
United States and Europe, our operations are subject to various federal, state and local environmental laws and regulations, which may require them to take action to remedy or alleviate the effects on
the environment of earlier plant decommissioning or leakage of pollutants.

42

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We
have an investment plan to comply with the applicable environmental regulations in Venezuela. This investment plan contemplates approximately $1,998 million in capital
expenditure from 2002 through 2007, including the following: $1,079 million for product quality; $583 million for risk control; $279 million for environmental adaptation; and
$57 million for other environment-related investments.

For
the purpose of compliance with future fuel specifications, both national and international, our production projects are aimed at the significant reduction of the sulfur content of
fuels.

In
addition to the activities outlined in our investment plan, expenditures of approximately $624 million are planned for remediation of 8,000 production pits as part of a global
remediation plan that will culminate in 2010. The pits are excavations made in the soil and/or constructions of earth walls that were used in the past to temporarily store the waste generated by the
exploration and production activities. These excavations were made when there was no appropriate technology available to avoid the use of pits. Currently, PDVSA does not excavate pits as part of its
operations.

In
addition, for the period 2002 - 2006, CITGO has planned expenditures of approximately $1,154 million to comply with environmental regulations in the
United States.

In
1992, CITGO reached an agreement with a state agency to cease usage of certain surface impoundments at CITGO's Lake Charles refinery by 1994. A mutually acceptable closure plan was
filed
with the state in 1993. CITGO and its former owner are participating in the closure and sharing the related costs based on estimated contributions of waste and ownership periods. The remediation
commenced in December 1993. In 1997, CITGO presented a proposal to a state agency revising the 1993 closure plan. In 1998 and 2000, CITGO amended its 1997 proposal as requested by the state
agency. A ruling on the proposal, as amended, is expected in 2002, with final closure to begin later in 2002.

In
January and July 2001, CITGO received notices of violation from the U.S. Environmental Protection Agency alleging violations of the Clean Air Act. The notices of violation are
an outgrowth of an industry-wide and multi-industry U.S. Environmental Protection Agency enforcement initiative, alleging that many refineries and electric utilities modified air emission
sources without obtaining permits under the New Source Review provision of the Clean Air Act. The notices of violation to CITGO followed inspections and formal information requests regarding CITGO's
Lake Charles, Louisiana and Corpus Christi, Texas refineries and the Lemont, Illinois refinery operated by CITGO. At the request of the U.S. Environmental Protection Agency, CITGO is engaged in
settlement discussions, but is prepared to contest the notices of violation if the settlement discussions fail. If CITGO settles or is found to have violated the provisions cited in the notices of
violation, it would be subject to possible penalties and significant capital expenditures for installation or upgrading of pollution control equipment or technologies.

In
June 1999, a notice of violation was issued by the U.S. Environmental Protection Agency alleging violations of the National Emission Standards for Hazardous Air Pollutants
regulations covering benzene emissions from wastewater treatment operations at the Lemont, Illinois refinery operated by CITGO. CITGO is in settlement discussions with the U.S. Environmental
Protection Agency. CITGO believes this matter will be consolidated with the matters described in the previous paragraph.

Conditions
which require additional expenditures may exist at various sites including, but not limited to, our operating complexes, closed refineries, service stations and crude oil and
petroleum storage terminals. The amounts of such future expenditures, if any, are indeterminable. Management believes that these matters, in the normal course of operations, will not have a material
effect on the financial position, liquidity or consolidated operations of PDVSA.

43

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Due to the nature of our business, our operating subsidiaries and joint ventures are subject to stringent occupational health and safety laws in the jurisdictions
in which they operate. As such, each of our subsidiaries and joint ventures maintains comprehensive safety, training and maintenance programs with the help of international and recognized leading
authorities in this area. Our management believes that our activities are conducted substantially in compliance with all applicable laws.

4.C  Organizational structure

Petróleos de Venezuela was formed by the Venezuelan government in 1975, and conducts its operations through its Venezuelan and international
subsidiaries.

Through
December 31, 1997, we conducted our operations in Venezuela through three main operating subsidiaries, Corpoven, S. A., Lagoven, S. A. and Maraven, S. A. In 1997, we
established a new operating structure based on business units. Since then, we have been involved in a process of transforming our operations with the aim of improving our productivity, modernizing our
administrative processes and enhancing the return on capital. The transformation process involved the merger of Lagoven, S. A. and Maraven, S. A. into Corpoven S. A., effective January 1, 1998,
and renaming the combined entity PDVSA-P&G. In May 2001, we renamed PDVSA-P&G "PDVSA Petróleo" and began the process of transferring certain of our
nonassociated gas assets to PDVSA Gas during the second quarter of 2001.

Additionally,
we have also made several adjustments within our organization in order to enhance internal control of our operations, to optimize our governance model and to align our
operating structure with the long-term strategies of our shareholder. These adjustments consist primarily of the adoption of an operating structure, increasing the involvement of our board
of directors in our activities, and, at the same time, enhancing PDVSA's operational independence. These adjustments are also a part of our effort to promote private investment in our subsidiaries,
PDVSA Gas, Pequiven, Bitor and Carbozulia.

44

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Our significant subsidiaries at December 31, 2001 and our percentage of equity capital (to the nearest whole number) are set out below. The principal country of operation is
generally indicated by the subsidiary's country of incorporation:

|Significant Subsidiary                                 |  | % Ownership |  | Principal Activities                   |  | Country of
Incorporation
|------------------------------------------------------ |  | ----------- |  | -------------------------------------- |  | ------------------------
|AB Nynäs Petroleum                                     |  | 50          |  | Refining and marketing                 |  | Sweden                  
|Bitúmenes Orinoco, S. A.                               |  | 100         |  | Orimulsion                             |  | Venezuela               
|Bonaire Petroleum Corporation N. V.                    |  | 100         |  | Storage                                |  | The Netherlands Antilles
|Carbones del Zulia, S. A.                              |  | 100         |  | Coal                                   |  | Venezuela               
|Chalmette Refining, L.L.C.                             |  | 50          |  | Refining                               |  | United States           
|CITGO Petroleum Corporation                            |  | 100         |  | Refining, marketing and transportation |  | United States           
|Corporación Venezolana del Petróleo, S.A.              |  | 100         |  | Exploration and production             |  | Venezuela               
|Deltaven, S.A.                                         |  | 100         |  | Marketing (in Venezuela)               |  | Venezuela               
|Hovensa, L.L.C.                                        |  | 50          |  | Refining                               |  | U.S. Virgin Islands     
|Intevep, S.A.                                          |  | 100         |  | Research and development               |  | Venezuela               
|LYONDELL-CITGO Refining Company, L.P.                  |  | 41          |  | Refining                               |  | United States           
|PDV America, Inc.                                      |  | 100         |  | Refining, marketing and transportation |  | United States           
|PDV Europa B.V.                                        |  | 100         |  | Refining and marketing                 |  | The Netherlands         
|PDV Holding, Inc.                                      |  | 100         |  | Refining, marketing and transportation |  | United States           
|PDV Insurance Company Ltd.                             |  | 100         |  | Insurance                              |  | Bermuda                 
|PDV Marina, S.A.                                       |  | 100         |  | Shipping                               |  | Venezuela               
|PDV Midwest Refining, L.L.C.                           |  | 100         |  | Refining and marketing                 |  | United States           
|PDVSA Finance Ltd.                                     |  | 100         |  | Financing                              |  | The Cayman Islands      
|PDVSA Gas, S.A.                                        |  | 100         |  | Gas                                    |  | Venezuela               
|PDVSA Petróleo, S.A.                                   |  | 100         |  | Integrated oil operations              |  | Venezuela               
|Petroquímica de Venezuela, S.A.                        |  | 100         |  | Chemicals and petrochemicals           |  | Venezuela               
|Ruhr Oel GmbH                                          |  | 50          |  | Refining and marketing                 |  | Germany                 
|The Bahamas Oil Refining Company International Limited |  | 100         |  | Storage                                |  | The Bahamas             

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Item 5.    Operating and Financial Review and Prospects

Overview and Trends

Our consolidated financial results depend primarily on the volume of crude oil produced and the price levels for hydrocarbons. The level of crude oil production
and the capital expenditures needed to achieve such level of production have been among the principal factors determining our financial
condition and results of operations since 1990, and are expected to continue to be the principal factors in determining our financial condition and results of operations for the foreseeable future.

Historically,
members of the OPEC have entered into agreements to reduce their production of crude oil. Such agreements have sometimes increased global crude oil prices by decreasing the
global supply of crude oil. Venezuela is a party to and has complied with such agreements, and we expect that Venezuela will continue to comply with such production agreements with other OPEC members.
Since 1998, OPEC's production quotas have resulted in a worldwide decline in crude oil production and substantial increases in international crude oil prices.

The
average price of the OPEC basket decreased by $4.43 per barrel, or 16%, from $27.55 per barrel in 2000 to $23.12 per barrel in 2001, due to the decrease in oil demand and the drop in
oil prices, primarily as a result of the global economic slowdown. The average prices of our exports, including refined products, decreased $5.70 per barrel, or 22%, from $25.91 per barrel in 2000 to
$20.21 per barrel in 2001.

Throughout
2001, the OPEC agreed to oil production cuts for its members. Three production cuts were effected in February, April and September 2001, resulting in a total decrease
in our production in 2001 of 407 MBD compared to our production level in 2000. In January 2002, pursuant to production agreements with OPEC members, we decreased our production by an additional
174 MBD.

At
the end of February 2002, PDVSA personnel initiated labor actions against political decisions of the Venezuelan government relating to PDVSA matters. These protests resulted in
a brief period of disruption in production at certain PDVSA refineries and shipping terminals in Venezuela. Although operations returned to normal, a prolonged labor action could have a material
adverse effect on our operating activities.

Impact of Inflation and Devaluation

While more than 95% of our revenues and a significant portion of our expenses are in dollars, some of our operating costs (including income tax liabilities) are
incurred in Bolivars. As a result, our financial condition and results of operations are affected by the Venezuelan inflation rate and the timing and magnitude of any change in the $/Bs exchange rate
during a given financial reporting period.

Since
1998, the Venezuelan government has been using exchange rates to moderate inflation, by devaluing the Bolivar within a pre-determined band. In 2001, 2000 and 1999, the
annual rate of devaluation was 10%, 8% and 15%, respectively, which was lower than the annual rate of inflation of 12%, 13% and 20%, respectively.

|                                                                                                                                                            |  | December 31,
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------
|
|Exchange rates at year-end derived from exchange agreement with the Central Bank of Venezuela (Bs/$1) (see note 2 to our consolidated financial statements) |  | 770.09      
|Average annual exchange rates (Bs/$1)                                                                                                                       |  | 722.01      
|Interannual increments in the exchange rate (%)                                                                                                             |  | 10.29       
|Interannual increments in the CPI (%)                                                                                                                       |  | 12.29       

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The
Venezuelan government and the Central Bank of Venezuela adopted a floating exchange rate system, as opposed to the band system previously in effect, effective February 13,
2002. As a result of the adoption of a floating exchange rate system, the Bolivar has devalued against the dollar and inflation has accelerated in 2002. See note 1(d) and note 17 to our
consolidated financial statements, included under "Item 18. Financial Statements."

Impact of Taxes on Net Income and Cash Flows

Our consolidated effective income tax rate increased 11%, from 44% in 2000 to 49% in 2001, due to an increase in the effect of the lower tax rate for our
non-petroleum sector and foreign subsidiaries, partially offset by a decrease in the tax effects of the inflation adjustment and the remeasurement to dollars. See note 9 to our
consolidated financial statements, included under "Item 18. Financial Statements."

Income
tax expense is based on accounting denominated in Bolivars, in accordance with the Venezuelan income tax law. For fiscal purposes, Venezuelan companies are required to reflect the
impact of inflation and the variations in the rate of the Bolivar vis-à-vis the dollar and other foreign currencies by adjusting non-monetary assets
and stockholder's equity on their fiscal balance sheets. The Venezuelan income tax law considers any gain resulting from this adjustment as taxable income and any loss as a deductible expense. Such
adjustments affect our taxable income and therefore the amount of our income tax liability in Bolivars. When such tax liabilities are translated into dollars, the adjustments may create a material
difference between the effective tax rate paid when expressed in dollars and the statutory rate in Bolivars.

A
production tax equal to 162/3% of the market value at the well head of the crude oil and natural gas produced is charged for the right to extract crude oil and natural
gas. This tax is fully deductible in determining net taxable income. This law was effective until December 2001.

The
new Hydrocarbons Law that came into effect as of January 2002 affects PDVSA as follows:



The
net effect of the increase in the production tax rate and the decrease in the income tax rate is not expected to have a material impact on either our cash flows or financial results.

Venezuela
levied a 16.5% wholesale tax (a form of value added tax) on domestic sales transactions. Effective June 1999, the wholesale tax was substituted by a 15.5% value added
tax and in August 2000, the value added tax was lowered to 14.5%. As an exporter, each of our Venezuelan operating subsidiaries is entitled to a refund for a significant portion of such taxes
paid, which we classify on our

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balance sheet as recoverable luxury and wholesale tax. The Venezuelan government reimburses taxes through special tax recovery certificates, or CERTS. In January 1999, the Venezuelan
government delivered to us $1,334 million of CERTs, of which $1,291 million were used to pay dividends declared by our shareholder in an extraordinary meeting held on
September 30, 1998. At the beginning of 2000, the Venezuelan government delivered to us $245 million of CERTs, all of which were used against our income tax liability. In 2001, we
recovered $347 million of CERTs.

Petróleos
de Venezuela and its Venezuelan subsidiaries are entitled to a tax credit for new investments of up to 12% of the amount invested. In the case of PDVSA
Petróleo, however, such credits may not exceed 2% of its annual net taxable income and, in all cases, the carryforward period cannot exceed three years. See note 9 to our
consolidated financial statements, included under "Item 18. Financial Statements."

Venezuela
also levies a tax on corporate assets at a rate of 1% of the average value of a company's assets, as adjusted for inflation at the beginning and at the end of each year. The
tax is in effect a minimum income tax, as it is only paid if the amount that would be due thereunder is greater than the income tax otherwise payable. This tax does not affect our oil producing
subsidiaries, as the amounts payable in income tax are greater than the amounts that would be payable under this law.

Effective
March 2002, and for the term of one year, the Venezuelan government introduced a tax on certain banking transactions to be levied at a rate of 0.75%.

An
amendment of the Income Tax Law of Venezuela was approved in October 1999. This amendment established the introduction of transfer pricing rules that came into effect in
January 2000. Pursuant to the standard on transfer pricing, taxpayers subject to income tax who carry out import, export and loan operations with related parties domiciled abroad are obliged to
determine their income, costs and deductions applying the methodology set forth under this law. Any resulting effects will be included as a taxable item in the determination of income tax.

PDVSA
carries out significant operations regulated by transfer pricing rules. Our management believes that the effects of transfer pricing rules on its taxable income is not significant
for 2001 and 2000.

Beginning
January 2001, the amendment also included an universal tax system for Venezuela and introduced taxes on dividends and rules to promote international fiscal transparency.

In
January 2002, another amendment of the Income Tax Law published in November 2001, came into effect. One of the most important aspects of this amendment is the change in
the income tax rate applicable to the Venezuelan subsidiaries engaged in the production of hydrocarbon and related activities from 67.7% to 50%. See note 9 to our consolidated financial
statements, included under "Item 18. Financial Statements."

Basis of Presentation

The economic environment of our operations involve mainly the international market for crude oil and refined products. As such, the dollar is our functional
currency and most of our financial transactions are denominated in dollars. See note 1(b) to our consolidated financial statements, included under "Item 18. Financial Statements."

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5.A  Operating results

Results of Operations2001 Compared to 2000



Our production of crude oil and liquid petroleum gas averaged 3,267 MBPD in 2001, a 0.46% increase from 3,252 MBPD produced in 2000. Of this total, 35% was light
crude oil and condensates, 31% was medium crude oil, 27% was heavy and extra-heavy crude oil and the remaining 5% was liquid petroleum gas. Our production of natural gas (net of amounts
re-injected) was 4,093 MMCFD in 2001 compared to 3,979 MMCFD in 2000. In 2001, our natural gas production capacity reached 7,560 MMCFD and natural gas liquid production capacity totaled
288 MBPD. Our crude oil production
capacity was 3,990 MBPD in 2001 compared to 3,582 MBPD in 2000. All of our crude oil and natural gas production operations are located in Venezuela.

In
2001, the net output of refined petroleum products (including output representing our equity interest in refineries held by our affiliates in the United States and in Europe) was
2,863 MBPD, slightly less than the 2,895 MBPD in 2000. Of this total, 1,408 MBPD (49%) was produced in our Venezuelan refineries (including the Isla Refinery in Curaçao), 1,187 MBPD
(41%) was produced by the refineries in the United States, and the remaining 268 MBPD (10%), was produced by our interests in the European joint ventures.



