TRADE AND ECONOMY

Tourism Sector

Tourism in Venezuela is very intense, due to the country’s vast natural resources and landscapes, as well as the necessary infrastructure to provide national and international tourists with first rate services.

Some of the many tourist-related resources the country offers include:

• Over 3.500 Km. of coastline, of which 1.700 Km. are sandy and coral beaches.
• 72 islands, islets and quays, many that haven’t been touched, such as Isla de Margarita and the archipelago Los Roques, the only atoll in the Caribbean.
• Three mountain ranges: the Andes Mountain Range, with landscapes of unique beauty, and very rich in customs, traditions and arts and crafts, the Eastern and Central Caribbean Mountain Range, where Mt. Avila is found, and which separates Caracas from the Central Seaboard; it provides a habitat for a great biological diversity and is rich in cultural and historic heritage.
• 430.000 Km² of jungle with impressive vegetation, dark water rivers, numerous species of animals and well known waterfalls such as Salto Churún-Merún (known as Salto del Ángel or Angel’s Leap) and Kuketán.
• 300.000 Km² of plains that stretch from the great north western mountainous arc and the coast, to the Orinoco River. This region is crossed by numerous rivers, and provides a habitat for an incredibly varied fauna, including endangered species such as manatees, alligators, turtles and jaguars.
• 39 national parks and 41 natural monuments that occupy 16,04% of the national territory. The government created two natural reserves and seven wildlife fauna shelters, in order to protect the native flora and fauna.

The Venezuelan government has also adopted a series of measures and programs to activate the country’s tourism, such as the signing of a tourism agreement and another involving the exemption of visas between Venezuela and Brazil, as well as the existing projects in view of increasing aerial connections between the two. Privatization processes and tourist projects are framed along theses same lines of revitalization. FOGADE.

Telecommunications Sector

Until 1991 this sector was characterized by an insufficient supply of basic services, a low quality telephone service, a state monopoly of the Venezuelan Anonymous Telephone Company (Compañía Anónima Telefónica de Venezuela) CANTV, and a minimum of private activity in this sector. CANTV’s privatization did not only imply great advantages for consumers of basic telephone services, but it also meant the telecommunications sector was opened to private investment, allowing for the provision of new services granted through concessions.
Today we have numerous telecommunications services of excellent quality in different products: mobile phones, television through subscription, personal communications services, mobile systems through satellites and Internet connection services.
In 2000, new investment opportunities opened up in the rural communications area and in basic telephone services, as it will no longer be exclusively controlled by CANTV.
Although this sector has grown immensely, the demand for most services has still not been satisfied and the participation of new companies and investments is required.

For more information: http://www.conatel.gov.ve/

Agricultural Sector

Venezuela has a large variety of soil and hydrographic resources, extensive coastlines, diverse climates, altitudes and vegetation, which, together with a favorable and increasing agricultural infrastructure, turn Venezuela into a country with great potential for the development of agriculture, livestock and fishing. In view of protecting this national heritage, Venezuela’s government issued an executive order on November 12, 2001, legally enforcing the Land and Agricultural Development Law, and on November 13, 2000, the Fishing and Aquaculture Law. The Land and Agricultural Development Law, in accordance with the provisions set forth in section 307 of the county’s constitution, aims to introduce the elements necessary for the complete elimination of the large estate ownership system; as it is regarded as being a system opposing justice, contrary to the public’s general interest and social peace in the countryside. Another objective of this new legal framework is to ensure biodiversity, the effective enforcement of environmental, and food and agricultural protection rights, and the food and agricultural security for present and future generations.

Agriculture

Agriculture was considered Venezuela’s principal source of wealth during the 18th, 19th and early 20th centuries. Venezuela was acknowledged worldwide as a coffee, cocoa, tobacco and indigo producer, but in the 20th century began the sudden, rapid exploitation of petroleum, which ended up by making this country dependent on food exports from other countries. Currently various agricultural sectors are reactivating and redeveloping, and the mechanization and increase of crop cultivated, in species and in amount, has contributed to a significant increase in productivity. Venezuela has a broad expanse of high quality soil, which stretches discontinuously and dispersedly over areas that have long been cultivated, in basins and valleys, and especially in the central-northern and central-western part of the Llanos (plains).

