Venezuela's Own

Jet fighters streaked in formation across the sky; a band struck up the national anthem; and Venezuela's President Carlos Andres Perez hoisted a red, yellow and blue tricolor over Venezuela's first commercial oil well on New Year's Day. Then cannon boomed their salute to the flag, whose position atop the well symbolized one of the most gentlemanly nationalizations in history.

The ceremony marked the takeover by a new state-owned holding company, Petroleos de Venezuela (Petroven) of the nation's oil industry, which in 1974 accounted for 50% of Venezuela's gross national product, 86% of its revenues and 97% of its exports. During the debates that led up to nationalization, the government shunned emotional rhetoric and consistently rejected far-left demands that it eject 21 foreign oil companies without compensation. For their part, the companies, headed by Exxon, accepted with only minimal grumbling a shade over $1 billion--10% of it in cash and most of the rest in five-year Venezuelan government bonds--for equipment and concessions that they value at $5 billion. Said one official of the former Exxon subsidiary, Creole Petroleum: "Venezuela has reached the point where it finds foreign control of its chief industry unacceptable and degrading. It would be silly for us to fight."

Joint Ventures. Aside from the replacement of foreign directors by Venezuelans, the most conspicuous immediate changes in the way the oil industry operates in the country will be changes in the names of the companies now under Petroven. Creole Petroleum will become Lagoven; the former Shell subsidiary will be known as Maraven. One cautious provision in the nationalization law even permits Petroven to undertake joint ventures with private foreign companies in any petroleum-related field, such as shipping or exploration.

Venezuela faces problems in running the industry. The most immediate is selling the oil. Foreign companies have agreed to buy 1.5 million bbl. per day for at least the first three months of 1976, but that is about 500,000 bbl.

per day short of Petroven's export goal.

One reason for the shortfall is Venezuela's refusal to lower crude oil prices below the minimums set by the Organization of Petroleum Exporting Countries. Another reason is a worldwide glut of petroleum.

An even greater challenge may be finding efficient management. Although the government has placed its new oil monopoly in the hands of experienced businessmen and oil experts--most of them Venezuelans--planners estimate that in the next five years Petroven will need to hire more than 3,000 trained professionals to run its wells and refineries. Venezuela's universities will be hard put to produce that many.

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