Total revenues decreased $7,430 million, or 14%, from $53,680 million in 2000 to $46,250 million in 2001.



Net sales decreased $7,448, or approximately 14%, from $53,234 million in 2000 to $45,786 million in 2001. This was due to a decrease in sales
volume of 4% and a decrease in average sales price of 3%. See "Item 3.A Selected financial data" and the table captioned "PDVSA Consolidated Sales Volume" above.

Export Revenues of Crude Oil and Refined Products.Exports represented 67% of our sales. Our exports decreased in volume by
2% from 2,823 MBPD in 2000 to 2,762 MBPD in 2001. The average export price per barrel for Venezuelan crude oil, refined petroleum products and liquid petroleum gas was $20.21 in 2001, compared to
$25.91 in 2000, representing a 22% decrease.

The
following table sets forth the primary markets for Venezuelan crude oil, refined petroleum products and liquid petroleum gas for 2001 and 2000.

PDVSA's Export SalesGeographical Breakdown

|                              |  | 2001  |  | 2000  |  | Increase (Decrease)
|----------------------------- |  | ----- |  | ----- |  | -------------------
|
|United States and Canada      |  | 1,497 |  | 1,540 |  | (3)%               
|Caribbean and Central America |  | 793   |  | 870   |  | (9)%               
|South America                 |  | 321   |  | 183   |  | 75%                
|Europe                        |  | 151   |  | 230   |  | (34)%              

We
export all of the crude oil that we produce that is not processed in our Venezuelan refineries (including to the Isla Refinery in Curaçao). Of our total exports of
2,762 MBPD in 2001, 2,065 MBPD were exported (including to the Isla Refinery in Curaçao) as crude oil and 697 MBPD were exported as refined petroleum products. For the purpose of
calculating export volumes, we treat crude oil processed

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in the Isla Refinery in Curaçao as an export of crude oil from Venezuela and do not treat the sale of refined petroleum products from the Isla Refinery as an export of refined
petroleum products from Venezuela.

Sales Revenues of International Subsidiaries.In 2001, the total volumes of crude oil and refined petroleum products that we
sold exceeded our total production of crude oil and liquid petroleum gas. In 2001, our total production of crude oil and liquid petroleum gas was 3,267 MBPD of crude oil and liquid petroleum gas
production, compared to 4,478 MBPD of total sales of such products. PDV America, through its wholly owned subsidiaries (primarily CITGO), generates most of the sales in excess of our crude oil and
liquid petroleum gas production, because it purchases crude oil and refined petroleum products from third parties (including affiliates) for supply to refining and marketing network in the United
States. Total sales of refined petroleum products by PDV America in 2001 were approximately 1,610 MBPD, compared to 1,636 MBPD in 2000, and its purchases of crude oil from us totaled approximately 347
MBPD in 2001, compared to 329 MBPD in 2000. PDV America's revenues
decreased to $19,601 million in 2001 from $22,157 million in 2000, due to a decrease in average sales price of 11% and a decrease in sales volume of 2%.

Domestic Sales.In 2001, in the domestic market, we sold 458 MBPD of refined petroleum products (including liquid petroleum
gas), compared to 411 MBPD sold in 2000. We also sold 307 MBPD of oil equivalent of natural gas, compared to 288 MBPD sold in 2000. Unit sales prices of refined petroleum products decreased 5%, from
$9.20 per barrel in 2000 to $8.74 per barrel in 2001, and unit sales prices of natural gas decreased from $0.90 per MCF, or $5.29 per BOE, in 2000 to $0.88 per MCF, or $5.35 per BOE, in 2001.

Petrochemical and Other Sales.Our net sales for 2001 included $1,403 million from sales of petrochemicals, bitumen
and coal, a 15% increase compared to $1,224 million of revenues from sales of these products in 2000. Such increase in net sales is due primarily to an increase in sales volumes and average
sales prices for fertilizers, bitumen and coal.



Equity in earnings of nonconsolidated investees increased 4% to $464 million in 2001 from $446 million in 2000. In the United States, PDV Holding's
equity in earnings increased 85% from $59 million in 2000 to $109 million in 2001. The increase was primarily due to the increase in the earnings of LYONDELL-CITGO, CITGO's share of
which increased $33 million, from $41 million in 2000 to $74 million in 2001. LYONDELL-CITGO's increased earnings in 2001 are primarily due to higher refining margins, offset by
the impact of lower crude processing rates due to a major turnaround in the fourth quarter and an unplanned production unit outage in the first quarter and higher natural gas costs. The earnings for
2000 were impacted by a major planned turnaround which occurred during the second quarter of 2000. In Venezuela, PDVSA Petróleo's equity in earnings decreased 63%, from
$145 million in 2000 to $53 million in 2001, mainly due to higher crude oil upgrading costs in 2001 to produce synthetic crude in Petrozuata.



Through CITGO, we purchase crude oil and refined petroleum products from third parties (including affiliates) to supply our refining and marketing networks in the
United States. Our purchase of crude oil and products decreased by 8% from $19,759 million in 2000 to $18,228 million in 2001, primarily due to a decrease in prices and supply for
hydrocarbons in the international markets. We also purchased an average of 55 MBPD and 51 MBPD of refined products and crude oil for our Venezuelan operations, during 2001 and 2000, respectively.
Other purchases of crude oil were also made to meet our supply commitments.

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Our operating expenses increased by $872 million, or 9%, from $10,010 million in 2000 to $10,882 million in 2001, primarily due to higher
labor costs and maintenance costs. All of these costs were offset by a decrease in production costs per barrel from $3.48 in 2000 to $3.38 in 2001. Our production costs per barrel, excluding costs
associated with operating service agreements, decreased from $2.22 in 2000 to $2.17 in 2001. Production from our fields that are operated under the operating service agreements (which have higher than
average cost structures) increased from 466 MBPD in 2000 to 502 MBPD in 2001, and the average cost per barrel from their production was $11.72 in 2001 as compared with $12.90 in 2000. See the table
captioned "PDVSA Average Production, Sales Price and Production Cost" above.

Total
refining costs represented 36% and 37% of our total operating expenses for 2001 and 2000, respectively. Costs incurred at our Venezuelan refineries (including the Isla Refinery)
represented 10% of our total operating expenses in 2001 and 8% of our total operating expenses in 2000.



Our total exploration expenses were $174 million in 2001, compared to $169 million in 2000. These also include expenses related to two dry wells
which were abandoned during 2001, totaling $9 million (compared to $57 million in 2000), offset by an increase in administrative cost due to higher labor cost and more geophysics
activities.



Depreciation and depletion decreased 13% from $3,100 million in 2000 to $2,624 million in 2001, due to a lower depletion factor and the
write-off of unproductive assets.



Selling, administrative and general expenses increased 48% to $1,853 million in 2001 from $1,256 million in 2000, due principally to increased labor
costs and pension plan and other postretirement benefits.



Financing expenses decreased 24% to $509 million in 2001 from $672 million in 2000, in each case, net of capitalized interest of $51 million
and $59 million, respectively, primarily as a result of a decrease in the weighted average variable interest rate from 6.07% in 2000 to 4.73% in 2001, partially offset by an increase in the
weighted average fixed interest rate from 7.73% in 2000 to 8.13% in 2001 and an increase in average indebtedness outstanding.



Income before income tax and minority interests was 40% lower in 2001 than in 2000 ($7,764 million in 2001 as compared to $12,979 million in 2000),
primarily as a result of a decrease in net sales. We were subject to an effective consolidated income tax rate in 2001 of 49% compared to 44% in 2000. This difference is primarily due an increase in
the effect of the lower tax rate for our non-petroleum sector and foreign subsidiaries, partially offset by a decrease in the tax effects of the inflation adjustment and the remeasurement
to dollars.

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Results of Operations2000 Compared to 1999



Our production of crude oil and liquid petroleum gas averaged 3,252 MBPD in 2000, a 4% increase from 3,127 MBPD produced in 1999. Of this total, 38% was light
crude oil and condensates, 32% was medium crude oil, 25% was heavy and extra-heavy crude oil and the remaining 5% was liquid petroleum gas. Our production of natural gas (net of amounts
re-injected) increased 6% (to 3,979 MMCFD in 2000 compared to 3,766 MMCFD in 1999). In 2000, our natural gas production capacity reached 6,594 MMCFD and natural gas liquid production
capacity totaled 2,482 MBPD. Our crude oil production capacity was 3,582 MBPD in 2000 compared to 3,691 MBPD in 1999. All of our crude oil and natural gas production operations are located in
Venezuela.

In
2000, our output of refined petroleum products (including output representing our equity interest in refineries held by our affiliates in the United States and in Europe) was 2,895
MBPD, from 2,873 MBPD in 1999. Of this total, 1,364 MBPD (47%) was produced in our Venezuelan refineries (including the Isla Refinery in Curaçao), 1,253 MBPD (43%) was produced by our
United States refineries and our interests in our European joint ventures accounted for the remaining 278 MBPD (10%).



In 2000, our revenues (including total net sales and equity in earnings of non-consolidated investees) totaled $53,680 million, a 64% increase
over our 1999 total revenues of $32,648 million.



Our 2000 net sales totaled $53,234 million, a 63% increase over 1999 net sales of $32,600 million. In terms of volume, our sales increased by 15% in
2000 compared to our sales in 1999. Our total sales volume of 4,668 MPBD in 2000 (compared to 4,066 MBPD in 1999) consists of Venezuelan domestic sales, exports of crude oil and refined petroleum
products from Venezuela and sales of crude oil and refined petroleum products produced by and purchased from third parties by our international subsidiaries.

Export Revenues of Crude Oil and Refined Products.In terms of volume, exports represented 61% of our sales. Our exports
increased in volume by 1% in 2000, to 2,823 MBPD from 2,784 MBPD in 1999. The average realized export price per barrel for Venezuelan crude oil, refined petroleum products and liquid petroleum gas was
$25.91 in 2000, compared to $16.04 in 1999, a 62% increase.

The
following table sets forth the primary markets for Venezuelan crude oil, refined petroleum products and liquid petroleum gas for the periods 2000 and 1999.

PDVSA's Export SalesGeographical Breakdown

|                              |  | 2000  |  | 1999  |  | Increase (Decrease)
|----------------------------- |  | ----- |  | ----- |  | -------------------
|
|United States and Canada      |  | 1,540 |  | 1,589 |  | (3)%               
|Caribbean and Central America |  | 870   |  | 748   |  | 16%                
|South America                 |  | 183   |  | 349   |  | (48)%              
|Europe                        |  | 230   |  | 98    |  | 135%               

We
export all of the crude oil that we produce that is not processed in our Venezuelan refineries (including to the Isla Refinery in Curaçao). Of our total exports of
2,823 MBPD in 2000, 1,998 MBPD were exported (including to the Isla Refinery in Curaçao) as crude oil and 825 MBPD were exported as refined petroleum products. For the purpose of
calculating export volumes, we treat crude oil processed

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in the Isla Refinery in Curaçao as an export of crude oil from Venezuela and do not treat the sale of refined petroleum products from the Isla Refinery as an export of refined
petroleum products from Venezuela.

Sales Revenues of International Subsidiaries.In 2000, the total volumes of crude oil and refined petroleum products that we
sold exceeded our total production of crude oil and liquid petroleum gas (3,252 MBPD of crude oil and liquid petroleum gas production as compared to 4,668 MBPD of total sales in 2000). PDV America
through its wholly owned subsidiaries (primarily CITGO) generates most of the sales in excess of our crude oil and liquid petroleum gas production, because it purchases crude oil and refined petroleum
products from third parties (including affiliates) for supply to refining and marketing network in the United States. Total sales of refined petroleum products by PDV America in 2000 were
approximately 1,636 MBPD, compared to 1,547 MBPD in 1999, and its purchases of crude oil from us totaled approximately 329 MBPD in 2000, compared to 314 MBPD in 1999. PDV America's revenues increased
to $22,157 million in 2000 from $13,300 million in 1999, primarily as a result of higher prices for hydrocarbon products.

Domestic Sales.In 2000, in the Venezuelan domestic market, we sold 411 MBPD of refined petroleum products (including liquid
petroleum gas), compared to 383 MBPD sold in 1999. We also sold 288 MBPD of oil equivalent of natural gas, compared to 287 MBPD sold in 1999. Unit sales prices of refined petroleum products increased
15% to $9.20 per barrel in 2000 (from $8.00 per barrel in 1999) and unit sales prices of natural gas increased to $0.90 per MCF or $5.22 per BOE in 2000 (from $0.73 per MCF or $4.24 per BOE in 1999).

Petrochemical and Other Sales.Our net sales for 2000 included $1,224 million from sales of petrochemicals, bitumen
and coal, a 57% increase compared to $781 million of revenues from sales of these products in 1999. Such increase in net sales is due primarily to an increase in production and higher sales
volumes for fertilizers, bitumen and coal. Such net sales also included $989 million (of which $321 million was derived from sales in the international markets) from sales of
petrochemical products, including fertilizers, industrial products and olefins, natural bitumen ($215 million) and coal ($112 million).



Equity in earnings of non-consolidated investees increased 829% to $446 million in 2000 from $48 million in 1999. In the United States,
PDV America's equity in earnings of non-consolidated investees increased 168% to $59 million in 2000 from $22 million in 1999. This increase was primarily due to increased
earnings at LYONDELL-CITGO. CITGO's equity in earnings increased $40 million, to $41 million in 2000 from $1 million in 1999. The increase in LYONDELL-CITGO's earnings was due
primarily to increased deliveries and an improved mix of crude oil, higher spot margins due to a stronger gasoline market in 2000 and higher margins for reformulated gasoline due to industry supply
shortages. These improvements were partly offset by higher fuel and utility costs and interest expense.



Our purchase of crude oil and products increased by 80% to $19,759 million in 2000 from $10,959 million in 1999, primarily as a result of the
increase in prices for hydrocarbons in the international markets. We also purchased an average of 51 MBPD and 67 MBPD of refined products and crude oil for our Venezuelan operations, during 2000 and
1999, respectively. Purchases of crude oil were also made to meet our supply commitments.

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Our operating expenses increased by 17% to $10,010 million in 2000 from $8,532 million in 1999. Such increase is due primarily to our operating
expenses under our operating service agreements. Our production costs per barrel increased to $3.48 in 2000, as compared to $2.72 in 1999, due primarily to an increase in the fees incurred pursuant to
our operating service agreements. Our production costs per barrel, excluding operating service agreements, increased to $2.22 in 2000, as compared to $2.00 in 1999, due primarily to an increase in the
cost of reconditioning and recovery of wells. Production from our fields that are operated under the operating service agreements (which have higher than average cost structures) increased from 403
MBPD in 1999 to 466 MBPD in 2000, and the average cost per barrel from such production was $12.90 in 2000.

Our
total refining costs represented 37% and 34% of our total operating expenses for 2000 and 1999, respectively. Costs incurred at our Venezuelan refineries (including the Isla
Refinery) represented 8% of our total operating expenses in 2000 and 11% of our total operating expenses in 1999.



Our total exploration expenses was $169 million in 2000, compared to $118 million in 1999. Our exploration expenses also include expenses related to
four dry wells which were abandoned during 2000, totaling $57 million (compared to $17 million in 1999).



Depreciation and depletion increased by 6% to $3,001 million in 2000 from $2,821 million in 1999 due to the depreciation and depletion related to
new production units.



Selling, administrative and general expenses increased 5% to $1,256 million in 2000 from $1,192 million in 1999.



Financing expenses increased 2% to $672 million in 2000 from $662 million in 1999, in each case, net of capitalized interest of $59 million
and $188 million, respectively, primarily as a result of a decrease in the amount of such expenses that was capitalized, partially offset by a decrease in the average balance of outstanding
debt and a decrease in the weighted average interest rate from 7.06% in 1999 to 6.07% in 2000. See "Liquidity and Capital Resources" below.



Income before income tax and minority interests was 143% higher in 2000 than in 1999 ($12,979 million in 2000 as compared to $5,350 million in
1999), primarily as a result of the increase in net sales. We were subject to an effective consolidated income tax rate in 2000 of 44% compared to 47% in 1999.

5.B  Liquidity and Capital Resources

Cash Flows from Operating Activities

For the year ended December 31, 2001, PDVSA's net cash provided by operating activities totaled $6,954 million, primarily reflecting
$3,993 million of net income, $2,624 million of depreciation and depletion, $1,479 million of provision for employee termination and pension benefit and other
post-retirement benefits, $603 million of deferred income tax and the net effect of other items of

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$1,745 million. The more significant changes in other items included the decrease in accounts receivable of approximately $1,155 million and the decrease in accounts payable and other
current liabilities of approximately $1,648 million. The decrease in accounts receivable was primarily due to lower prices in the international market for crude oil and refined products, as
compared with the prices in 2000. See table captioned "PDVSA Average Export Prices" table above. The decrease in accounts payable is related to the decline in the purchase prices of crude oil and
refined products in the international markets resulting in a decrease in accounts payable to suppliers of approximately $500 million. The balance comprised of payments of employee termination
of approximately $760 million and other current liabilities of approximately $388 million.