Agricultural development

The guidelines of the current National Agricultural Plan are summarized in three essential aspects:

1) Recovering, transforming and invigorating auto-productive chains, favoring competition and sustainable development;
2) Promoting the development of rural aspects in strategic parts of the country;
3) Guaranteeing the security of food and fiber supply derived from agricultural activity.

Agricultural products for export

Cacao:
Originally from Tropical America, cacao is grown in warm climates, in the shade, with a good drainage system and in a soil rich in organic matter. The main states that produce cacao in Venezuela include Sucre, Miranda, Delta Amacuro, Apure, Barinas, Zulia, Táchira, Aragua, Monagas, Guarico, Yaracuy, Mérida and Carabobo. A total of 17.124 metric tones are produced annually.
In Venezuela there are a number of eatable species, which are differentiated by the fruit’s and seed’s characteristics. Among these are the TH-Cacao, Cacao Criollo or cacao “Chuao”, acknowledged as the best quality cocoa in the world; and the TH-Leiocarpa, Trinitarian cocoa, wild or calabacillo cocoa.

Coffee:
Coffee originates from Africa (Sudan and Ethiopia). It was introduced into Venezuela in the mid 18th Century and is grown in fresh, mountainous terrain, with good drainage and in soil rich in organic matter. It is planted mainly in the Andes Mountain Range and in the Aragua Valleys. A total of 76.036 metric tones are produced annually.

Various types of coffees are harvested in Venezuela: “Arabic” coffee, el café “Liberian”, Gabephoras coffee.

• Other farming products

Corn:
Corn is a staple food in the Venezuelan diet. Three varieties are grown: white or common corn, valley or “early” corn, and small yellow corn or Cariaco corn. It is planted in silt, sandy and lime-based soils, clay-based soils or loam-based soils, with adequate drainage. Corn needs wide open spaces and plenty of sun. It is grown all over Venezuela, except for the Amazonas and Nueva Esparta states. A total of 1.033.292 metric tones are produced annually.

Rice:
Rice is also considered a staple food in the Venezuelan diet. There are two types of rice: dry-land rice and paddy-field rice. There are many varieties. The biggest rice producers include the Portuguesa, Barinas, Guarico, Cojedes, Delta Amacuro, Carabobo and Bolívar states. A total of 779.906 metric tones are produced annually.

Sorghum:
This is used mainly in the feeding industry for animals. There are around 200 varieties and 30 species presenting different qualities and uses. Sorghum is a crop requiring warm climates, silt, sandy and lime-based soils that are averagely humid. It is grown in the central and eastern Llanos and in the Yaracuy, Lara and Cojedes states. A total of 436.320 metric tones are produced annually.

Forestry Sector

Currently, the Venezuelan Guayana Corporation (Corporación Venezolana de Guayana, CVG) is undertaking a number of investment projects in this region; some of these projects include:

Forestry Plantation Project:

The Project aims at achieving an annual production of 2.0 billion m3 of Caribbean pine wood as from 2017; the Project relies on an investment of 23 billion US$.

Seedbeds and Gardens Development Project

-Production: 2.500 Kg / year of genetically improved pine seeds
-Investment: 3.1 billion US$

The following projects are being promoted with investors:

Wooden Houses Factory

-Production: 10.000 kits per year of components for housing
-Investment: 48.3 million US$

Sawdust Plant

-Production: 170.000 metric tones / year of sawdust
-Investment: 35 billion US$

Chipboard Plant

-Production: 410.000 m3 / year OSB chipboard panels and 60.000 m3 / year of sawdust
-Investment: 118 billion US$

Pulp and Paper Plant

-Production: 300.000 metric tones / year of mechanic and whitening pulp, 300.000 metric tones / year of news paper, magazine paper, printing and writing paper
-Investment: 513.2 billion US$

Cattle Raising

In Venezuela the extensive stockbreeding activity of the old cattle farms – which produced low quality meats and semi-processed cheeses – has been gradually replaced by dynamic types of cattle livestock producing meta and diary products which have been established in various parts of the country. The plains region is the main stockbreeding area in Venezuela; pig raising and poultry farming have also increased.

