WORLD TRADE
ORGANIZATIONG/STR/N/4/VEN
17 February 1999
(99-0629)
Working Party on State Trading Enterprises Original:  Spanish
STATE TRADING
Notification Pursuant to Article XVII:4(a) of the GATT and Paragraph 1
of the Understanding on the Interpretation of Article XVII
VENEZUELA
The following communication, dated 3 February 1999, has been received from the Permanent
Mission of Venezuela.
_______________
I. ENUMERATION OF STATE TRADING ENTERPRISES
Enterprise:  Petróleos de Venezuela, S.A. (PDVSA) and its subsidiaries.
Product:  Hydrocarbons (Chapter 27 of the Venezuelan Tariff).
II. REASON AND PURPOSE
The oil industry is reserved for the Venezuelan State for reasons of national interest.
The Organizational Law Reserving the Hydrocarbon Industry and Trade to the State
(Nationalization Act) contains a provision whereby any enterprises created to engage in reserved
activities, if they take the form of joint-stock companies, may consist of one single partner (Article 6),
thereby forming an exception to the Commercial Co de, which requires two or more partners for the
establishment of joint-stock companies.
The joint-stock company Petróleos de Venezuela, whose shares are held exclusively by the
Republic of Venezuela, is the sole shareholder of the above-mentioned subsidiaries.  One of the
principal objectives of the State petroleum enterprises must be to achieve a maximum economic rate
of return, in keeping with the requirements of national development (Article 3 of Nationalization Act).
The Nationalization Act stipulates that petroleum en terprises shall be governed by the Act and the
regulations thereto, by their own statutes, by the provisions issued by the National Executive and by
any applicable provisions of ordinary law (Article 7); this provision is repeated in the
Constituent Instrument – Statutes of Petróleos de Venezuela, S.A.
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING
ENTERPRISES
The subsidiaries of Petróleos de Venezuela, S.A. are engaged in meeting the needs both of the
domestic market and, directly or indirectly, exports.
They are also responsible for imports of products and inputs for their activities.G/STR/N/4/VEN
Page 2
As of 1 January 1998, the former subsidiaries of PDVSA, Lagoven and Maraven, were
absorbed by the subsidiary Corpoven.  The resulting enterprise changed its name to
PDVSA Petróleo y Gas S.A., and groups togeth er the core activities of the oil business.
This new enterprise, in its turn, is composed of three main divisions:  PDVSA Exploration
and Production;  PDVSA Manufacturing and Marketing;  and PDVSA Services.
PDVSA Exploration and Production is responsible for locating and developing oil, natural gas
and coal reserves and manufacturing Orimulsion.
PDVSA Manufacturing and Marketing is in charge of crude refining activities, product
manufacturing, marketing and supplying domestic and international markets.
PDVSA services is responsible for supplying integrated, specialized and competitive services
to the entire PDVSA group.
The private sector may be authorized by the Ministry of Energy and Mines to play a role in
the marketing process for petroleum products in the local market.  Thus, for example, service stations
and systems for distributing gas cylinders are operated by private traders.  The private sector also
plays a part in producing and marketing lubricants.
On 11 September 1998, the Organic Law on the Opening Up of the Domestic Market for
Gasoline and Other Hydrocarbon Fuels for Motor Vehicles was approved.  This Law eliminates the
State reserve in respect of the domestic market for hydrocarbons, opening up fuel storage,
distribution, sales and transport activities to competition.
Inputs and products required by the subsidiaries of PDVSA are imported according to need in
order to develop their different activities.  Manufactured products, using both domestic resources and
imported inputs, are then re-exported or sold on the domestic market.
Export quantities are determined on the basis of international supply and demand for
petroleum.  The prices of exports are determined by the market and by their competitiveness.
In regard to pricing:1. Domestic prices are established by the Government, through the Ministry of Energy
and Mines.
2. Export prices are determined by market forces, on the basis of competitive prices for
crude and for oil products on the international oil market.
Crude and oil products are sold on the international market by contracts of various kinds
based on clearly commercial criteria and negotiated by mutual agreement between the parties.  The
only supply of quantities based on a geopolitical agreement is for San Jose Agreement countries.They are, however, handled entirely on a commercial basis.