Cash Flows from Investing Activities

Net cash used in investing activities totaled $5,125 million for 2001, of which $3,524 million was invested in property, plant and equipment and
$1,666 million represented deposits to the FIEM.

For
the three-year period ended December 31, 2001, our capital expenditures were as follows:

|                           |  | 2001 |       | 2000 |   | 1999 
|-------------------------- |  | ---- | ----- | ---- | - | -----
|
|Exploration and Production |  | $    | 507   |      | $ | 2,208
|Refining                   |  |      | 2,809 |      |   | 175  
|Petrochemicals and others  |  |      | 208   |      |   | 102  
|                           |  |      |       |      |   |      
|                           |  | $    | 3,524 |      | $ | 2,485
|                           |  |      |       |      |   |      

The
following table sets forth our planned capital expenditures for the period 2002-2004:

|                     |  | 2002 |       | 2003 |   | 2004 
|-------------------- |  | ---- | ----- | ---- | - | -----
|
|Venezuela(1)         |  | $    | 4,033 |      | $ | 4,478
|United States        |  |      | 509   |      |   | 589  
|Europe and Caribbean |  |      | 165   |      |   | 156  
|                     |  |      |       |      |   |      
|                     |  | $    | 4,707 |      | $ | 5,223
|                     |  |      |       |      |   |      

---

Our capital expenditures in Venezuela for 2002 are as follows: $2,197 for exploration and production, $566 million for refining and
marketing, $386 million for natural gas projects, $173 million for petrochemicals and others, and $711 for equity investments in our Orinoco Belt associations. Our
anticipated capital expenditures for our international subsidiaries and affiliates are aimed toward compliance with increasingly stringent environmental laws affecting their operations.

We
expect to meet our capital expenditure requirements primarily through internally-generated cash flows, financing in the international markets and withdrawal of our deposits with the
FIEM.

In
June 1999, the Venezuelan government created the Macroeconomic Stabilization Investment Fund, or the FIEM, to minimize the adverse effects of volatile prices in the global
energy markets on Venezuela's economy, national budget and monetary and foreign exchange markets. PDVSA is required to make deposits to the FIEM equivalent to 50% of its revenues from export sales in
excess of $9 per barrel, net of taxes related to such sales.

In
October 2001, the Venezuelan government introduced reforms to laws governing the FIEM and, among other changes, suspended contributions for the last quarter of 2001 and the
year 2002. Beginning 2003, 6% of income from exports, net of the respective taxes, will be transferred to the

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FIEM. This rate will be progressively increased on an annual basis at a constant rate of 1% up to 10% in 2007.

PDVSA's
deposits with the FIEM can be used only by PDVSA with the prior approval of the board of directors of the FIEM, provided that the National Assembly and the Venezuelan government
have informed the FIEM board of directors, within the established period, of compliance with established conditions. See note 3 to our consolidated financial statements, included under "Item
18. Financial Statements."

In
June 2002, the Venezuelan government and the National Assembly authorized PDVSA to withdraw up to $2,445 million of the funds deposited with the FIEM for capital
investments.

Cash Flows from Financing Activities

Consolidated net cash from financing activities totaled approximately $4,161 million, resulting primarily from borrowings of $1,509 million,
payments of dividends in the amount of $4,862 million, capital lease payments of $127 million and debt repayments of $681 million.

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As of December 31, 2001, PDVSA had an aggregate of $8,427 million of indebtedness outstanding that mature on various dates through 2031.

As
of December 31, 2001, PDV Finance had an aggregate of $3,297 million of unsecured notes outstanding that matures on various dates through 2028.

In
May 1998 and April 1999, PDVSA Finance issued $1,800 million and $1,000 million and Euro 200 million of unsecured notes, respectively, with due
dates ranging from 2000 to 2028, and with annual interest rates ranging from 6.25% to 9.95%. PDVSA Finance used the proceeds from these notes to purchase from PDVSA Petróleo certain
current and future accounts receivables generated from export sales of crude oil and refined products by PDVSA Petróleo.

In
2001, PDVSA Finance and Petróleos de Venezuela filed a shelf registration statement with the U.S. Securities and Exchange Commission for the offering from time to time
of up to $1,500 million in aggregate principal amount of notes. Pursuant to this shelf registration statement, PDVSA Finance issued $500 million aggregate principal amount of senior
notes on November 16, 2001 with an interest rate of 8.50%, payable quarterly. The notes mature on November 16, 2012. PDVSA Finance used the proceeds from the issuance of these notes to
purchase from PDVSA Petróleo certain current and future accounts receivables generated from export sales of crude oil and refined products by PDVSA Petróleo.

As
of December 31, 2001, PDV America had an aggregate of $1,911 million of indebtedness outstanding that matures on various dates through 2031.

In
August 1993, PDV America issued $1,000 million principal amount of senior notes with interest rates ranging from 7.25% to 7.875% and with due dates ranging from 1998 to
2003. Interest on these notes is payable semiannually. The senior notes are guaranteed by Petróleos de Venezuela and Propernyn. In August 1998, PDV America repaid the
$250 million 7.25% senior notes due August 1, 1998 with the proceeds received from the maturity of $250 million of mirror notes due to PDV America from PDVSA on July 31,
1998. On August 1, 2000, PDV America repaid $250 million 7.75% senior notes due August 1, 2000 with proceeds from the maturity of $250 million of mirror notes due to PDV
America from PDVSA on July 31, 2000.

As
of December 31, 2001, CITGO's bank credit facilities consist of a $400 million five-year revolving bank loan, a $150 million 364-day
revolving bank loan and a $25 million 364-day revolving bank loan, all of which are unsecured and have various borrowing maturities. At December 31, 2001, $360 million
was outstanding under these credit agreements. CITGO's other principal indebtedness consists of (i) $200 million in senior notes issued in 1996, (ii) $260 million in senior
notes issued pursuant to a master shelf agreement with an insurance company, (iii) $57 million in private placement senior notes issued in 1991, (iv) $338 million in
obligations related to tax exempt bonds issued by various governmental units and (v) $146 million in obligations related to taxable bonds issued by various governmental units. See
note 11 to our consolidated financial statements, included under "Item 18. Financial Statements."

PDVMR
has available borrowings under a $75 million revolving credit facility, committed through April 2002, of which $32 million was outstanding at
December 31, 2001. Inventories and accounts receivable of PDVMR were pledged as collateral. The weighted average interest rate for this facility at December 31, 2001 was 2.5%. PDVMR
cancelled this facility effective January 23, 2002. PDVMR's other indebtedness consists of $20 million in pollution control bonds. See note 11 to our consolidated financial
statements, included under "Item 18. Financial Statements."

As
of December 31, 2001, PDVSA Petróleo had an aggregate of $1,842 million of indebtedness outstanding that matures on various dates through 2028.

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In
June 1998, Cerro Negro Finance, Ltd. (a company 50% owned by PDVSA Cerro Negro, an indirect wholly owned subsidiary of Petróleos de Venezuela, and 50%
owned by Mobil Cerro Negro, Ltd., an indirect wholly owned subsidiary of ExxonMobil) issued $600 million principal amount of senior notes with annual interest rates ranging from 7.33% to
8.03% and due dates ranging from 2009 to 2028. The senior notes are guaranteed by Petróleos de Venezuela and are being used to finance the development and construction of part of the
facilities for the exploitation, production, transportation and upgrading of extra-heavy crude oil from reserves located in the Cerro Negro area of the Orinoco Belt. See "Item 4.B Business
overviewOrinoco Belt Extra-Heavy Crude Oil Projects" and note 11 to our consolidated financial statements, included under "Item 18. Financial Statements."

In
June 1999, PDVSA Cerro Negro obtained loans from a financial institution for $150 million, with LIBOR interest rates plus an additional annual interest rate ranging from
5.76% to 6.79%, due in 2002. The proceeds from these loans have been used to finance the exploration and production of crude oil from reserves located in the Cerro Negro area of the Orinoco Belt.

In
1999 and 1998, PDVSA Sincor (an indirect subsidiary of Petróleos de Venezuela), Total Fina and a subsidiary of Statoil entered into two lines of credit totaling
$1,200 million and $1,500 million, respectively, with syndicates of international banks to finance the Sincor extra-heavy crude oil project. See "Item 4.B Business
overviewOrinoco Belt Extra-Heavy Crude Oil Projects" and note 11 to our consolidated financial statements, included under "Item 18. Financial Statements."

Petróleos
de Venezuela, Total and Statoil have guaranteed, on an individual basis, the amounts withdrawn by each of their subsidiaries until the completion of the
construction phase of the project.

PDVSA
Sincor's participation interest under the $1,200 million line of credit, in an aggregate amount equal to $456 million, was fully drawn down as of December 31,
2001. The amount borrowed was used to pay financing expenses and to cover cash requirements and operating expenses for the Sincor joint venture. Interest on this line of credit accrues at a fixed base
rate for the first six months and at LIBOR beginning the seventh month and, for both periods, an additional annual interest ranging from 4.44% to 7.695% is also payable.

Approximately
$1,175 million of the $1,500 million line of credit has been drawn down; of this amount, PDVSA Sincor's participation interest as of December 31, 2001
was approximately $447 million. Interest on this line of credit accrues at LIBOR, and additional annual interest ranging from 5.44% to 8% is also payable. See "Item 4.B Business
overviewOrinoco Belt Extra-Heavy Crude Oil Projects" and note 11 to our consolidated financial statements, included under "Item 18. Financial Statements."

In
2001, PDVSA and its joint venture partners in the Hamaca project obtained a $470 million line of credit from a group of international banks and a $627 million line of
credit from certain United States banks. Amounts borrowed under these loans are used for the construction of project facilities for the improvement of synthetic crude and production. In 2001,
approximately $633 million was drawn down from these lines of credit at LIBOR ranging from 2.75% to 4.69% on $300 million and LIBOR ranging from 1.90% to 3.84% on $333 million.
Corpoguanipa, S.A., our indirect wholly owned subsidiary, has a 30% participation interest in these lines of credit. See "Item 4.B Business overviewOrinoco Belt Extra-Heavy Crude Oil
Projects" and note 11 to our consolidated financial statements, included under "Item 18. Financial Statements."

In
September 2000, PDVSA Petróleo entered into a loan agreement with a group of Japanese banks headed by the Japan Bank for International Cooperation for a credit
facility in yen equivalent to $500 million for use in the VALCOR project in Puerto La Cruz.

The
following table summarizes future payments for PDVSA's contractual obligations at December 31, 2001.

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Future Payments for PDVSA's Contractual Obligations
At December 31, 2001

|                                   |  | Total
(MM$) |  | Less than
1 year |  | Years
2-3 |  | Years
4-5 |  | After
5 years
|---------------------------------- |  | ----------- |  | ---------------- |  | --------- |  | --------- |  | -------------
|Long-Term Debt                     |  | 8,427       |  | 1,000            |  | 1,590     |  | 1,213     |  | 4,624        
|Capital Lease Obligations          |  | 179         |  | 62               |  | 61        |  | 40        |  | 16           
|Operating Leases                   |  | 1,400       |  | 130              |  | 226       |  | 103       |  | 941          
|                                   |  |             |  |                  |  |           |  |           |  |              
|Total Contractual Cash Obligations |  | 10,006      |  | 1,192            |  | 1,877     |  | 1,356     |  | 5,581        
|                                   |  |             |  |                  |  |           |  |           |  |              

In
2001, we declared and paid $4,774 million in dividends. At December 31, 2001, $198 million, corresponding to dividends declared in 2000, remain payable by us. See
note 12 to our consolidated financial statements, included under "Item 18. Financial Statements."

On
June 6, 2002, a cash dividend amounting to $1,533 million was declared (based on the exchange rate of Bs.1,147 to $1).

Critical Accounting Policies

The preparation of financial statements in conformity with Accounting Principles Generally Accepted in the United States of America requires that management apply
accounting policies and make estimates and assumptions that affect results of operations and the reported amounts of assets and liabilities. Actual outcomes could differ from the estimates and
assumptions used. The following areas are those that management believes are important to the financial statements and which require significant judgment and estimation because of inherent
uncertainty.



A reduction in our crude oil production or export activities or a decline in the prices of crude oil and refined petroleum products for a substantial period of
time may materially and adversely affect our operations, cash flow, and financial results. We review for impairment long-lived assets and certain identifiable intangibles, to be held and
used, whenever events indicate that the carrying amount of an asset may not be recoverable. If it is not expected that an asset will be recovered through future cash flows, then the asset is written
down to fair value. Fair value is generally determined from estimated discounted future net cash flows. Statement of Financial Accounting Standards No. 121 ("SFAS No. 121") requires that
assets to be disposed of be reported at the lower of carrying amount or fair value, less disposal costs.



The costs to comply with environmental regulations are significant. Environmental expenditures incurred currently that relate to present or future revenues are
expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and that do not contribute to current or future revenue generation are expensed. We
constantly monitor our compliance with environmental regulations and respond promptly to issues raised by regulatory agencies. 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.

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Petróleos de Venezuela and its subsidiaries and joint ventures are involved in various lawsuits and claims arising in the normal course of their
businesses. External and internal legal counsel continually reviews the status of these lawsuits and claims. These reviews provide the basis for which we determine whether or not to record accruals
for potential losses. Accruals for losses are recorded 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 PDVSA, and in amounts greater than our accruals, then such determinations could have a material adverse effect on our results of operations in a given reporting period.



All the crude oil and natural gas reserves located in Venezuela are owned by Venezuela. Crude oil and natural gas reserves are estimated by PDVSA and reviewed by
the Ministry of Energy and Mines, using reserve criteria which are consistent with those prescribed by the American Petroleum Institute (API) and the U.S. Securities and Exchange Commission. Proved
oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating conditions. Accordingly, these estimates do not include probable or possible reserves. Our estimates of reserves are not
precise and are subject to revision. We review these crude oil and natural gas reserves annually to take into account, among other things, production levels, field reviews, the addition of new
reserves from discoveries, year-end prices and economic and other factors. Proved reserve estimates may be materially different from the quantities of crude oil and natural gas that are
ultimately recovered.

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 will not impact PDVSA's 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. We believe that the adoption of SFAS No. 142 will not
materially impact our financial position nor 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

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

PDVSA
is required to, and plans to, adopt SFAS No. 143 on January 31, 2003. In order to accomplish this, PDVSA 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 PDVSA will need to
gather market information and develop cash flow models in order to make this determination. Additionally, PDVSA 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, it is presently not practicable for PDVSA's management to estimate the impact of adopting SFAS No. 143. We have not
determined the impact of SFAS No. 143 on our financial statements.

In
August 2001, the FASB issued SFAS No.144 "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144, fully
effective beginning January 1, 2002, 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. We believe that the adoption of SFAS No. 144 will not materially impact our
financial position nor results of operations.

5.C  Research and development, patents and licenses

As of December 31, 2001, the amounts that we have spent on our research and development activities have not been material. See "Item 4.B Business
overviewResearch and Development" and note 1(p) to our consolidated financial statements, included under "Item 18. Financial Statements."

Item 6.    Directors, Senior Management and Employees

6.A  Directors and senior management

In accordance with our charter, we are managed by our board of directors and our president. Our board of directors is responsible for convening our shareholder's
meetings, preparing our year-end accounts and presenting them at our shareholder's meetings and reviewing and monitoring our economic, financial and technical strategies.

Our
board of directors comprises eleven members: a president, two vice presidents, five directors and three external directors. Our board of directors is directly appointed by the
President of Venezuela for an initial term of two years, which may be extended indefinitely until a new board of directors is appointed.

Our
board of directors meets weekly and, at other times, when summoned by the president of Petróleos de Venezuela.

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Pursuant
to our charter, the president of Petróleos de Venezuela has broad powers to act on behalf of Petróleos de Venezuela and to represent
Petróleos de Venezuela in its dealings with third parties, subject only to those powers expressly reserved to the board of directors or reserved to be effected at our general
shareholder's meeting. The president of Petróleos de Venezuela determines and is responsible for the implementation of the goals, strategies and budgets (which must be approved at the
general shareholder's meeting) for our different businesses. Such goals, strategies and budgets are reviewed and monitored by our board of directors.

The
President of Venezuela appointed the current members of our board of directors in April 2002. Our current directors and executive officers are:

|Name                    |  | Age |  | Position with PDVSA |  | Date of
Appointment
|----------------------- |  | --- |  | ------------------- |  | -------------------
|Alí Rodríguez Araque    |  | 64  |  | President           |  | 2002               
|Jorge Kamkoff Miller    |  | 57  |  | Vice President      |  | 2001               
|José Rafael Paz         |  | 51  |  | Vice President      |  | 2002               
|Nelson Nava             |  | 49  |  | Director            |  | 2002               
|Ludovico Nicklas        |  | 57  |  | Director            |  | 2002               
|Hugo Hernández Rafalli  |  | 53  |  | External Director   |  | 2002               
|Clara Coro              |  | 44  |  | External Director   |  | 2002               
|Arnoldo Rodríguez Ochoa |  | 61  |  | External Director   |  | 2002               

Certain
information on our current directors and executive officers is set forth below:

Alí Rodríguez Araque
President

Mr. Rodríguez graduated from the Central University of Venezuela in 1961 with a degree in Law. He also undertook studies in economics,
specializing in the petroleum industry, and has been a member of study and analysis teams on mining and oil economics.