Fishing

Fishing in Venezuela is a diversified activity encompassing contrasting art forms, from traditional costal fishing, to fishing as a sport, to fly-fishing and ocean fishing carried out with state of the art technology. The main sea fishing regions are found in the Cariaco Gula and in Nueva Esparta where fish of the Caribbean Sea (grouper, croaker, anchovies, shark, sardines, dorado, saw fish and sting rays) are fished.

Aquaculture

Fresh water fishing – especially in the Orinoco River -, although not industrially developed, is of great economic important for the country’s inland population. Various aquaculture projects have been developed: shrimp farms in the coastal area, Talapia farms in the Orinoco strip, in the Andes and in the state of Lara; Cachama farms in the Llanos and the Lara, Falcón, Sucre, Monagas and Bolívar states; and trout farms in the Andean regions.

Metallurgic and Mining Sector

Venezuela has a number of different mineral resources, among which the most important are coal, iron ore and bauxite.

There are enormous iron ore, bauxite, nickel, coal, gold ore, diamond and limestone deposits, as well as non metallic minerals, besides significant asbestos, phosphate, manganese, sulfur and lead prospecting.

A few decades ago it was decided to industrially exploit and transform some of these mineral resources. In 1975, the state nationalized iron ore production and stimulated the mining industry of coal, gold, bauxite and other minerals.

The mining sector has been an excellent option for private local and foreign investors, who have been benefited by the optimum conditions of Venezuela’s road and port infrastructure; the availability of low cost energy – hydro electrical, gas and petroleum energy; as well as our exceptional geographic position.

Coal

Part of the energy used in the electric boilers and metallurgic plants in the United States and in many European countries comes from the Guasare coal deposits in la Guajira, in the state of Zulia. The high heating power and low sulfur content and ashes of the coal produced by Carbozulia, a PDVSA affiliate, is considered to be of Premium quality.

It is estimated that coal reserves in Venezuela total 485 million metric tones. All of the coal produced in the Guasare basin is for export. In 1999, 75% of exported coal was for thermal use, while the remaining 25% was mostly sold to steel companies.

Iron Ore

Iron ore is one of the minerals that contribute significantly to the Venezuelan mining and metallurgic wealth. A total of 20.842 metric tones are produced annually.

Main hematite basins are situated south of the Orinoco, in the geologically formed mountainous complex in Imataca in the state of Bolívar, where the deposits of Cerro Bolívar, Pao and Real Corona, among others, are found.

Currently the Venezuelan Guayana Corporation is undertaking a series of investment projects in the iron and steel sector, such as the expansion of a lump and briquettes plant and friable quartzite concentration plant.

Bauxite

Bauxite is the raw material used in aluminum production. Through the Guayana Corporation, the Government of Venezuela created the Bauxilum company, to exploit bauxite in Los Pijiguaos – Cerro Páez mines in the state of Bolívar – where 4 million metric tones are produced annually. Bauxite is extracted and crushed in the Los Pijiguaos mines and is shipped down the Orinoco to Ciudad Guayana, where the other part of the industrial complex is established, with a plant where the transformation from bauxite to aluminum takes place.

Other minerals

There are also other mineral resources, both metallic and non-metallic, such as: copper, asbestos, sulfur, nickel and manganese deposits, which are included in the state’s development program and which await private investors to take interest.

Energy Sector

It is within this sector that the three large sectors of enormous productivity are found: the petroleum industry, the petrochemical industry and gas production, and hydroelectric production.

Petroleum represents an important source of income for Venezuela’s economy.

Petroleum

We have one of the largest hydrocarbon reserves in the world as well as state of the art petroleum infrastructure. The technical and managerial personnel are highly qualified. These factors make our petrol industry – Venezuela Petroleum (Petróleos de Venezuela, PDVSA) – one of the most efficient and competitive industries in the world.

Factors that favor our petroleum industry include: the country’s excellent geographical location – ideal for exporting activities, the fact that international service providing companies are established here, local capacity for the construction of new plants, and the opening of the private capital industry as well as various economic reforms.