Finally, as concerns the "upstream" oil business, private enterprises may participate through
two mechanisms:
(a) Strategic associations with PDVSA subsidiaries subject to authorization by the
National Congress;
(b) Operating agreements with PDVSA affiliates.G/STR/N/4/VEN
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In the former case, the private enterprises engage in their respective production activities on
their own behalf and jointly with the PDVSA subsidiary (this also includes private enterprises
participating in exploration risk contracts and profit-sharing production); in the latter case, on the
other hand, the private enterprises act on behalf of the PDVSA subsidiary, and it is the subsidiary that
carries out the activity from the legal point of view.IV. STATISTICAL INFORMATION
TABLE 1
Imports
Product designation (indicating HS Code) Total quantity
imported
(MBD)Total quantity
imported by the
state trading
enterprise
(MBD)Average
import price
($/BBL)Average home market
sales price ($/BBL)Price increase Domestic
production volume
(MBD) *
12 3 4 5 6 7
1995 REFINED 27.10.00 - 27.15
PRODUCTS21 21 19.68 4.01 1,040
1996 REFINED 27.10.00 – 27.15
PRODUCTS32 32 21.75 9.84 1,048
1997 REFINED 27.10.00 – 27.15
PRODUCTS42 42 23.91 8.83 1,113
*  Excludes:  self-consumption/losses, production LPG.
Estimates for January – November.G/STR/N/4/VEN
Page 4TABLE 2
Exports
Product designation
(indicating HS Code)Total quantity
exported
(MBD)Total
quantity
exported
PDVSA (MBD)Average
purchase
priceAverage home
market price
($/BBL)Average
export price
(MBD)Domestic
production
volume
(MBD) *
1 2345 6 7
1995 2709.00.00
2710.00.60
27.10 – 27.10.0049
271000071 - 2715Crude
ResidualNaphtha/gasolineOther
1
TOTAL1,819
2142232811,819
214223281
2,537n.a.
n.a.n.a.n.a.n.a.
2.971.497.0513.93
13.2519.4518.282,752
237363440
1996 2709.00.00
2710.00.60
27.10 – 27.10.0049
271000071 - 2715Crude
Residual
Naphtha/gasolineOther
1
TOTAL1,977
204
2513201,977
204
251320
2,752n.a.
n.a.
n.a.n.a.n.a.
1.55
10.29
9.8217.44
14.95
24.4121.752,938
229
360459
1997 2709.00.00
2710.00.60
2710 – 2710.0049
2710.0071 - 2715Crude
ResidualNaphtha/gasoline
Other
1
TOTAL2,211
184274
3832,211
184274
383
3,052n.a.
n.a.n.a.
n.a.n.a.
2.035.98
12.6215.09
13.8623.35
19.623,206
218385
510
1Others include:  diesel/fuel oils, lubricants, LPG, others.
*  Excludes:  self-consumption/domestic production losses, condensates and production-site LPG.
n.a.:  not applicable.G/STR/N/4/VEN
Page 5TABLE 3
Internal Activities
Product designation
(indicating HS Code)Purchases by the
state enterprise on
the home marketNational production
(MBD)Sales by the
enterprise on the
home market
(MBD)National
consumption (MBD)
12 3 * 4 5
1995 Crude
ResidualNaphtha/spiritsOther
12709.00.00
2710.00.00 - 2715
27.10 – 27.10.0049
271000071 - 2715n.a.
n.a.n.a.n.a.2,752
2373634400.0
11
1971700.0
11
197170
1996 Crude
Residual
Naphtha/spirits
Other12709.00.00
2710.00.00 - 2715
27.10 – 27.10.0049
271000071 - 2715n.a.
n.a.
n.a.
n.a.2,938
229
360
4590.0
9
183
1620.0
9
183
162
1997 Crude
ResidualNaphtha/spiritsOther 
12709.00.00
2710.00.00 - 2715
2710 – 27.10.0049
27100071 - 2715n.a.
n.a.n.a.n.a.3,206
2183855100.0
11
1881650.0
11
188165
  1Others include:  diesel/fuel oils, lubricants, others.
*  Excludes:  self-consumption/domestic production losses, condensates and production-site LPG.
n.a.:  not applicable.
__________         G/STR/N/4/VEN
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