He
was a member of Venezuela's Congress from 1983 to 1999 and was also president of the Chamber of Deputies' Energy and Mines Commission from 1994 to 1997. He was vice president of
Congress' Energy and Mines Commission for the analysis and approval of reports on the oil opening master contract. From 1993 to 1999, he was a member of the National Energy Council and the Latin
American Parliament's Energy Commission. Mr. Rodríguez was a member of President Chavez's Presidential Liaison Commission for Energy and Mines and was again elected to Congress,
as senator for the Bolivar state, for the 1999-2004 period. He has published several articles on energy policy. His most recent article is "The privatization process in the Venezuelan oil
industry," published in 1997.

In
February 1999, Mr. Rodríguez was appointed Venezuela's Minister of Energy and Mines and was named president of the OPEC in 2000. In January 2001,
he was elected secretary-general of the OPEC, and in April 2002 he was appointed President of Petróleos de Venezuela.

Jorge Kamkoff Miller
Vice President

Mr. Kamkoff graduated from the Central University of Venezuela in 1969 with a degree in Chemical Engineering. He joined the petroleum industry in 1970 with
the Venezuelan Gulf Refining Company. Mr.Kamkoff held various supervisory and managerial positions at the Puerto La Cruz refinery, mainly in process engineering and refining operations, including
Management and Projects Manager in petrochemicals coordination, Operations Manager and Manager of the Puerto La Cruz District. He also served as Refining General Manager at Corpoven, Advisor to
Petróleos de Venezuela on relations with the U.S. Congress and the Venezuelan government in energy affairs and President of

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PDVSA's Formation and Training Center (CEPET, now known as CIED). In 1990, Mr. Kamkoff was President of the National Ports Institute's Governing Council assisting in the decentralizing and
privatization process of the Institute and, later, he was the President of the Restructuring Commission of the Venezuelan Institute of Social Insurance (IVSS).

In
1992, he was appointed director of PDV Marina and, in January 1998, he was named president of the PDV Marina Business Unit at the PDVSA Manufacturing and Marketing Division. In
October 1999, Mr. Kamkoff became Executive Vice-President of PDVSA's Gas Division and, later, Vice-President of the Manufacturing and Marketing Division, now
Refining, Supply and Commerce Division, of PDVSA. On March 15, 2001, Mr. Kamkoff was appointed Vice-President of Petróleos de Venezuela.

He
has taken part in, and contributed actively to, the social development of several of Venezuela's communities and in various joint activities with the armed forces, including the PDV
Marina-Navy, PDV Marina-Airforce, PDV Marina-National Guard agreements, and in Safety and National Defense operations with the Armed Forces. Mr. Kamkoff belongs to several national
and international associations related to the energy sector.

José Rafael Paz
Vice President

Mr. Paz graduated from Louisiana State University in 1974 with a degree in Chemical Engineering. He began his professional career with Diamond Shamrock
Company's Specialized Chemical Products Division in the United States.

In
1975, he joined Compañía Shell de Venezuela, later known as Maraven, S.A., as processes engineer at the Cardón refinery, where he later
held various technical, supervisory and managerial positions in the areas of processes, conversion, supply, operations and technology.

In
1991, he was appointed general manager of Maraven's Internal Market Division and, in 1994, was transferred to Pequiven, where he was business manager of the Olefins and Plastics
Business Unit. Mr. Paz then served as director, Vice-President and, later, President of Pequiven from October 2001 until April 2002, when he was appointed Vice-President of
Petróleos de Venezuela.

Mr. Paz
has also held executive positions in other companies in the chemicals field, such as president of Productos Especiales C.A. (Proesca), president of Comercializadora de
Químicos y Petroquímicos (COPEQUIM), president of the Grupo Zuliano, president of Metanol de Oriente (Metor) and principal director of International Petrochemical
Holding Ltd. (IPHL).

Ludovico Nicklas
Director

Mr. Nicklas graduated from Innsbruck University, Austria, in 1970 with a degree in Geology. He joined the oil industry in 1970 with Creole Petroleum
Corporation, where he held several technical and supervisory positions in the divisions of Development Geology, Well Repairs, and Exploration and Production Geology.

Mr. Nicklas
has served as Petróleos de Venezuela's Offshore Operations Manager in the Eastern Division, coordinator of the Geology Planning Section, and Lagoven's
Production manager. He was Intevep's manager of Earth Sciences Division in 1985, returning to Lagoven in 1987, where he served as assistant manager of Informatics, assistant manager of the Eastern
Division (1990), manager in charge of Major Projects (1992) and Corporate Planning manager (1994).

He
was subsequently appointed manager of the Petróleos de Venezuela's Exploration and Production Division in 1996, and managing director of Exploration Division in 1998.
In 2001, he was

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named executive director of Exploration, Production and Upgrading, a position which he held until his current appointment as director of Petróleos de Venezuela.

Nelson Nava Hernández
Director

Mr. Nava graduated from the University of Zulia in 1975 with a degree in Chemical Engineering. He obtained a Master's degree in Management from the
Massachusetts Institute of Technology in 1993.

Upon
graduation in 1975, he joined Creole Petroleum Corporation in the Gas Engineering Organization at Tía Juana, Zulia state. He has held several technical, supervisory
and managerial positions in General Engineering and Major Gas Compression Projects, in the various areas of Lagoven's Western Division.

In
1986, he was transferred to the Production department in Caracas, where he held the position of Production Installations Planning manager until the end of 1987. In
February 1988, he was appointed Technical Services manager in the Orinoco Project Organization, working on the commercial development of Orimulsion®.

In
1990, Mr. Nava was assigned to the Lagoven Eastern Division as Technical Manager. In 1993, he was appointed assistant manager of Corporate Finance, later becoming manager of
this department.

In
1997, he was appointed manager of the PDVSA Information Services Division, being named corporate manager of Information Technology in January 1998. In July of that year, he was
named Managing Director of Information Technology (Cybernetics) in the PDVSA Services Division. He was seconded in October 1999 to PDVSA Gas as Managing Director of Development and New
Business.

In
March 2001, he was named President of PDVSA Gas, a position which he held until his appointment as director of Petróleos de Venezuela in April 2002.

Arnoldo Rodríguez Ochoa
External Director

Mr. Rodríguez is a retired army General who graduated from the Military Academy of Venezuela in 1961 with a Bachelor of Science in Military
Sciences and Arts.

Mr. Rodríguez
specializes in Staff and National Security and Defense and has attended the following courses: Basic and Integral Armament, Basic Command and Staff
and Higher Command and Staff in Argentina. He also completed the Higher National Security and Defense Course in the Institute of Higher Studies of National Defense of Venezuela.

Mr. Rodríguez
has served as the Head of the Supply Department of the Armament Service of the Army; Head of the Payment Processing Department in the Army Finance
Division; Army IT Director; Sub-director of the Military Academy of Venezuela; Army Acquisitions Director; Director of the Technical Army School; Chief of Staff and 2nd
Commanding Officer of the Fourth Division of Infantry and Garrison of Aragua State; Executive Vice President of Compañía Anónima Venezolana de Industrias
Militares (CAVIM) (Venezuelan Company of Military Industries); Commanding Officer of the First Division of Cavalry and Garrison of Guárico State with jurisdiction in Apure State. He was
the Executive Secretary of the Consejo Nacional de Seguridad y Defensa (SECONASEDE) (National Security and Defense Council) and was commissioned by the President of Venezuela as the President of the
Fundación para el Programa Alimentario Materno Infantil (PAMI) (Foundation for the Child-Maternal Food Program).

In
the private sector, he has been a principal director and President of the Cámara Nacional del Gas Natural Vehicular (National Chamber of Vehicle Natural Gas). He was
also a principal director of the company Importaciones Gasmóvil 91, C.A., engaged in vehicle conversion to VNG. He has received

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numerous awards during his professional career. On August 9, 1999, he was appointed as an external director of Petróleos de Venezuela, position which was ratified on
March 15, 2001 and in February 2002.

Clara Coro Fernández
External Director

Ms. Coro graduated from the Central University of Venezuela in 1981 with a degree in Chemical Engineering. Ms. Coro also completed her postgraduate
studies at the Simón Bolívar University, specializing in Hydrocarbons Economy Management.

She
joined the Ministry of Energy and Mines in its Hydrocarbons Planning and Economy Division in September 1982. In 1990, she was appointed head of the International Markets
Division and in 1994 was also placed in charge of the Ministry's Economy and Finance Division. In 2000, she became director of Hydrocarbons Planning and Economy. In November 2001,
Ms. Coro was named Venezuela's national representative to the Economic Commission of the OPEC.

In
February 2002, she was appointed external director of Petróleos de Venezuela.

Hugo Hernández Raffalli
External Director

Mr. Hernández graduated from the University of Zulia with a degree in Law. He has been president of the electrical contractor Construcciones
Eléctricas e Industriales C.A. (CEICA), and of the managing boards of Siderúrgica Occidental, C.A. (SIDEROCA) and C.A. Venezolana Procesadora de Acero (PROACERO). He was
also a principal director on the boards of C.A. Energía Eléctrica de Venezuela (Enelven), Las Américas Construction Company, Suramericana de Constructores,
and Inversiones Turísticas, C.A.

Mr. Hernández
was also president of the Venezuelan Petroleum Chamber's Zulia chapter from 1994 to 2000, board director of the Chamber between 1996 and 1998, when he
was also elected first vice president. In 2000, he was elected president of the Venezuelan Petroleum Chamber for the 2000-2002 period.

Mr. Hernández
is also a member of the Maracaibo Chamber of Commerce, of the State of Zulia's Industry Chamber and of the Fedecámaras Energy
Commission. He was a member of the Presidential Commission charged with analyzing the Organic Law on Hydrocarbons bill and has represented the Venezuelan oil sector as a speaker at international
events.

In
April 2002, he was appointed external director of Petróleos de Venezuela.

6.B  Compensation

For the year ended December 31, 2001, the aggregate amount paid by Petróleos de Venezuela as compensation to its directors and executive
officers for services in all capacities was approximately $2.4 million (based on the 2001 average exchange rate of Bs/$ 722.01).

6.C  Board practices

Our directors are appointed for an initial term of 2 years, which may be extended indefinitely until a new board of directors is appointed. We have not
entered into any service or employment contracts with any of our directors and executive officers.

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6.D  Employees

The number of PDVSA employees and their location of employment for 2001, 2000 and 1999 are as follows:

|Year |  | Total Number of
Employees |  | In Venezuela |  | Abroad
|---- |  | ------------------------- |  | ------------ |  | ------
|2001 |  | 46,425                    |  | 40,945       |  | 5,480 
|2000 |  | 46,920                    |  | 41,462       |  | 5,458 
|1999 |  | 47,750                    |  | 42,267       |  | 5,483 

Our
productivity has increased during the last six years from 20.13 barrels of crude oil produced per year per employee in Venezuela in 1995 to 27.58 barrels of crude oil produced per
year per employee in Venezuela in 2001. Our total number of employees in Venezuela during this six-year period declined by approximately 9%. Approximately 37% of our Venezuelan work force
is unionized and belongs to one of three principal unions: the Federación de Trabajadores Petroleros, Químicos y Similares (79.4%), the Federación de
Trabajadores de la Industria de los Hidrocarburos (11.4%) or the recently created national union Sindicato de Trabajadores de la Industria Petrolera (9.2%). Our management, employees based in our
headquarters and security personnel are generally not affiliated with any union.

The
term of our two-year collective bargaining agreement with our operating subsidiaries is scheduled to expire in October 2002. The collective bargaining agreement
currently in effect provides that proposals for a new agreement may be submitted beginning May 21, 2002. We anticipate that this agreement will be extended after negotiations.

From
May 28, 2001 through May 30, 2001, there was a nationwide labor strike. A satisfactory agreement was reached on May 31, 2001 with the objective of achieving the
continuity of our operations.

At
the end of February 2002, PDVSA personnel initiated labor actions against political decisions of the Venezuelan government relating to PDVSA matters. These protests resulted in
a brief period of disruption in production at certain PDVSA refineries and shipping terminals in Venezuela.

For
our non-unionized workers, we adopted a new social compensation program. This program introduced a variable factor in a portion of the employees' compensation, which is
tied to individual performance based on predetermined targets and goals, as well as on our financial results.

6.E  Share ownership

Petróleos de Venezuela's common stock is not publicly traded and, as of December 31, 2001, we had 51,204 shares outstanding. All of our
issued and outstanding shares of common stock are owned by Venezuela.

66

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6.F.  Audit Committee Structure and Objectives

PDVSA's Audit Committee comprises three members and a secretary, and its main functions are as follows:



Item 7.    Major Shareholders and Related Party Transactions

7.A  Major shareholders

Control of Registrant

Petróleos de Venezuela is wholly owned by the Bolivarian Republic of Venezuela, which exercises its ownership through the Ministry of Energy and
Mines. The Ministry of Energy and Mines establishes our policies and approves our production levels, capital expenditures and operating budgets annually, while our board of directors is responsible
for implementing the policies established by our shareholder.

Since
its formation, Petróleos de Venezuela has been operated as a commercial entity, vested with commercial and financial autonomy. Under the recently adopted
Constitution of Venezuela (effective as of December 30, 1999), Venezuela must retain exclusive ownership of the shares of Petróleos de Venezuela. However, the Constitution does
not require Venezuela to retain ownership of the shares of Petróleos de Venezuela's subsidiaries or its minority interests in various exploration and exploitation joint venture
arrangements.

Our
operations and activities are subject to the Nationalization Law and its regulations, our charter and by-laws, regulations adopted by the executive branch of the
Venezuelan government and other laws of general application, such as the Commercial Code of Venezuela. Petróleos de Venezuela and its Venezuelan subsidiaries are organized under the
Commercial Code, which regulates the rights and obligations of Venezuelan companies. Under the Commercial Code, Petróleos de Venezuela and Venezuelan subsidiaries are permitted to
develop and execute their shareholder's objectives as corporate entities rather than governmental agencies.

The
Nationalization Law provides that every activity related to the exploration, exploitation, manufacture, refining, transportation by special means, storage and domestic and foreign
sales of hydrocarbons and their derivatives is reserved to the State, acting directly or through State-owned entities. The Nationalization Law also provides that the State or entities created pursuant
to the Nationalization Law may enter into operating agreements with third parties and, to the extent approved by the Venezuelan National Assembly (formerly, the Congress of Venezuela), enter into
association agreements with private sector entities. Petróleos de Venezuela was created as the entity that coordinates monitors and controls all operations related to hydrocarbons.

67

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The
Nationalization Law contains a number of articles intended to promote commercial business practices. Article 3 specifies that our operating companies shall pursue the most
efficient means to commercialize hydrocarbons, establishing the legal basis for our international business ventures. Article 6 permits our operating subsidiaries to exist as incorporated
entities operating under the Commercial Code and requires that 10% of our operating subsidiaries' net revenues from exports of crude oil be paid to us to be applied for reinvestment in the development
of the Venezuelan hydrocarbons industry. Article 7 establishes that the state-owned companies will continue to operate under the Hydrocarbons Law that previously regulated the activities of
foreign concessionaires and established production tax levels and will not be subject to state and municipal taxes. Article 8 stipulates that officers and employees of Petróleos
de Venezuela and its operating affiliates are not public employees, thereby permitting PDVSA to develop, train, and compensate human resources in accordance with industry standards.

In
January 2002, the new Hydrocarbons Law came into effect, superseding the Hydrocarbons Law of 1943, the Law of Assets Subject to Reversion in Hydrocarbon Concessions of 1971,
Law that Reserves for the State the Exploitation of the Internal Market for the Byproducts of Hydrocarbons of 1973, the Organic Law that Reserves for the State the Industry and Trade of Hydrocarbons
of 1975, the Organic Law of Internal market Opening for Gasoline and Other Hydrocarbon-derived Fuels for Use in Automobiles of 1998, and any other legal provision that may be in conflict with this
Law. Gas activities are regulated by the Organic Law of Gas Hydrocarbons of September 1999 and its regulations dated June 2000. See note 1(a) to our consolidated financial
statements, included under "Item 18. Financial Statements."

None
of Petróleos de Venezuela, its Venezuelan subsidiaries engaged in the conduct of activities reserved to the State pursuant to the Nationalization Law or its foreign
subsidiaries is subject to the authorization process set forth in the Finance Administration for the Public Sector Law enacted on September 5, 2000 revoking the Organic Public Credit Law, which
establishes the regulations applicable to borrowing and other forms of financing by Venezuelan public entities.