Reserves

“Total PDVSA crude oil reserves increase to 221 thousands of barrels for the end of 2001, of which 77,8 thousands of barrels are from proven reserves.

Of all proven reserves, 68% are heavy and extra-heavy crude oil reserves and the most abundant in the country, and 32% are condensed, light and medium crude oil reserves, which is the oil with the highest demand on the market.

Venezuela also owns 148 billions of cubic feet in natural gas reserves.” (Source: PDVSA)

These reserves are included among the largest extra-heavy crude oil and bitumen reserves in the world -1.2 billons of barrels – are found in Venezuela, in the Orinoco petroleum strip. Production is extracted from 4 large basins: Falcón, Maracaibo, Oriente and Apure-Barinas. The Lago de Maracaibo basin is the highest producing oil region.

“PDVSA’s total production capacity is, toward the end of 2001, 3.99 millions of barrels per day (MBD) of crude and condensed oil and 6.0 thousands of cubic feet of gas per day (MCFD). The Business Plan 2002-2007 contemplates an increase in crude oil production to 5.1 MBD by 2007”. (Source: PDVSA)

Venezuela Petroleum (PDVSA)

The Venezuelan petroleum industry was nationalized in 1976. Since then, exploration, production and processing activities of hydrocarbons have been undertaken exclusively by PDVSA, State-owned Corporation in charge of administering the country’s petroleum, petrochemical, orimulsion and coal industry.

Since 1998 the company restructured its organization in order to make internal decisions more effective and agile. This allowed for the reconsideration of the role placed by the headquarters and of activities of a strategic kina. Its new operative structure is based on three units of business: PDVSA exploration and production, PDVSA manufacture and marketing, and PDVSA services.

PDVSA is the third company producing the highest amount of petroleum in the world – 3,5 millions of barrels per day –.

Business Plan

The main objective of the PDVSA business plan for the next decade is to further increase petroleum’s contribution to the country’s development through strengthening national capital reserves and stimulating private capital participation.

Venezuela’s President, Hugo Cháves Frías, issued and executive order on November 2, 2001, passing the new Hydrocarbon Organic Law. This Law with Executive Order establishes, among other aspects, the participation of private capital, opening up the possibility of setting up mixed capital companies to undertake primary activities, such as the intervention in industrial and commercial activities carried out with hydrocarbons.

PDVSA maintains important community support programs, especially involving education, health and environmental protection. PDVSA aims to maintain a harmonious relationship between the development, environment and personal security. The adaptation of waste material from its production activities, the recovery and conservation of hydrographic basins in various regions throughout the country as well as the beginning of production and marketing of unleaded petrol in the country are clear examples of an integral development policy.

Research and development


The Venezuelan petroleum industry relies on the experience and soundness of INTEVEP – a PDVSA affiliate company – responsible for research, development, engineering and technical services for its clients in the hydrocarbon business.

INTEVEP

INTEVEP is one of the most talented research centers in this field on a world scale. In its 25 years of work, it has registered close to 856 patents – including orimulsion – generated in its laboratories. PDVSA has its own university institute– the International Centre for Education and Development (Centro Internacional de Educación y Desarrollo), CIET – headquartered in Caracas with training centers in various cities. The executive, professional and technical education of PDVSA’s personnel, partners, replacements and contractors is undertaken at these centers.

Petrochemistry

In 1978 Venezuela began its activities in the petrochemical sector, by jeans of Venezuelan Petrochemistry (PEQUIVEN). In the last two decades, this PDVSA affiliate company began its stage of expansion directed mainly at the internal market and in 1989 this growth began to attempt insertion into global markets. Based on natural gas and petroleum derivatives, the petrochemical industry elaborates hundreds of products that are used daily – agricultural fertilizers, plastics, wrapping materials, packaging materials, tubing, furniture, construction material, paraffin, oils, tar and much more.

PEQUIVEN keeps up a permanent commitment with the environment by prioritizing the quality of the processes and products; the use of clean technology, safe operations and the development of nature recovery conservation programs.

