The Importance Of Oil In Venezuela: 10 Reasons

The importance of oil in Venezuela lies in being one of the first sources of wealth in the country’s economy. In other parts of the world its use is vital to generate heat in houses during winter and produce electricity. Other petroleum derivatives are used to obtain plastics, in the agricultural industry with fertilizers, cosmetics, clothing and even wax for chewing gum.

Oil is found in deposits in the subsoil, associated with natural gas and water. Therefore, in its processing, these two components are obtained. Natural gas is used as fuel, while water is treated and reinjected to maintain reservoir pressure.

Refinery at night

Oil is not soluble in water and as a component in nature, it can cause serious damage to it, polluting the waters of seas and rivers, damaging the existing flora and fauna.

It is worth saying that at a global level, the search for forms of energy such as oil has been the cause of wars between countries and peoples. In the same way, the most advanced countries have put pressure on the producing countries to obtain their oil at a lower cost.

The use of oil as fuel is the main generator of CO2, carbon dioxide, a molecule that is believed to be the main cause of global warming, as well as the main pollutant in the planet’s atmosphere . Many cities in the world are currently toxic and harmful to their inhabitants.

Since oil is originated by the decomposition of organic matter under extreme conditions of pressure and temperature, it is a limited non-renewable natural resource.

It is estimated that there is enough oil to maintain current consumption for about 100 to 200 years, so humanity has made efforts to reduce its dependence on it and migrate to alternative and cleaner energy sources.

However, despite these efforts, it is estimated that in ten years, 84% of the vehicles in circulation will continue to operate with petroleum derivatives worldwide.

You may also be interested in the advantages and disadvantages of oil .

Importance of oil in Venezuela

Source of income

Venezuela is one of the largest oil producers in the world. Oil produced and sold abroad is the main source of income for the country’s wealth and is one of its main natural resources .

Which are used to finance the expenses of education, health, defense, as well as in innumerable activities that in other countries would be financed by private companies, or simply would not exist.

On the other hand, as a country dependent on oil, the Venezuelan economy changes radically according to the price of oil on the world market.

Thus, the variation of a price of more than $ 100 per barrel (146 liters), to one of up to $ 12, significantly impacts the national budget. And since the country depends almost entirely on the state’s economy, this affects the way of life of the population to a great extent.

Oil in Venezuela was originally exploited by international companies. With nationalization, the country achieved control of national production, but in return it acquired huge debts that depress the economy.

Power source

Oil moves Venezuela. With oil, gasoline, kerosene and diesel are obtained, products that power vehicles, means of transporting cargo, airplanes, construction machinery, as well as electricity generating plants.

Natural gas and propane gas are extracted from oil, using electricity-generating turbines, compressors and pumps for kitchens and for some vehicles.

World politics

As an oil-producing country and a founding member of OPEC (Organization of Petroleum Exporting Countries), Venezuela has a tool to influence world politics by controlling oil prices.

Thus, apart from OPEC, alliances have been created with other non-producing countries to obtain votes in the UN, OAS, political support in exchange for advantages in the sale of crude oil.

As a country with the largest reserves in the world, Venezuela acquires a global strategic value in the energy sector, because in the future it will continue to be a producer of crude oil when other fields have already been exhausted.

Job creation

In Venezuela, the oil producing and trading company is called PDVSA (Petróleos de Venezuela SA).

She is in charge of exploring, extracting, refining and commercializing oil, an activity that generates many direct and indirect jobs through companies that provide services, not only at a technological level, but also financially, consulting, auditing, training, etc.

In addition, in the places where oil activity occurs, small companies and individuals benefit by marketing their products to workers, which is also a wealth-generating activity.

Technology

For the extraction, refining and commercialization process, many technologies are used that are learned by PDVSA personnel. This is how the worker acquires valuable knowledge worldwide.

As the process of extracting, processing, refining and shipping oil involves routine and high-risk activities, automation technologies have been adopted. All this in order to control the processes of filling and emptying tanks, separation of oil from water and gas, cooling, pumping, with the use of industrial computers ( PLC , Programmable Logic Processor).

At the same time, similar but more sophisticated equipment with a higher level of efficiency has been incorporated as a safety measure in the same processes, to stop production in the event of a leak, fire or explosion. As well as to activate fire extinguishing systems by spraying water or foam depending on the affected area.

For the control and supervision of these processes from a secure site, data supervision and control systems have been acquired and recently created with national companies. This is because from a control room the operator sees the entire process and takes the required actions in each case.

As the oil facilities are many kilometers apart from each other. There are also many-kilometer pipelines from the places where oil is extracted to the places where it is refined or shipped. In addition, telecommunications systems have been acquired to create secure data networks and interconnect control and supervision systems.