Venezuela
is not legally liable for Petróleos de Venezuela's obligations, including Petróleos de Venezuela's guarantees of indebtedness or obligations of
its subsidiaries, nor for the debt or obligations of Petróleos de Venezuela's subsidiaries.

Ownership of Reserves

All oil and hydrocarbon reserves within Venezuela are owned by Venezuela and not by us. Under the Nationalization Law, every activity related to the exploration,
exploitation, manufacture, refining, transportation by special means and domestic and foreign sales of hydrocarbons and their derivatives is reserved to the State. Petróleos de
Venezuela was created as the entity that coordinates monitors and controls all operations related to hydrocarbons.

7.B  Related party transactions

See note 14 to our consolidated financial statements, included under "Item 18. Financial Statements."

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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 reports of independent accountants beginning on page F-1.

8.A.6Substantially all of our revenues are derived from export sales. See "Item 3.A Selected financial data," and
note 15 to our consolidated financial statements.

8.A.7  Legal proceedings

In August 1999, the U.S. Department of Commerce rejected a petition filed by a group of independent oil producers to apply antidumping measures and
countervailing duties against imports of crude oil from Venezuela and some other countries. The petitioners appealed this decision before the U.S. Court of International Trade based in New York, where
the matter is still pending. On September 19, 2000, the Court of International Trade (per Judge Aquilino) remanded the case to the Department of Commerce with instructions to reconsider its
August 1999 decision. The Department of Commerce was required to make a revised decision as to whether or not to initiate an investigation within 60 days. The Department of Commerce
appealed to the U.S. Court of Appeals for the Federal Circuit, which dismissed the appeal as premature on July 31, 2001. The Department of Commerce issued its revised decision, which again
rejected the petition, in August 2001. The revised decision is awaiting review by the Court of International Trade (per Judge Pogue).

Petróleos
de Venezuela and its Venezuelan subsidiaries and joint ventures are involved in various lawsuits and claims arising in the normal course of their businesses.
Information regarding legal proceedings affecting PDV America and its subsidiaries is set forth under "Item 3. Legal proceedings" in PDV America's 2001 annual report on Form 10-K,
incorporated herein by reference, and information regarding legal proceedings affecting Propernyn and its non-U.S. subsidiaries is set forth under "Item 8.A.7. Legal Proceedings" in
Propernyn's 2001 annual report on Form 20-F, filed with the U.S. Securities and Exchange Commission.

LYONDELL-CITGO
has commenced an action against Petróleos de Venezuela and PDVSA Petróleo in the Southern District of New York. LYONDELL-CITGO is seeking
damages and specific performance for alleged breaches of the crude oil supply agreement, dated May 5, 1993, between LYONDELL-CITGO and Lagoven (subsequently merged into PDVSA
Petróleo) and the supplemental supply agreement, dated May 5, 1993, between LYONDELL-CITGO and Petróleos de Venezuela. LYONDELL-CITGO alleges that
Petróleos de Venezuela wrongfully declared force majeure events and reduced shipments of extra-heavy crude oil to LYONDELL-CITGO. See "Item 4.B Business overviewRefining
and MarketingUnited States."

The
challenged reductions in the shipment of extra-heavy crude oil to LYONDELL-CITGO were made pursuant to instructions received from the Ministry of Energy and Mines. In accordance with
the contract, PDVSA Petróleo and Petróleos de Venezuela declared a force majeure when the Ministry and Energy and Mines' instructions required them to reduce production.

Since
the underlying cause of action is a challenge to the Venezuelan government's ability to limit crude oil production, Petróleos de Venezuela and PDVSA
Petróleo filed a motion to dismiss based upon the Act of State doctrine on May 31, 2002. LYONDELL-CITGO's response papers are due on June 17, 2002.

We
are not involved (whether as defendant or otherwise) in and, other than as described above, we have no knowledge of any threat of, any litigation, arbitration, or administrative or
other proceeding

69

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which management believes will have a material adverse effect on our consolidated financial position or results of operations.

Item 9.    The Offer and Listing

9.A  Offer and listing details

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

PDVSA
Finance's senior notes are solely obligations of PDVSA Finance and are not obligations of, or guaranteed by, Petróleos de Venezuela. The PDVSA Finance's 6.450% Notes
due 2004, 6.650% Notes due 2006, 6.800% Notes due 2008, 7.400% Notes due 2016, 7.500% Notes due 2028, 8.750% Notes due 2004, 9.375% Notes due 2007, 9.750% Notes due 2010 and 9.950% Notes due 2020 are
listed on the Luxembourg Stock Exchange.

Item 10.    Additional Information

10.D Exchange Controls

Foreign Exchange Agreements

Article 89 of the regulations of the Central Bank of Venezuela stipulates that the Central Bank of Venezuela must sell non-Venezuelan currency
to us on a priority basis to meet our foreign exchange requirements, subject to the annual foreign currency budget approved by the shareholders. We are the only entity accorded such priority under the
regulations of the Central Bank of Venezuela, which was approved by the Venezuelan Congress in 1992, although the article establishing our priority to foreign exchange was originally incorporated into
the regulations of the Central Bank of Venezuela in 1983 and effectively reaffirmed in 1992.

The
priority access has been formalized through a foreign exchange agreement between the Ministry of Finance and the Central Bank of Venezuela. The agreement requires us to sell our
foreign exchange receipts to the Central Bank of Venezuela within 48 hours of receipt, except that we may maintain a foreign currency working capital fund of up to the amount authorized by the
board of directors of the Central Bank of Venezuela (currently $600 million). We may use amounts contained in this fund to cover our obligations and operating costs in foreign currency and
external debt service.

Current
revenues and the working capital fund have always proved sufficient to meet all foreign currency requirements as they became due, and we have never experienced payment delays as
a result of foreign exchange controls.

Foreign Exchange Budget

We are required to submit a foreign exchange budget for approval by our shareholder each year. Foreign exchange inflows are based on projected export volumes and
prices, as well as proceeds from any debt issuance, while outflows are based on projected purchases of imported goods and services, as well as payments of principal of and interest on foreign currency
denominated debt. In 2001, our foreign exchange inflows totaled $27,951 million, while outflows totaled $9,713 million.

10.E Taxation

Under current Venezuelan tax law, no tax is imposed by Venezuela, by reason of withholding or otherwise, on payments made by (1) PDV America pursuant to
its senior notes, (2) Propernyn pursuant to its obligations under its guarantee of PDV America's notes, (3) PDVSA pursuant to its obligations under its guarantee of PDV America' notes or
(4) PDVSA pursuant to the notes (the "Mirror Notes")

70

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issued to PDV America at the time of the original issuance of the senior notes issued by PDV America, except for the application of a Venezuelan withholding tax on interest payments under the Mirror
Notes.

The
PDV America' notes, the related indenture and Mirror Notes contain gross-up provisions for certain Venezuelan and other taxes, including the withholding tax referred to
in clause (4) of the preceding paragraph.

United
States holders of PDVSA Finance Notes are not subject to Venezuelan taxes, by reason of withholding or otherwise, on payments made by PDVSA Finance pursuant to the PDVSA Finance
Notes.

On
January 25, 1999, representatives from the United States and Venezuela signed an income tax treaty for the avoidance of double taxation. Both countries exchanged ratification
instruments on December 30, 1999. As a result, the treaty was fully in force in 2000 and 2001.

Item 11.    Quantitative and Qualitative Disclosures about Market Risk

Introduction

We are exposed to hydrocarbon price fluctuations, interest rate fluctuations and foreign currency exchange risks. To manage these exposures, we have defined
certain benchmarks consistent with our preferred risk profile for the environment in which we operate and finance our assets. We do not attempt to manage the price risk related to all of our
inventories of hydrocarbon products. As a result, at December 31, 2001, we were exposed to the risk of broad market price with respect to a substantial portion of our hydrocarbon inventories.
The following disclosure does not attempt to quantify the price risk associated with such commodity inventories. All matters related to market risk are managed by our international subsidiaries.

Commodity Derivative Instruments

We balance our crude oil and refined products supply and demand and manage a portion of our price risk by entering into petroleum commodity derivatives through
CITGO. Generally, CITGO's risk management strategies qualified as hedges through December 31, 2000. Effective January 1, 2001, we decided not to elect hedge accounting. Petroleum
Marketing International, A.V.V., a direct trading
subsidiary of Petróleos de Venezuela in Aruba, and PMI Panama, S.A., a direct trading subsidiary of Petróleos de Venezuela in Panama, have limited involvement with
commodity derivatives. Both these entities manage commodity price risks associated with crude oil or refined products that arise out of their respective core business activities. These entities do not
use derivative financial instruments for trading or speculative purposes.

In
December 1999, PDVSA Trading, S.A. was incorporated as a direct subsidiary of Petróleos de Venezuela in Venezuela primarily to manage commodity price risk
associated with derivatives. This subsidiary began its operations in March 2000.

The
table below presents contractual amounts with open positions at December 31, 2001, for commodity derivatives, and includes futures purchased and futures sold.

71

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Non-Trading Commodity Derivatives
Open positions at December 31, 2001

|Commodity        |  | Derivative                              |  | Maturity
Date |  | Volumes of
Contracts(1) |  | Contract
Value(2) |  | Market Value
|---------------- |  | --------------------------------------- |  | ------------- |  | ----------------------- |  | ----------------- |  | ------------
|
|Crude Oil        |  | Futures Purchased                       |  | 2002          |  | 1.647                   |  | 37                |  | 33          
|                 |  | Futures Sold                            |  | 2002          |  | 2.397                   |  | 49                |  | 49          
|                 |  | OTC Swaps (Pay Float/Receive Fixed)(3)  |  | 2002          |  | 2                       |  |                  |  |            
|                 |  | OTC Swaps (Play Fixed/Receive Float)(3) |  | 2002          |  | 1                       |  |                  |  |            
|                 |  | Forward Purchase Contracts              |  | 2002          |  | 6.651                   |  | 128               |  | 132         
|                 |  | Forward Sale Contracts                  |  | 2002          |  | 6.261                   |  | 124               |  | 125         
|Refined Products |  | Futures Sold                            |  | 2002          |  | 450                     |  | 12                |  | 11          
|Unleaded         |  | Futures Purchased                       |  | 2002          |  | 994                     |  | 25                |  | 25          
|                 |  | Futures Sold                            |  | 2002          |  | 332                     |  | 8                 |  | 8           
|                 |  | Forward Purchase Contracts              |  | 2002          |  | 4.095                   |  | 96                |  | 94          
|                 |  | Forward Sale Contracts                  |  | 2002          |  | 3.148                   |  | 71                |  | 73          
|Distillates      |  | Futures Purchased                       |  | 2002          |  | 1.483                   |  | 43                |  | 35          
|                 |  | Futures Purchased                       |  | 2003          |  | 94                      |  | 2                 |  | 2           
|                 |  | Futures Sold                            |  | 2002          |  | 943                     |  | 25                |  | 22          
|                 |  | OTS Options Purchased                   |  | 2002          |  | 10                      |  |                  |  |            
|                 |  | OTS Options Sold                        |  | 2002          |  | 10                      |  |                  |  |            
|                 |  | Forward Purchase Contracts              |  | 2002          |  | 30                      |  |                  |  |            
|                 |  | Forward Sale Contracts                  |  | 2002          |  | 30                      |  |                  |  |            
|Natural Gas      |  | Futures Sold                            |  | 2002          |  | 55                      |  | 2                 |  | 1           
|                 |  | OTC Options Sold                        |  | 2002          |  | 20                      |  |                  |  |            

---

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Non-Trading Commodity Derivatives
Open positions at December 31, 2000

|Commodity        |  | Derivative                          |  | Maturity |  | Volumes of
Contracts(1) |  | Contract Value(2) |  | Market Value
|---------------- |  | ----------------------------------- |  | -------- |  | ----------------------- |  | ----------------- |  | ------------
|
|Crude Oil        |  | Futures Purchased                   |  | 2001     |  | 7.188                   |  | 431               |  | 713         
|                 |  | Futures Sold                        |  | 2001     |  | 7.640                   |  | 216               |  | 179         
|Refined Products |  | Futures Sold                        |  | 2001     |  | 92                      |  | 3                 |  | 3           
|Unleaded         |  | Futures Purchased                   |  | 2001     |  | 25                      |  | 0.8               |  | 0.8         
|Heating Oil(1)   |  | Futures Purchased                   |  | 2001     |  | 1.533                   |  | 53.9              |  | 55.9        
|                 |  | Futures Purchased                   |  | 2002     |  | 16                      |  | 0.5               |  | 0.5         
|                 |  | Futures Sold                        |  | 2001     |  | 579                     |  | 21.2              |  | 21.7        
|                 |  | OTS Swaps (Pay Fixed/Receive Float) |  | 2001     |  | 9                       |  |                  |  | 0.1         
|                 |  | OTS Swaps (Pay Fixed/Receive Fixed) |  | 2001     |  | 500                     |  |                  |  | 0.5         

---

Debt Related Instruments



We enter into various interest rate swap agreements to manage the risks related to interest rate fluctuations on our debt.

On
January 28, 2000, PDVSA Finance entered into an interest rate swap agreement to manage the risks related to interest rate fluctuations in respect of its Euro 200 million
6.250% notes due 2002 through 2006 issued on April 8, 1999.

The
agreement provides protection to PDVSA Finance in respect of interest and principal payments from a possible appreciation of the Euro relative to the U.S. dollar during the terms of
the notes. The agreement contains a knock-in provision that eliminates protection to PDVSA Finance, in respect of
principal payments, above a 1.09 U.S. dollar/Euro exchange rate if during the term of the agreement the U.S. dollar/euro exchange rate reaches or exceeds 1.2.

CITGO
has fixed and floating U.S. currency denominated debt. CITGO uses interest rate swaps to manage its debt portfolio toward a benchmark of 40% to 60% fixed rate debt to total fixed
and floating rate debt. These instruments have the effect of changing the interest rate with the objective of minimizing CITGO's long-term costs. At December 31, 2001, CITGO's
primary exposures were to LIBOR and floating rates on tax exempt bonds.

For
interest rate swaps, the table below presents notional amounts and interest rates by expected (contractual) maturity dates. Notional amounts are used to calculate the contractual
payments to be exchanged under the contracts.

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Non-Trading Interest Rate Derivatives
Open positions at December 31, 2001 and 2000

|Variable Rate Index |  | Expiration Date |  | Fixed Rate Paid |  | Notional Principal Amount
|------------------- |  | --------------- |  | --------------- |  | -------------------------
|
|J. J- Kenny         |  | February 2005   |  | 5.30            |  | 12                       
|J. J- Kenny         |  | February 2005   |  | 5.27            |  | 15                       
|J. J- Kenny         |  | February 2005   |  | 5.49            |  | 15                       

Generally,
we do not enter into interest rate swaps with respect to debt incurred by PDVSA, other than with respect to debt of CITGO or PDVSA Finance. The table below presents our
principal cash flows and related weighted interest rates by expected maturity date. Weighted average variable rates are based on implied forward rates in the yield curve at the reporting date.