Investing in the petrochemical sector

Some of the enormous advantages our petrochemical sector offers investors include, among others:

– The growth experienced by the petroleum industry as a result of the different openings to private investment;
– Special emphasis on petrochemical development such as President Hugo Chávez’s policy;
– Abundant gas reserves associated to petroleum;
– A trustworthy supply of raw material related to gas and petroleum;
– The possibility of associating with PEQUIVEN in projects included within the main development projects, free distribution of capital and income;
– Access to port and road infrastructure considered among the best in Latin America.

Gas

Our country has significant natural gas resources – daily production rounds 6.200 millions of cubic feet of associated gas – which provide an abundant energy source for homes and industry, besides being the raw material for petrochemical products.
Recently, drilling work has begun as part of the new gas exploration Project on the Deltana Platform. This project includes drilling from 10 to 14 wells in search of gas, in an Atlantic area 150 kilometers from the eastern Venezuelan coastline. In the first phase of exploratory operations, the area involved includes 27 thousand kilometers in regions with depths of over a thousand meters; this would cost approximately 375 millions of dollars. The second phase of exploitation would require some 4 billion dollars, with participation of private investors.

Gas discoveries in the last decade in the north eastern region, especially in Guárico, Anzoátegui, Monagas, even coastlines out in Sucre have substantially increased our reserves – are estimated at 145 billons of cubic feet.

Gas is used in current processing plants, in petroleum injection and in the gas duct network, through which liquid hydrocarbons of gas are extracted, besides distributing dry gas to the rest of the country.

Investing in the gas sector

Our large number of proven gas reserves and high production of associated gas – there are steadfast projects in view of producing non associated gas – offer an abundant supply at a low cost, as well as en excellent geographical location and infrastructure – 5.000 Km of gas ducts– thus providing attractive opportunities for the private investor.

Strategic Plan

PDVSA proposes to concentrate its efforts in petroleum, leaving as much space as possible to private initiative in the gas and chemical business.


a) Petroleum

– Undertaking more intense exploratory activities and incorporating new light and medium petroleum reserves in order to improve PDVSA’s competitiveness taking into account the quality of hydrocarbons demanded on the market;
– Establishing output levels in accordance with agreements reached with the OPEC and other producers;
– Intensifying participation in all marketing stages in the Latin American and Caribbean markets. Particularly, increase participation in the wholesale and retail distribution markets;
– Consolidating the important participation it has in its main market, namely the United States, through its affiliate company, CITGO;
– Reduce production costs and increase productivity.

b) Gas and chemicals

– Achieve active participation by the private sector in the gas business and in its transformation into chemical and petrochemical products;
– Create new possibilities for private capital through the new gaseous hydrocarbon law and its regulation – PDVSA will participate on a minor selective scale in each business segment –
– Increase gas-based chemical production and refinery currents, with the participation of national and international private capital.

Lastly, the business plan ratifies PDVSA’s commitment of being a friendly neighbor in the communities it operates in.

Gold

The potential for extracting gold ore approximates 10.000 metric tones.

Construction Sector

Venezuela is a country requiring a considerable amount of development in construction in different environments and in many regions. In these last years the sector has expanded and diversified, and is now considered one of the largest growing sectors in out country.

Since 1994 the Concessions of Public Works and Utilities Law has been in force. According to this Law with Executive Order, expressways, railways, ports, bridges, viaducts, electricity generation, hydraulic works and clearing works, public monuments and buildings, airports, urban and suburban transport, among many others, are capable of being granted under concession.

The Ministry of Infrastructure is the institution with the largest number of works and services susceptible of being granted in concession, and therefore, is the organ which has developed an organization to carry out this concession process.

Venezuelan infrastructure is considered as being the best in Latin America, in terms of quality, size and number of inhabitants. The development of the petroleum and hydro electrical industry serve as an umbrella for the competitive development of other related services.

Infrastructure for land transport is considerable developed; nevertheless, it requires substantial improvement and new investment.

Trade and Exports

Venezuela’s international trade is a vigorous sector in our economy, characterized above all by petrol exports heading the list of our country’s exports commodities and whose principal market is the United States.

Other vital national products for export include: iron ore, aluminum and steel, sold to the United States, Colombia, Europe (the Netherlands and the United Kingdom), Japan and Mexico.

Exports not including petroleum have increased in the last decade, since Venezuela opened up to the global market.

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