Foreign Direct

Investment in PDVSA

Prepared By:
Group 2
Introduction
 Problem
• Whether PDVSA should open for foreign
investment.
• Chevaz act to destroy company's functioning
• Incapabilities of PDVSA
 Assumptions
• New discoveries which could effect PDVSA
profits.
• Chevaz act to destroy company.
• Benefits could be gained of opened for foreign
companies
 Question 1
• Company aiming to protect its natural resource
i.e. Oil, so could be valid reason.
• But on other hand, forgot to estimate-
– Shortage of capital to invest alone
– Lacked technology
– Learning modern techniques
 Question 2
• Lack of capital to invest alone
• Lack of latest technology
• Had to go for joint venture for the purpose of
learning modern techniques
• Potential Benefits-
– BP agreed to invest $60 billion by 1995
– Increment in oil barrels
– Discovered crude oil and entered in joint ventures
 Question 3
• More than 40 project undertaken by PDVSA
and foreign oil companies.
• Company’s output increasing to 3.5 million
barrels per day.
• PDVSA earned profits $2.4 billion
– Reduction in operating expense by 20%
• Chevaz in 2003, fired all employees and hired
expensive employees which proved danger for
company
 Question 4
• Oil production increased by 3.5 million barrels
per day
• Profits increased by $2.4 billion
• Oil production operation fall by 20%
• Profitability situation increased to $24 billion
Thank You