Short-Term and Long-Term Debt
at December 31, 2001

|Expected Maturities |  | Fixed Rate Debt |  | Average Fixed
Interest Rate |  | Variable Rate Debt |  | Average
Variable
Interest Rate
|------------------- |  | --------------- |  | --------------------------- |  | ------------------ |  | ------------------------------
|
|2002                |  | 761             |  | 8.79                        |  | 239                |  | 4.85                          
|2003                |  | 1,069           |  | 8.03                        |  | 521                |  | 5.02                          
|2004                |  | 367             |  | 7.48                        |  | 237                |  | 3.95                          
|2005                |  | 410             |  | 8.05                        |  | 198                |  | 3.69                          
|2006                |  | 470             |  | 7.99                        |  | 111                |  | 3.41                          
|Thereafter          |  | 2,600           |  | 8.11                        |  | 1,444              |  | 4.97                          
|                    |  |                 |  |                             |  |                    |  |                               
|Total               |  | 5,677           |  | 8.13                        |  | 2,750              |  | 4.73                          
|                    |  |                 |  |                             |  |                    |  |                               
|Fair Value          |  | 7,295           |  |                             |  |                    |  |                               
|                    |  |                 |  |                             |  |                    |  |                               

Short-Term and Long-Term Debt
at December 31, 2000

|Expected Maturities |  | Fixed Rate Debt |  | Average Fixed
Interest Rate |  | Variable Rate Debt |  | Average
Variable
Interest Rate
|------------------- |  | --------------- |  | --------------------------- |  | ------------------ |  | ------------------------------
|
|2001                |  | 389             |  | 7.93                        |  | 207                |  | 7.96                          
|2002                |  | 711             |  | 7.65                        |  | 160                |  | 6.95                          
|2003                |  | 1,073           |  | 7.58                        |  | 172                |  | 5.76                          
|2004                |  | 370             |  | 7.31                        |  | 196                |  | 5.54                          
|2005                |  | 413             |  | 7.93                        |  | 147                |  | 5.12                          
|Thereafter          |  | 2,594           |  | 7.97                        |  | 1,167              |  | 6.11                          
|                    |  |                 |  |                             |  |                    |  |                               
|Total               |  | 5,550           |  | 7.73                        |  | 2,049              |  | 6.07                          
|                    |  |                 |  |                             |  |                    |  |                               
|Fair Value          |  | 7,270           |  |                             |  |                    |  |                               
|                    |  |                 |  |                             |  |                    |  |                               

Foreign Exchange Risk

The dollar is our functional currency, since a significant portion of our revenues and debt, as well as the majority of our costs, expenses and investments are
denominated in dollars. We generally do not enter into foreign currency derivative transactions to hedge against movements in exchange rates. We are, however, exposed to foreign currency exchange risk
associated with our recoverable luxury and

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wholesale tax receivables, notes and accounts receivable, and long-term and short-term debt denominated in currencies other than the dollar, as summarized below:

|                    |  | At December 31, 2001 | 
|------------------- |  | -------------------- | 
|
|
|
|Venezuelan Bolivars |  | 5,294                | 
|Euros               |  | 483                  | 
|German marks        |  |                     | 
|Other currencies    |  | 12                   | 

|                    |  | At December 31, 2001 | 
|------------------- |  | -------------------- | 
|
|
|
|Venezuelan Bolivars |  | 5,037                | 
|Euros               |  | 618                  | 
|German Marks        |  |                     | 
|Other currencies    |  | 13                   | 

At
December 31, 2001, we had approximately $281 million of short-term and long-term debt denominated in currencies other than dollars, as summarized
below:

Currency

At December 31, 2001($ in millions)Bolivars

19Euros

178Yenes

84


At
December 31, 2000, we had approximately $242 million of short-term and long-term debt, denominated in currencies other than dollars, as
summarized below:

Currency

At December 31, 2000($ in millions)Bolivars

30Euros

212


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-54 incorporated herein by reference.

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The
following financial statements, together with the report of KPMG Alcaraz Cabrera Vazquez (a member firm of KPMG International) thereon, are filed as a part of this annual report:



|                                                                                                                       |  | Page
|---------------------------------------------------------------------------------------------------------------------- |  | ----
|Independent Auditors' Report of KPMG Alcaraz Cabrera Vázquez (a member firm of KPMG International)                     |  | F-1 
|Independent Auditor's Report of Deloitte & Touche LLP                                                                  |  | F-2 
|Report of the Independent Accountants, Espiñeira, Sheldon y Asociados (a member firm of PricewaterhouseCoopers L.L.P.) |  | F-3 
|Consolidated Balance Sheet at December 31, 2001 and 2000                                                               |  | F-4 
|Consolidated Statement of Income for the years ended December 31, 2001, 2000 and 1999                                  |  | F-5 
|Consolidated Statement of Stockholder's Equity for the years ended December 31, 2001, 2000 and 1999                    |  | F-6 
|Consolidated Statement of Cash Flows for the years ended December 31, 2001, 2000 and 1999                              |  | F-7 
|Notes to the Consolidated Financial Statements                                                                         |  | F-8 

Item 19.    Exhibits

|Exhibit No:  |  | Description                                                                                                                                                                                                                               
|------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.1 |  | Consent of KPMG Alcaraz Cabrera Vázquez (a member firm of KPMG International).                                                                                                                                                            
|Exhibit 10.2 |  | Consent of Espiñeira, Sheldon y Asociados (a member firm of PricewaterhouseCoopers L.L.P.).                                                                                                                                               
|Exhibit 10.3 |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                         
|Exhibit 99.1 |  | Annual Report on Form 20-F of PDVSA Finance Ltd. for the year ended December 31, 2001 as first filed with the U.S. Securities and Exchange Commission (Commission file No. 333-09678) on June 14, 2002 (incorporated herein by reference).
|Exhibit 99.2 |  | 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).

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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.

|                    |  | PETROLEOS DE VENEZUELA, S.A.
|------------------- |  | ----------------------------
|                    |  | By:                         
|Date: June 14, 2002

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ANNEX A
Measurement Conversion Table

|1 barrel                       |  | = |  | 42 U.S. gallons                                                             |  |   |  |                                                                                                                       
|------------------------------ |  | - |  | --------------------------------------------------------------------------- |  | - |  | ----------------------------------------------------------------------------------------------------------------------
|1 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      |  | = |  | 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                             |  |   |  |                                                                                                                       

A-1

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Glossary of Certain Oil and Gas Terms

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

|2D                     |  | Two dimensional seismic lines (Km).                                                                                                                                                                                                                                                                              
|---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3D                     |  | Three dimensional seismic lines (Km2).                                                                                                                                                                                                                                                                           
|4D                     |  | Three dimensional seismic lines (Km2) taken as different periods of time.                                                                                                                                                                                                                                        
|Alquilation            |  | The process of producing alquilates (refined products used to enhance gasoline).                                                                                                                                                                                                                                 
|AQUACONVERSION®        |  | A proprietary technology for the thermal/catalytic conversion of heavy crude oil and residuals by treatment with steam and additives, to reduce the viscosity of heavy crude oil fractions and residuals.                                                                                                        
|API gravity            |  | An indication of 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.                                                                                                                                                                                                                                              
|BCF                    |  | Billions of cubic feet.                                                                                                                                                                                                                                                                                          
|BOE                    |  | Barrels of oil equivalent.                                                                                                                                                                                                                                                                                       
|BPD                    |  | Barrels per day.                                                                                                                                                                                                                                                                                                 
|Cetane index           |  | An index used to measure diesel quality based on the efficiency with which the fuel ignites; the higher the number the higher the quality of the diesel.                                                                                                                                                         
|Condensate             |  | Light carbon substances produced from natural gas that condense into liquid at normal temperatures and pressures associated with surface production equipment.                                                                                                                                                   
|crude oil              |  | Crude oil containing condensate.                                                                                                                                                                                                                                                                                 
|crude slate (or slate) |  | A listing of the various crudes that are processed in a refinery during a given period in a given configuration.                                                                                                                                                                                                 
|Distillate             |  | Liquid hydrocarbons distilled from crude or condensate.                                                                                                                                                                                                                                                          
|extra-heavy crude oil  |  | Crude oil with an average API gravity of less than 11°.                                                                                                                                                                                                                                                          
|FCC                    |  | The FCC unit is the basis of modern refineries. It "cracks" heavy molecules of crude oils into smaller, lighter ones that can then be used in the formulation of gasolines.                                                                                                                                      
|Feedstocks             |  | Partially refined petroleum that is added to the crude slate and converted into refined petroleum products.                                                                                                                                                                                                      
|                       |  |                                                                                                                                                                                                                                                                                                                  

A-2

---

|Fractionator              |  | A processing unit that breaks down feedstocks into desired fractions (specific boiling ranges).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|heavy crude oil           |  | Crude oil with an average API gravity of less than 21°.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Hydrotreatment            |  | The process of removing sulfur from a hydrocarbon stream in the presence of a catalyst.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Km                        |  | Kilometer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|light crude oil           |  | Crude oil with an average API gravity of 30° or more.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|LNG                       |  | Liquefied natural gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Medium crude oil          |  | Crude oil with an average API gravity of 21° or more and less than 30°.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|MBPD                      |  | Thousands of barrels per day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|MCF                       |  | Thousands of cubic feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|MCFD                      |  | Thousands of cubic feet per day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|MDWT                      |  | Thousand deadweight tons; a designation for the size or displacement of a ship.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|M3D                       |  | Cubic meters per day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|MM3D                      |  | One thousand cubic meters per day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|MMB                       |  | Millions of barrels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|MMMB                      |  | Billions of barrels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|MMCFD                     |  | Millions of cubic feet per day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Olefins                   |  | A class of unsaturated hydrocarbons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Pitch                     |  | Black or dark viscose substance obtained as a residual in the distillation of oil (bituminous  resin).                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Proved reserves           |  | Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reserves under
existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not escalations based upon future
conditions.                                                                    
|Proved developed reserves |  | Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application of fluid injection or
other improved recovery techniques for supplementing natural forces and mechanisms of primary recovery are included as "proved developed reserves" only after testing by a pilot project or after the operating of an installed program has confirmed
through production response that increased recovery will be achieved.
|                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

A-3

---

|Proved undeveloped reserves |  | Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively minor expenditure is required for recompletion, but does not include reserves
attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proven to be effective by actual testing in the area and in the same reservoir. Reserves on
undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that
there is continuity of production from the existing productive field.
|--------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Reformer                    |  | A processing unit that converts naphtha into higher octane components.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Spud                        |  | To begin to drill a well.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

A-4

---



Independent Auditors' Report

The
Stockholder and Board of Directors
Petróleos de Venezuela, S. A. (PDVSA):

We
have audited the accompanying consolidated balance sheets of Petróleos de Venezuela, S. A. and subsidiaries (PDVSA) (wholly owned by the Bolivarian Republic of
Venezuela) as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholder's equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the
consolidated financial statements of PDV Holding, Inc., and subsidiaries, a wholly owned subsidiary, which statements reflect total assets constituting 12% as of December 31, 2001 and
2000 and total revenues constituting 43% and 42%, for the years ended on those dates, of the related consolidated totals. Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the amounts included for PDV Holding, Inc., and subsidiaries is based solely on the report of the other auditors.

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 and the report of the other auditors provide a reasonable basis for our opinion.

In
our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Petróleos de Venezuela, S. A. and subsidiaries (PDVSA) as of December 31, 2001 and 2000, and the results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United States of America.

KPMG
Alcaraz Cabrera Vázquez

/s/
Gustavo González Brache
Gustavo González Brache
Public Accountant
C.P.C. No 476

Caracas,
Venezuela
March 8, 2002

F-1

---



INDEPENDENT AUDITORS' REPORT

To
the Board of Directors and Shareholder of
    PDV Holding, Inc.:

We
have audited the accompanying consolidated balance sheets of PDV Holding, Inc. 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 the years then ended. These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements 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 PDV Holding, Inc. and subsidiaries at
December 31, 2001 and 2000, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States
of America.

/s/
Deloitte & Touche LLP
Tulsa, Oklahoma
March 8, 2002

F-2

---



REPORT OF INDEPENDENT ACCOUNTANTS

To
the Shareholder and Board of Directors of
Petróleos de Venezuela S.A. (PDVSA)

In
our opinion, based upon our audit and the reports of the other independent accountants, the accompanying consolidated statements of income, stockholder's equity and cash flows,
present fairly, in all material respects, the results of operations of Petróleos de Venezuela S.A. (PDVSA) and its subsidiaries (PDVSA or the Company) and their cash flows for the year
ended December 31, 1999, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of certain subsidiaries and affiliates which in the
aggregate reflect total revenues which represent approximately 44% of consolidated revenues for the year ended December 31, 1999. Those statements were audited by other independent accountants
whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for such subsidiaries and affiliates, is based solely on the reports of
other independent accountants. We conducted our audit of these statements in accordance with generally accepted auditing standards in Venezuela, which are substantially similar to those in the United
States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 audit and the reports of the other independent accountants provide a reasonable
basis for our opinion expressed above. We have not audited the consolidated financial statements of Petróleos de Venezuela, S.A. (PDVSA) and its subsidiaries for any period subsequent
to December 31, 1999.

ESPIÑEIRA,
SHELDON Y ASOCIADOS

/s/
Carlos Hugo Odremán
Carlos Hugo Odremán

CPC
463

Caracas,
Venezuela
March 10, 2000

F-3

---



PETROLEOS DE VENEZUELA, S.A. AND SUBSIDIARIES (PDVSA)  (Wholly owned by the Bolivarian Republic of Venezuela)        Consolidated Balance Sheets        (Expressed in millions of U.S. dollars)

|                                                                         |                                                                          | December 31              
|------------------------------------------------------------------------ | ------------------------------------------------------------------------ | -------------------------
|
|Assets                                                                   |                                                                          |                          
|Current assets:                                                          |                                                                          |                          
|                                                                         | Cash and cash equivalents                                                |                          
|                                                                         | Notes and accounts receivable                                            |                          
|                                                                         | Inventories                                                              |                          
|                                                                         | Recoverable value added tax                                              |                          
|                                                                         | Prepaid expenses and other                                               |                          
|                                                                         | Deferred income tax                                                      |                          
|                                                                         |                                                                          |                          
|                                                                         |                                                                          | Total current assets     
|Restricted cash                                                          |                                                                          | 4,072                    
|Investments in nonconsolidated investees                                 |                                                                          | 2,819                    
|Property, plant and equipment, net                                       |                                                                          | 37,230                   
|Deferred income tax                                                      |                                                                          | 301                      
|Other assets                                                             |                                                                          | 3,128                    
|                                                                         |                                                                          |                          
|                                                                         |                                                                          | 57,542                   
|                                                                         |                                                                          |                          
|Liabilities and Stockholder's Equity                                     |                                                                          |                          
|Current liabilities:                                                     |                                                                          |                          
|                                                                         | Accounts payable to suppliers                                            |                          
|                                                                         | Short-term debt                                                          |                          
|                                                                         | Taxes payable                                                            |                          
|                                                                         | Employee termination, pension benefits and other postretirement benefits |                          
|                                                                         | Other liabilities                                                        |                          
|                                                                         |                                                                          |                          
|                                                                         |                                                                          | Total current liabilities
|Long-term debt                                                           |                                                                          | 7,427                    
|Capital lease obligations                                                |                                                                          | 117                      
|Employee termination, pension benefits and other postretirement benefits |                                                                          | 3,167                    
|Deferred income tax                                                      |                                                                          | 834                      
|Other liabilities                                                        |                                                                          | 800                      
|                                                                         |                                                                          |                          
|                                                                         |                                                                          | Total liabilities        
|Minority interests                                                       |                                                                          | 167                      
|Stockholder's equity (see accompanying statement)                        |                                                                          | 37,098                   
|                                                                         |                                                                          |                          
|                                                                         |                                                                          | 57,542                   
|                                                                         |                                                                          |                          

The
accompanying notes form an integral part of the consolidated financial statements.

F-4

---



PETROLEOS DE VENEZUELA, S.A. AND SUBSIDIARIES (PDVSA)  (Wholly owned by the Bolivarian Republic of Venezuela)        Consolidated Statements of Income        (Expressed in millions of U.S.
dollars)

|                                                |                                              | Years ended December 31                         |       
|----------------------------------------------- | -------------------------------------------- | ----------------------------------------------- | ------
|
|Sales of crude oil and products:                |                                              |                                                 |       
|                                                | Exports and international markets            |                                                 | 42,682
|                                                | In Venezuela                                 |                                                 | 1,701 
|Petrochemical and other sales                   |                                              | 1,403                                           |       
|Equity in earnings of nonconsolidated investees |                                              | 464                                             |       
|                                                |                                              |                                                 |       
|                                                |                                              | 46,250                                          |       
|                                                |                                              |                                                 |       
|Costs and expenses:                             |                                              |                                                 |       
|                                                | Purchases of crude oil and products          |                                                 | 18,228
|                                                | Operating expenses                           |                                                 | 10,882
|                                                | Exploration expenses                         |                                                 | 174   
|                                                | Depreciation and depletion                   |                                                 | 2,624 
|                                                | Selling, administrative and general expenses |                                                 | 1,853 
|                                                | Production and other taxes                   |                                                 | 3,760 
|                                                | Financing expenses                           |                                                 | 509   
|                                                | Other expense, net                           |                                                 | 456   
|                                                |                                              |                                                 |       
|                                                |                                              | 38,486                                          |       
|                                                |                                              |                                                 |       
|                                                |                                              | Income before income tax and minority interests |       
|Provision for income tax                        |                                              | (3,766                                          | )     
|Minority interests                              |                                              | (5                                              | )     
|                                                |                                              |                                                 |       
|                                                |                                              | Net income                                      |       
|                                                |                                              |                                                 |       

The
accompanying notes form an integral part of the consolidated financial statements.

