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.