In Venezuela there are different types of crude, from the lightest to the most viscous. The lightest crudes are better priced on the market. Extra heavy crude oil, to be commercialized, must undergo cracking processes (breaking the molecules) to make them lighter.

This has resulted in the application of new knowledge on the subject and the creation of crude oil “improvers” to process the extra heavy oils and make them commercially attractive. Such is the case of the José Refining Complex in Puerto la Cruz.

PDVSA also created INTEVEP, the Venezuelan Institute of Petroleum Technology, a body in charge of developing technologies to improve production processes. These technologies are related to engineering  mechanics, electronics, electricity, physics, chemistry and many more.

Environmental impact

All oil activity generates pollution, both in the atmosphere and in the seas and rivers. The oil industry, as part of its commercialization process, makes use of docks and boats that potentially represent a serious danger to the seas and coasts, and therefore to the fauna and flora present there.

Oil processing plants also cause damage to the area where they are located. The danger of spills and explosions is also harmful to workers and the population.

In Venezuela, some unwanted events with high environmental impact have occurred throughout history, which, although small compared to other events in the world, have caused damage to natural water supplies and the country’s coasts.

Recently, in 2012, the rupture of an oil pipeline that contaminated the Guarapiche River in Monagas state occurred, from which water is taken for human consumption in the city of Maturín, with about 500 thousand inhabitants.

In the 1980s, an electricity generating plant exploded in Vargas state, resulting in several deaths and losses of billions of dollars in assets.

Industrial Security

Given the risk of damage to the environment, people and property, generated by the oil industry, many safety measures are taken to minimize the damage from a possible spill or explosion.

At PDVSA, there are working rules and procedures to ensure that there is no damage, and if there is, that the minimum possible human and material losses occur.

PDVSA has its own fire department for fighting fires and rescuing affected workers and personnel in areas where a contingency occurs. There is also an oil collection team in case of possible spills. Any area that is affected is later rescued and reforested.

Migration

Since oil activity in Venezuela is the main economic engine, many people have moved from their places of origin to the areas where oil activity is established.

This causes these areas to develop to a greater extent, increase the construction of homes and recreational areas, increase automobile traffic and therefore expand communication routes, accentuate trade and banking, etc.

The areas of greatest oil development in Venezuela are the West, the East and part of Los Llanos.

With the development of the oil industry, a migratory process of foreigners to Venezuela also occurred.

At first, North Americans and British settled in the country to manage its industries. Specialized labor involved that settled in the country.

Later, and also in search of economic improvements, a high component of Europeans, as well as Latin Americans, settled in Venezuela to work, either in the oil industry, or in companies that benefited from it.

Development

Economic activity in Venezuela totally changed with oil. Venezuela was a rural, agricultural country, and it became an urban, industrialized country, with large cities such as Caracas, Maracaibo, Valencia, Barquisimeto, Maracay, Ciudad Guayana, among others.

In Venezuela, refining complexes have been created that are among the largest in the world. Such is the case of the CRP, the Paraguaná Refining Complex, made up of the Cardón and Amuay refineries in Punto Fijo, Falcón state. There is also the El Tablazo refining complex in Zulia, El Palito in Carabobo and Puerto La Cruz in Anzoátegui state.

Social help

In Venezuela, the oil wealth has been used in recent years for social assistance: housing construction, financing of aid plans for the population, service activities such as paving streets, aqueducts, creation of hospital centers, financing plans for small companies, training of young students, etc.

In particular, many people who are not workers in the industry have benefited from PDVSA when they go to seek medical help for a family member.

Recently, a low-priced food distribution plan was created for the population, which no longer works due to various problems.

What is oil?

It is a viscous substance, dark in color, made up of carbon and hydrogen, called hydrocarbon . Its name comes from the Greek and means stone oil. It originated millions of years ago from organic substances (algae and small animals), trapped and pressed by tons of sediment and heat from within the earth.

These substances rise to the surface due to their low density. When they fail to do so, deposits are created that are used by oil companies.

References

  1. National Academy of Economic Sciences: Importance of the Oil Industry in Venezuela and in the world. Recovered from: ance.msinfo.info.
  2. Bausch, J. (2016). Electronic Products: OPEC – 94% of cars will still rely on fossil fuels come 2040 (EVs will make up just 1%). Recovered from: electronicproducts.com.
  3. Hernández, H. (2015). Panorama newspaper: The oil industry and its importance. Recovered from: panorama.com.ve.
  4. Importance of Oil. Recovered from: importa.org.
  5. Seijas, A. (2011). Prof. Andrés Seijas: Oil, the predominant factor in the Venezuelan economy. Recovered from: andresseijas.bolgspot.com.

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