F-5

---



PETROLEOS DE VENEZUELA, S.A. AND SUBSIDIARIES (PDVSA)  (Wholly owned by the Bolivarian Republic of Venezuela)        Consolidated Statements of Stockholders' Equity  Years ended December 31, 2001,
2000 and 1999        (Expressed in millions of U.S. dollars)

|                              |                                                |                            |   | Deficit |   |         |      
|----------------------------- | ---------------------------------------------- | -------------------------- | - | ------- | - | ------- | -----
|
|Balances at December 31, 1998 |                                                | 39,094                     |   | 7,567   |   | (14,702 | )    
|Comprehensive income:         |                                                |                            |   |         |   |         |      
|                              | Net income 1999                                |                            |  |         |  |         | 2,818
|                              | Change in additional minimum pension liability |                            |  |         |  |         |     
|                              |                                                |                            |   |         |   |         |      
|                              |                                                | Total comprehensive income |   |         |   |         |      
|                              |                                                |                            |   |         |   |         |      
|Transfer to reserves          |                                                |                           |   | (10     | ) | 10      |      
|Dividends                     |                                                |                           |   |        |   | (1,719  | )    
|                              |                                                |                            |   |         |   |         |      
|Balances at December 31, 1999 |                                                | 39,094                     |   | 7,557   |   | (13,593 | )    
|Comprehensive income:         |                                                |                            |   |         |   |         |      
|                              | Net income 2000                                |                            |  |         |  |         | 7,216
|                              | Change in additional minimum pension liability |                            |  |         |  |         |     
|                              |                                                |                            |   |         |   |         |      
|                              |                                                | Total comprehensive income |   |         |   |         |      
|                              |                                                |                            |   |         |   |         |      
|Transfer to reserves          |                                                |                           |   | 576     |   | (576    | )    
|Dividends                     |                                                |                           |   |        |   | (2,018  | )    
|                              |                                                |                            |   |         |   |         |      
|Balances at December 31, 2000 |                                                | 39,094                     |   | 8,133   |   | (8,971  | )    
|Comprehensive income:         |                                                |                            |   |         |   |         |      
|                              | Net income 2001                                |                            |  |         |  |         | 3,993
|                              | Change in additional minimum pension liability |                            |  |         |  |         |     
|                              |                                                |                            |   |         |   |         |      
|                              |                                                | Total comprehensive income |   |         |   |         |      
|                              |                                                |                            |   |         |   |         |      
|Transfer to reserves          |                                                |                           |   | (151    | ) | 151     |      
|Dividends                     |                                                |                           |   |        |   | (4,774  | )    
|                              |                                                |                            |   |         |   |         |      
|Balances at December 31, 2001 |                                                | 39,094                     |   | 7,982   |   | (9,601  | )    
|                              |                                                |                            |   |         |   |         |      

The
accompanying notes form an integral part of the consolidated financial statements.

F-6

---



PETROLEOS DE VENEZUELA, S.A. AND SUBSIDIARIES (PDVSA)  (Wholly owned by the Bolivarian Republic of Venezuela)        Consolidated Statements of Cash Flows        (Expressed in millions of U.S.
dollars)

|                                      |                                                                                      | Years ended December 31                                                                    |                                                                                         
|------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------
|
|Cash flows from operating activities: |                                                                                      |                                                                                            |                                                                                         
|                                      | Net income                                                                           |                                                                                            | 3,993                                                                                   
|                                      | Adjustment to reconcile net income to net cash provided by
    operating activities: |                                                                                            |                                                                                         
|                                      |                                                                                      | Depreciation and depletion                                                                 |                                                                                         
|                                      |                                                                                      | Deferred income tax                                                                        |                                                                                         
|                                      |                                                                                      | Provision for employee termination, pension benefits and other
    postretirement benefits |                                                                                         
|                                      |                                                                                      | Equity in earnings of nonconsolidated investees                                            |                                                                                         
|                                      |                                                                                      | Dividends received from nonconsolidated investees                                          |                                                                                         
|                                      |                                                                                      | Change in operating assets:                                                                |                                                                                         
|                                      |                                                                                      |                                                                                            | Notes and accounts receivable                                                           
|                                      |                                                                                      |                                                                                            | Inventories                                                                             
|                                      |                                                                                      |                                                                                            | Recoverable value added tax                                                             
|                                      |                                                                                      |                                                                                            | Prepaid expenses and other assets                                                       
|                                      |                                                                                      | Change in operating liabilities:                                                           |                                                                                         
|                                      |                                                                                      |                                                                                            | Accounts payable to suppliers                                                           
|                                      |                                                                                      |                                                                                            | Taxes payable and dividends payable, accruals and other
    short-term liabilities      
|                                      |                                                                                      |                                                                                            | Payments of employee termination, pension benefits and other
    postretirement benefits
|                                      |                                                                                      |                                                                                            | Other liabilities                                                                       
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|Cash flows from investing activities: |                                                                                      |                                                                                            |                                                                                         
|                                      | Capital expenditures, net                                                            |                                                                                            | (3,524                                                                                  
|                                      | Increase in restricted cash                                                          |                                                                                            | (1,666                                                                                  
|                                      | Net change in investments                                                            |                                                                                            | 65                                                                                      
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|Cash flows from financing activities: |                                                                                      |                                                                                            |                                                                                         
|                                      | Proceeds from issuance of debt                                                       |                                                                                            | 1,509                                                                                   
|                                      | Debt repayments                                                                      |                                                                                            | (681                                                                                    
|                                      | Payments of capital lease obligations                                                |                                                                                            | (127                                                                                    
|                                      | Dividends paid                                                                       |                                                                                            | (4,862                                                                                  
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      | Cash and cash equivalents at beginning of year                                       |                                                                                            | 3,257                                                                                   
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      | Cash and cash equivalents at end of year                                             |                                                                                            | 925                                                                                     
|                                      |                                                                                      |                                                                                            |                                                                                         
|SUPPLEMENTAL DISCLOSURE:              |                                                                                      |                                                                                            |                                                                                         
|                                      | Cash paid during the year for:                                                       |                                                                                            |                                                                                         
|                                      |                                                                                      | Interest, net of capitalized amounts                                                       |                                                                                         
|                                      |                                                                                      | Income tax                                                                                 |                                                                                         
|                                      |                                                                                      |                                                                                            |                                                                                         
|                                      | Non cash activities:                                                                 |                                                                                            |                                                                                         
|                                      |                                                                                      | Tax certificates applied against:                                                          |                                                                                         
|                                      |                                                                                      |                                                                                            | Income tax payable                                                                      
|                                      |                                                                                      |                                                                                            | Dividends payable                                                                       
|                                      |                                                                                      |                                                                                            |                                                                                         

The accompanying notes form an integral part of the consolidated financial statements.

F-7

---



PETROLEOS DE VENEZUELA, S.A. AND SUBSIDIARIES (PDVSA)  (Wholly owned by the Bolivarian Republic of Venezuela)        Notes to Consolidated Financial Statements        December 31, 2001 and 2000





F-8

---







F-9

---



December 312001

2000Monetary assets:Bolivars

5,294

5,037Euros

483

618Other currencies

12

135,789

5,668Monetary liabilities:Bolivars

6,640

6,452Euros

178

189Other currencies

196

1787,014

6,819Net monetary liability position, see note 17 to the consolidated financial statements

(1,225
)
(1,151
)




December 312001

2000

1999Exchange rates at year-end

770.09

698.23

647.53Average annual exchange rates (Bs/$1)

722.01

679.80

609.29Interannual increments in the exchange rate (%)

10.29

7.83

14.98Interannual increments in the CPI (%)

12.29

13.43

20.02








F-10

---









F-11

---





F-12

---









F-13

---











F-14

---





F-15

---





December 312001

2000Macroeconomic Stabilization Investment Fund (FIEM)

4,072

2,406Funds for extra-heavy crude oil project in the Orinoco Belt

109

58Liquidity Accounts of PDVSA Finance

96

884,277

2,552Less current portion, included in prepaid expenses and other

205

1464,072

2,406




December 312001

2000Contribution to the FIEM

4,072

2,406Unpaid contributions

420

624Contributions generated

4,492

3,030




F-16

---





December 312001

2000Trade

2,506

3,968Related parties (see note 14 to the consolidated financial statements)

440

281Other

383

2153,329

4,464Less allowance for doubtful trade accounts receivable

49

293,280

4,435




December 312001

2000Crude oil and products

1,826

1,818Fertilizers, industrial products, coal, Orimulsion® and other

85

79Materials and supplies

395

3582,306

2,255Less materials and supplies classified in non-current assets, net

98

802,208

2,175




F-17

---



December 31Percentage of
capital stock

Share of equity2001

2000

2001

2000Foreign investees:United States of America:CITGO investees:LYONDELL-CITGO

41

41

509

518Needle Coker

25

25

22

24Other





170

170Chalmette Refining

50

50

316

286Merey Sweeny

50

50

34

361,051

1,034Virgin Islands:PDVSA VI

50

50

805

746Germany:Ruhr Oel

50

50

132

130Sweden:Nynäs Petroleum

50

50

61

73Colombia:Monómeros Colombo:Venezolanos

47

47

30

30Other:Bitor investees

50

50

2

22,081

2,015Investees in Venezuela:PETROZUATA

49

49

230

176FERTINITRO

35

35

122

108METOR

38

38

98

90Carbones del Guasare

49

49

88

87Supermetanol

35

35

70

69Super Octanos

49

49

78

78CERAVEN

49

49

10

10PROFALCA

35

35

10

10INTESA

40

40

6

5Other





26

54738

687Total nonconsolidated investees





2,819

2,702


F-18

---



| |                                 | December 31      |       
| | ------------------------------- | ---------------- | ------
|
|
|
| | Current assets                  |                  | 886   
| | Non-current assets              |                  | 5,253 
| | Current liabilities             |                  | (576  
| | Long-term liabilities           |                  | (3,818
| |                                 |                  |       
| |                                 | Net equity       |       
| |                                 |                  |       
| | Operating results for the year: |                  |       
| |                                 | Revenues         |       
| |                                 | Operating income |       
| |                                 | Net income       |       
| |                                 |                  |       



December 312001

2000

1999Financial position:Current assets

227

310

219Non-current assets

1,434

1,386

1,406Current liabilities

(377
)
(867
)
(697
)Long-term liabilities

(776
)
(321
)
(316
)Member's equity

508

508

612


December 312001

2000

1999Operating results for the year:Revenues

3,284

4,075

2,571Gross profit

317

250

133Net income

203

128

24


F-19

---



December 312001

2000Financial position:Current assets

491

524Non-current assets

1,881

1,632Current liabilities

(294
)
(424
)Long-term liabilities

(388
)
(155
)Net equity

1,690

1,577Operating results for the year:Revenues

4,209

5,242Operating income

131

606Net income

120

247




F-20

---





December 312001

2000Oil and gas production

43,485

43,548Refining, marketing and transportation

19,281

16,393Petrochemical

3,687

3,532Other

1,639

1,41368,092

64,886Less accumulated depreciation and depletion

36,784

34,61231,308

30,274Land

222

288Construction in progress

5,700

5,76837,230

36,330




December 312001

2000

1999Depreciation and depletion during the year

2,624

3,001

2,821Capitalized interest during the year

51

59

188




F-21

---



December 31YearsOperating

Capital2002

130

812003

122

742004

104

422005

103

52006 and thereafter

941

26Estimated future lease payments

1,400

228Less interest



49Present value



179Short-term portion, included in accruals and other



62Long-term portion



117






Association

PDVSA's
percentage
of participation

Partners

Estimated gross
project cost
(unaudited)

Incurred as of
December 31, 2001
(unaudited)(millions of dollars)

(millions of dollars)PETROZUATA

49.90

Conoco

3,000

2,929Cerro Negro

41.66

ExxonMobil-Veba Oel

2,000

1,737Sincor

38.00

Total Fina-Statoil

4,200

4,272Hamaca

30.00

Texaco-Phillips Petroleum

3,400

1,230




F-22

---





Areas

CVP partners

Mixed companiesDelta Centro

Burlington-Union
Pacific-Benton (1)

Administradora General Delta Centro, S.A.Golfo de Paria Este

Ineparia

Administradora del Golfo de Paria Este, S.A.Golfo de Paria Oeste

ConocoAGIP-OPIC

Compañía Agua Plana, S.A.Guanare

ELFConoco (1)

Administradora Petrolera Guanare, S.A.Guarapiche

Maxus (Repsol) (1)

Administradora General Guarapiche, S.A.La Ceiba

ExxonMobilVeba-Nippon

Administradora Petrolera La Ceiba, C.A.Punta Pescador

AmocoTotal FinaVeba (2)

Administradora General Punta Pescador, S.A.San Carlos

Pérez Companc

Compañía Anónima Mixta San Carlos, S.A.






F-23

---





Years ended December 312001

2000

1999Operating fees

766

755

559Capital fees and other

550

686

436Stipends

794

716

2772,110

2,157

1,272


F-24

---





Years ended December 312001

2000

1999Income tax

3,766

5,748

2,521Production and other taxes

3,760

4,986

3,0087,526

10,734

5,529






Years ended December 312001

2000

1999In Venezuela

6,730

12,408

5,020Foreign

1,034

571

3307,764

12,979

5,350




Years ended December 312001

2000

1999Current income tax expense:In Venezuela

3,033

5,780

2,620Foreign

130

123

(17
)3,163

5,903

2,603Deferred income tax expense (benefit):In Venezuela

454

(249
)
(163
)Foreign

149

94

81603

(155
)
(82
)Provision for income tax

3,766

5,748

2,521


F-25

---



December 312001

2000Deferred tax assets:Accruals for employee benefits

1,005

1,087Property, plant and equipment

291

276Production tax payable

130

249Inventories

123

208Other reserves



89Investment tax credits and tax loss carryforwards

1,098

1,371Other

153

2732,800

3,553Less valuation allowance

1,036

8501,764

2,703Deferred tax liabilities:Property, plant and equipment

869

991Operating agreements, net

397

365Capitalized interest

189

302Investments in nonconsolidated investees

221

207Inventories

94

122Deferred charges for plant turnaround costs

84

109Other

101

851,955

2,181Net deferred tax (liabilities) assets

(191
)
522




December 312001

2000Current assets

342

657Long-term assets

301

502Long-term liabilities

(834
)
(637
)(191
)
522




F-26

---



Years ended December 312001

2000

1999%

%

%In Venezuela:Statutory income tax rate for the petroleum sector

67.7

67.7

67.7Inflation adjustment for tax purposes and effect of remeasurement to dollars

(8.4
)
(10.5
)
(8.9
)Legal contribution received from subsidiaries

(2.4
)
(5.3
)
(2.9
)Effect of lower income tax rate for non-petroleum sector subsidiaries

(7.4
)
(6.0
)
(3.8
)Other differences, net

2.3

(1.3
)
(2.8
)Effective income tax rate in Venezuela

51.8

44.6

49.3Foreign:Other, primarily effect of lower income tax rate for foreign subsidiaries

(3.3
)
(0.3
)
(2.2
)Consolidated effective income tax rate

48.5

44.3

47.1




December 312002

2003

2004Tax credits

169

277

401Tax losses

496

56

7




F-27

---





Years ended December 312001

2000

1999Pending recovery or compensation at beginning of year

1,475

921

1,381Generated during the year

1,022

799

874Recovered during the year

(347
)
(245
)
(1,334
)Pending recovery or compensation at end of year

2,150

1,475

921


F-28

---



Approved by the Integrated National Tax Administration Service (SENIAT), corresponding to the period June 1999 to December 2000, in process of obtaining the CERT

1,048Pending recovery from 2000 and 1999 under administrative proceedings

105Awaiting reply from SENIAT, corresponding to the period January to June 2001

446Under application, corresponding to the period July to December 2001

5512,150










F-29

---



December 312001

2000Carrying
amount

Fair
value

Carrying
amount

Fair
ValueAssets:Cash and cash equivalents

925

925

3,257

3,257Notes and accounts receivable

3,280

3,280

4,435

4,435Other investments

187

187

148

148Long-term accounts receivable

774

674

538

451Derivative assets (included in other assets)

16

16



Liabilities:Accounts payable

2,584

2,584

3,084

3,084Short-term debt

1,000

1,000

596

596Long-term debt

7,427

7,376

7,003

6,674Derivative liabilities
(included in other liabilities)

65

65












F-30

---





December 312001

2000Short-term borrowing facilities with various banks with a weighted average interest rate of 8.62%



58Current portion of long-term debt

1,000

5381,000

596




F-31

---







December 312001

2000PDV America/CITGO:Senior notes

499

499Revolving bank loans

392

Senior notes under shelf registration

200

200Private placement senior notes

57

97Master shelf agreement senior notes

260

260Tax-exempt bonds

357

329Taxable bonds

146

174Other



71,911

1,566PDVSA Finance:Unsecured notes

3,297

2,907PDVSA VI:Guaranteed secured note

442

491PDVSA Petróleo:Loans guaranteed by governmental export agencies and
financial institutions

299

413PDVSA Cerro Negro bonds

300

300PDVSA Cerro Negro line of credit

150

150PDVSA Sincor line of credit

903

809Corpoguanipa line of credit

190

1,842

1,672Bariven, S. A. (Bariven):Loans guaranteed by governmental export agencies and
financial institutions

365

401Commercial paper program

179

179544

580PDV Marina, S. A. (PDV Marina):Credit facility

185

234Other  Corporate and other subsidiaries

206

918,427

7,541Less current portion of long-term debt

1,000

538Total long-term portion

7,427

7,003


F-32

---



Years2003

1,5902004

6042005

6092006

5812007 and thereafter

4,0437,427






F-33

---





2001

20006.45% due 2002 through 2004

400

4008.75% due 2000 through 2004

226

3256.25% due 2002 through 2006 (in Euros)

178

1896.65% due 2004 through 2006

300

3009.37% due 2004 through 2007

250

2506.80% due 2007 through 2008

300

3009.75% due 2008 through 2010

250

2508.50% due 2010 through 2012

500

7.40% due 2014 through 2016

400

4009.95% due 2018 through 2020

100

1007.50% due 2027 through 2028

400

400Treasury notes

(7
)
(7
)Total

3,297

2,907




F-34

---



F-35

---









F-36

---





December 31Pension benefits

Other postretirement
benefits2001

2000

2001

2000Venezuela:Change in benefit obligationBenefit obligation, beginning of year

3,836

2,955

892

885Service cost

142

116

52

28Interest cost

386

307

135

80Participants contribution

16

19



Plan amendments

81

971

465

Actuarial (gain) loss

(65
)
(339
)
(54
)
95Benefits paid

(156
)
(193
)
(28
)
(196
)Benefit obligation, end of year

4,240

3,836

1,462

892


F-37

---

|                                                                            |                                              | December 31                                  |                                       
|--------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------- | --------------------------------------
|
|
|Change in plan assets                                                      |                                              |                                              |                                       
|                                                                            | Fair value of plan assets, beginning of year |                                              | 1,206                                 
|                                                                            |                                              | Actual return on plan assets                 |                                       
|                                                                            |                                              | Employer contribution                        |                                       
|                                                                            |                                              | Participant contributions                    |                                       
|                                                                            |                                              | Benefits paid                                |                                       
|                                                                            |                                              |                                              |                                       
|                                                                            | Fair value of plan assets, end of year       |                                              | 1,199                                 
|                                                                            |                                              |                                              |                                       
|Funded status                                                               |                                              | (3,041                                       | )                                     
|Employer contribution                                                       |                                              | 22                                           |                                       
|Benefit payments made directly by employer                                  |                                              | 21                                           |                                       
|Unrecognized net actuarial loss                                             |                                              | 949                                          |                                       
|Unrecognized prior service cost                                             |                                              | 1,193                                        |                                       
|Unrecognized transition obligation                                          |                                              | 4                                            |                                       
|                                                                            |                                              |                                              |                                       
|                                                                            |                                              | Net amount recognized                        |                                       
|                                                                            |                                              |                                              |                                       
|Amounts recognized in the Company's consolidated balance
sheets consist of |                                              |                                              |                                       
|                                                                            |                                              | Accrued benefit liability                    |                                       
|                                                                            |                                              | Employer contributions                       |                                       
|                                                                            |                                              | Benefit payments made directly by employer   |                                       
|                                                                            |                                              | Intangible asset                             |                                       
|                                                                            |                                              | Accumulated other comprehensive income       |                                       
|                                                                            |                                              |                                              |                                       
|                                                                            |                                              |                                              | Net amount recognized                 
|                                                                            |                                              |                                              |                                       
|Foreign:                                                                    |                                              |                                              |                                       
|                                                                            | Change in benefit obligation                |                                              |                                       
|                                                                            |                                              | Benefit obligation, beginning of year        |                                       
|                                                                            |                                              |                                              | Service cost                          
|                                                                            |                                              |                                              | Interest cost                         
|                                                                            |                                              |                                              | Plan vesting changes                  
|                                                                            |                                              |                                              | Actuarial gain (loss)                 
|                                                                            |                                              |                                              | Benefits paid                         
|                                                                            |                                              |                                              |                                       
|                                                                            |                                              | Benefit obligation, end of year              |                                       
|                                                                            |                                              |                                              |                                       
|                                                                            | Change in plan assets                       |                                              |                                       
|                                                                            |                                              | Fair value of plan assets, beginning of year |                                       
|                                                                            |                                              |                                              | Actual return on plan assets          
|                                                                            |                                              |                                              | Employer contribution                 
|                                                                            |                                              |                                              | Benefits paid                         
|                                                                            |                                              |                                              |                                       
|                                                                            |                                              |                                              | Fair value of plan assets, end of year
|                                                                            |                                              |                                              |                                       

F-38

---

December 31Pension benefits

Other postretirement
benefits2001

2000

2001

2000Funded status

(73
)
(15
)
(260
)
(205
)Unrecognized net actuarial gain

(2
)
(62
)
31

(10
)Unrecognized prior service cost

2

2



Net gain at date of adoption



(1
)


Net amount recognized

(73
)
(76
)
(229
)
(215
)Amounts recognized in the Company's consolidated balance sheets consist ofAccrued benefit liability

(80
)
(83
)
(229
)
(215
)Intangible asset

3

4



Accumulated other comprehensive
income

4

3



Net amount recognized

(73
)
(76
)
(229
)
(215
)


F-39

---



|           |                                | December 31
|---------- | ------------------------------ | -----------
|
|
|
|Venezuela: |                                |            
|           | Discount rate                  |            
|           | Rate of compensation increase  |            
|           | Expected return on plan assets |            
|Foreign:   |                                |            
|           | Discount rate                  |            
|           | Rate of compensation increase  |            
|           | Expected return on plan assets |            

An annual increase of 1% in the inflation assumption for social benefits and medical and life insurance in future years would 
increase the accumulated postretirement benefit obligation at December 31, 2001 by $40 million and the net periodic cost for postretirement benefits by $4 million.

For
the years ended at December 31 the net periodic benefit costs are as follows (expressed in millions of dollars):

|           |                                          | December 31                                 
|---------- | ---------------------------------------- | --------------------------------------------
|
|
|Venezuela: |                                          |                                             
|           | Components of net periodic benefit cost |                                             
|           |                                          | Service cost                                
|           |                                          | Interest cost                               
|           |                                          | Expected return on plan assets              
|           |                                          | Amortization of prior service cost          
|           |                                          | Amortization of net gain at date of adoption
|           |                                          | Recognized net actuarial loss               
|           |                                          |                                             
|           |                                          |                                             
|           |                                          |                                             
|Foreign:   |                                          |                                             
|           | Components of net periodic benefit cost |                                             
|           |                                          | Service cost                                
|           |                                          | Interest cost                               
|           |                                          | Expected return on plan assets              
|           |                                          | Recognized net actuarial gain               
|           |                                          |                                             
|           |                                          |                                             
|           |                                          |                                             

F-40

---



2001

2000Transactions during the year:Sales

4,167

4,424Costs and expenses

4,991

7,043Balances at year-end:Deposits with the BCV, including contributions to FIEM

4,159

4,401Accounts receivable

440

281Long-term accounts receivable included in other assets

668

538Investments in nonconsolidated investees

2,819

2,702Accounts payable

152

262




Affiliate

Delivery
obligation

Year of
terminationRuhr Oel

220

2002Nynäs Petroleum

34

Not definedLYONDELL-CITGO

230

2017Chalmette Refining

90

Strategic association periodHovensa

155

2008CITGO

297

Between 2006 and 20131,026






F-41

---





|                      |                                       | Years ended December 31               |                         
|--------------------- | ------------------------------------- | ------------------------------------- | ------------------------
|
|Revenues:             |                                       |                                       |                         
|                      | Net sales of crude oil and products:  |                                       |                         
|                      |                                       | Segments in Venezuela:                |                         
|                      |                                       |                                       | Upstream operations     
|                      |                                       |                                       | Downstream operations   
|                      |                                       |                                       | Petrochemical operations
|                      |                                       | Segments in United States of America |                         
|                      |                                       |                                       | Downstream operations   
|                      | Other                                 |                                       | 851                     
|                      |                                       |                                       |                         
|                      |                                       | 67,905                                |                         
|                      | Eliminations (1)                      |                                       | (21,655                 
|                      |                                       |                                       |                         
|                      |                                       | 46,250                                |                         
|                      |                                       |                                       |                         
|Operating income: (2) |                                       |                                       |                         
|                      | Segments in Venezuela:                |                                       |                         
|                      |                                       | Upstream operations                   |                         
|                      |                                       | Downstream operations                 |                         
|                      |                                       | Petrochemical operations              |                         
|                      | Segments in United States of America: |                                       |                         
|                      |                                       | Downstream operations                 |                         
|                      | Other                                 |                                       | 2,534                   
|                      |                                       |                                       |                         
|                      |                                       | 9,393                                 |                         
|                      | Eliminations (1)                      |                                       | (1,120                  
|                      |                                       |                                       |                         
|                      |                                       | 8,273                                 |                         
|                      |                                       |                                       |                         

---

F-42

---

|                                    |                                       | Years ended December 31 
|----------------------------------- | ------------------------------------- | ------------------------
|
|Capital expenditures, net:          |                                       |                         
|                                    | Segments in Venezuela:                |                         
|                                    |                                       | Upstream operations     
|                                    |                                       | Downstream operations   
|                                    |                                       | Petrochemical operations
|                                    | Segments in United States of America: |                         
|                                    |                                       | Downstream operations   
|                                    | Other                                 |                         
|                                    |                                       |                         
|                                    |                                       | 3,524                   
|                                    |                                       |                         
|Property, plant and equipment, net: |                                       |                         
|                                    | Segments in Venezuela:                |                         
|                                    |                                       | Upstream operations     
|                                    |                                       | Downstream operations   
|                                    |                                       | Petrochemical operations
|                                    | Segments in United States of America |                         
|                                    |                                       | Downstream operations   
|                                    | Other                                 |                         
|                                    |                                       |                         
|                                    |                                       | 37,230                  
|                                    |                                       |                         

Net
sales and long-lived assets information by geographic area are summarized below (expressed in millions of dollars):

|                      |  | December 31, 2001
|--------------------- |  | -----------------
|
|Net sales (1)         |  | 26,184           
|Long-lived assets (2) |  | 42,229           
|                      |  |                  
|
|Net sales (1)         |  | 31,077           
|Long-lived assets (2) |  | 39,639           
|                      |  |                  
|
|Net sales (1)         |  | 19,268           
|Long-lived assets (2) |  | 34,676           
|                      |  |                  

---



F-43

---



F-44

---





F-45

---



2001

2000

1999Proved developed and undeveloped reserves of light, medium and heavy crude oil at January 1

41,998

41,162

40,461Revisions

784

1,652

1,782Extensions and new discoveries

538

286

Production

(1,095
)
(1,103
)
(1,082
)Proved developed and undeveloped reserves of light, medium and heavy crude at December 31

42,225

41,997

41,161Proved developed and undeveloped reserves of extra-heavy crude oil at December 31

35,558

35,688

35,701Total proved developed and undeveloped reserves at December 31

77,783

77,685

76,862Total proved developed reserves, submitted to production, including extra-heavy crude oil at December 31 (included above)

17,372

17,373

18,124




F-46

---



2001

2000Projects

Total
including
projects

Projects

Total
including
projectsProved developed and undeveloped reserves of extra-heavy crude oil at January 1

9,776

35,687

5,652

35,689Revisions (1)

1,079



4,181

101Production

(87
)
(129
)
(57
)
(103
)Proved developed and undeveloped reserves of extra-heavy crude oil at December 31

10,768

35,558

9,776

35,687Proved developed extra-heavy crude oil reserves at December 31

1,170

1,963

646

1,375Net proved extra-heavy crude oil reserves in unincorporated joint ventures at December 31

8,121



7,089Net proved extra-heavy crude oil reserves in equity affiliate at December 31

2,647



2,68710,768



9,776


---

F-47

---



2001

2000

1999(Billions of cubic feet)Proved developed and undeveloped reserves of natural gas at January 1

135,080

134,174

134,136Revisions

997

1,957

1,413Extensions and new discoveries

1,209

446

Production

(1,467
)
(1,497
)
(1,375
)Proved developed and undeveloped reserves of natural gas at December 31

135,819

135,080

134,174Proved reserves related to extra-heavy crude reserves at December 31

12,476

12,505

12,437Total proved developed and undeveloped reserves at December 31

148,295

147,585

146,611Total proved developed reserves, submitted to production, including quantities associated with extra-heavy crude oil in production at December 31 (included above)

103,807

103,310

102,625




|                     |       | 2001  |       | 2000 |     | 1999 
|-------------------- | ----- | ----- | ----- | ---- | --- | -----
|
|Exploration costs    |       | 174   |       |     |     | 174  
|Development costs    |       | 1,364 |       | 792  | (2) | 2,156
|                     |       |       |       |      |     |      
|                     | Total |       | 1,538 |      | 792 |      
|                     |       |       |       |      |     |      
|Equity affiliate (1) |       |      |       | 86   |     | 86   
|                     |       |       |       |      |     |      
|                     | Total |       | 1,538 |      | 878 |      
|                     |       |       |       |      |     |      

---

F-48

---



The
following table summarizes capitalized costs of oil and gas exploration and production activities and the related accumulated depreciation and depletion at December 31 for
PDVSA's conventional and extra-heavy crude oil reserves (expressed in millions of dollars):

|                                       |       | 2001    |        | 2000  |       | 1999    |       
|-------------------------------------- | ----- | ------- | ------ | ----- | ----- | ------- | ------
|
|Producing assets (1)                   |       | 31,255  |        | 1,038 |       | 32,293  |       
|Support facilities                     |       | 12,657  |        | 5     |       | 12,662  |       
|                                       |       |         |        |       |       |         |       
|                                       | Total |         | 43,912 |       | 1,043 |         | 44,955
|Accumulated depreciation and depletion |       | (25,720 | )      | (43   | )     | (25,763 | )     
|Construction in progress               |       | 3,092   |        | 1,674 |       | 4,766   |       
|                                       |       |         |        |       |       |         |       
|Net capitalized costs                  |       | 21,284  |        | 2,674 |       | 23,958  |       
|Equity affiliate (2)                   |       |        |        | 1,394 |       | 1,394   |       
|                                       |       |         |        |       |       |         |       
|                                       | Total |         | 21,284 |       | 4,068 |         | 25,352
|                                       |       |         |        |       |       |         |       

---

F-49

---



|                          |       | 31 December                |                                   
|------------------------- | ----- | -------------------------- | ----------------------------------
|
|
|Revenues from production: |       |                            |                                   
|                          | Sales |                            | 14,091                            
|                          |       | Transfers                  |                                   
|                          |       | Production costs           |                                   
|                          |       | Production and other taxes |                                   
|                          |       | Depreciation and depletion |                                   
|                          |       | Exploration costs          |                                   
|                          |       |                            |                                   
|                          |       |                            | Results before income tax         
|Income tax                |       | (8,218                     | )                                 
|                          |       |                            |                                   
|                          |       |                            | Results from production operations
|Equity affiliate (1)      |       |                           |                                   
|                          |       |                            |                                   
|                          |       |                            | Total                             
|                          |       |                            |                                   

---



F-50

---



2001

2000

1999Average sales price:Crude oil, per barrel

18.95

24.94

15.35Natural gas liquids, per barrel

19.55

25.42

14.71Natural gas, per barrel

5.35

5.29

4.24Average production costs, per barrel of oil equivalent

3.38

3.48

2.72Average production costs, per barrel of oil equivalent, excluding operating agreements

2.17

2.22

2.00




F-51

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|                                            |       | December 31 |       
|------------------------------------------- | ----- | ----------- | ------
|
|
|Future cash inflows                         |       | 893,878     |       
|Future production costs                     |       | (187,727    | )     
|Future production taxes                     |       | (251,816    | )     
|Future development costs                    |       | (60,136     | )     
|Future income tax expense                   |       | (179,962    | )     
|                                            |       |             |       
|Future net cash flows                       |       | 214,237     |       
|Effect of discounting net cash flows at 10% |       | (172,961    | )     
|                                            |       |             |       
|Discounted future net cash flows            |       | 41,276      |       
|Equity affiliate (1)                        |       |            |       
|                                            |       |             |       
|                                            | Total |             | 41,276
|                                            |       |             |       

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F-52

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The following table analyzes the changes for each year (expressed in millions of dollars):

|                                                                          |                                            | December 31                  |        
|------------------------------------------------------------------------- | ------------------------------------------ | ---------------------------- | -------
|
|
|Present value at January 1, sales, net of production costs and taxes      |                                            | (11,446                      | )      
|Value of reserves added during the year due to extensions and discoveries |                                            | 902                          |        
|                                                                          |                                            |                              |        
|                                                                          |                                            | (10,544                      | )      
|Change in value of previous year reserves due to:                         |                                            |                              |        
|                                                                          | Development costs incurred during the year |                              | 1,365  
|                                                                          | Change in future development costs         |                              | 2,272  
|                                                                          | Net changes in prices and production costs |                              | (81,216
|                                                                          | Revisions of previous reserve estimates    |                              | 1,161  
|                                                                          | Net changes in income taxes                |                              | 61,642 
|                                                                          | Net changes in production rates and other  |                              | (9,354 
|                                                                          |                                            |                              |        
|                                                                          |                                            | Total change during the year |        
|Equity affiliate (1)                                                      |                                            |                             |        
|                                                                          |                                            |                              |        
|                                                                          |                                            | Total                        |        
|                                                                          |                                            |                              |        

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F-53

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F-54

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