(Brief analysis about who is the
legal owner and administrator of crude oil and natural gas)
Venezuela has one of the largest
reserves of crude oil and natural gas in the Western Hemisphere, and it is
interesting to know that in legal and regulatory terms the conception
or denomination of property over hydrocarbons resources, has changed
conceptually since the 19th century and until today. In that sense,
the conception and economic regulation of the ownership and
administration of hydrocarbons, has historically been materialized
through an approximate number of nineteen (19) legislations. These
regulations can be discriminated in three (3) large normative groups:
I) General regulations on oil
activities:
Hydrocarbon laws of the years: 1920,
1921, 1922, 1925, 1928, 1935, 1938 and 1943.
II) Regulations on the regime of
ownership and exploitation of hydrocarbons:
Law on Property Affected by Reversal
in Hydrocarbons Concessions (1971)
Law that Reserves the State the Gas
Industry (1973)
Law that reserves to the State the
Exploitation of the Internal Market of Products Derived from
Hydrocarbons (1973)
Organic Law that reserves to the State
the Hydrocarbons Industry (1975)
III) Specific regulations on the
ownership, exploitation and commercialization of hydrocarbons and
derived products:
Law of Opening of the Internal Market
of Gasoline (1998)
Organic Law of Gaseous Hydrocarbons
and its Regulation (1999 and 2000)
Organic Hydrocarbons Law (2001 and
2006)
Law on Migration of Mixed Companies
(2007)
Organic Law of Reorganization of the
Internal Market of Liquid Fuels (2008)
Organic Law that reserves to the State
Goods and Services Related to the Primary Activities of Hydrocarbons
(2009)
The fact that in this great number of
regulations and regulations, as well as in the constitutional texts
of the years 1864, 1881, 1961 and 1999, has tended to use, in
alternate, random or indistinct, the terms "Republic",
"Nation" and "State", to define and assign the
regime of ownership and administration of hydrocarbons; this, even
when such terms have appreciable differences in their meaning and
connotation.
In this sense, it
is interesting to review the conditions or historical aspects that
have originated and that gravitate in this conceptual mix or
variability, since an aspect as relevant as the ownership of
hydrocarbons in our country, becomes a matter of national interest;
any time that any inaccuracy in it, in my opinion, could create
problems for the regulator or administrator in the execution and
development of public energy policies (for example: how to adequately
safeguard the rights and interests of the Nation, in the granting of
permits or licenses for the exploration and exploitation of oil and
gaseous hydrocarbons, to private national companies or to large
multinational companies in the oil and natural gas sector).
The economic and legal regulation of
the ownership and administration of hydrocarbon resources (as primary
energy sources) has different complexities, edges, approaches or
limitations, and if such quality is indicated, referred or assigned
to the State, the Nation, or the Republic; the matter can complicate
the effective management of these hydrocarbon resources. While it is
true that such terms (Republic, State and Nation) are intimately
linked, and it is commonly accepted that such terms seem synonymous,
it is also true that their connotations and administrative, economic,
legal, sociological and formal derivations; are very different.
Historical and conceptual variation
of the ownership and administration of hydrocarbons
In our country, the first historical
act of a legal nature, to define the nomination of hydrocarbons
property to the Republic, was due to the Liberator Simon Bolivar, in
1829 issuing the "Decree on Conservation and Ownership of Mines"
. However, based on this fact, discrimination, ownership and
administration of energy resources has had a lot of variability and
inaccuracy when altering the Republic, the State, the States of the
Union and the Nation.
It should be noted that the
aforementioned Decree of the Liberator, defining the denomination and
allocation of ownership of the mines and hydrocarbon resources for
the Republic, was one of the notorious facts regarding sovereignty
and defense of our natural resources, which resulted in the
consecution of the war of Independence against Spain. Remember that
the independence struggle, apart from the achievement of freedom and
self-determination, implied the replacement of a monarchical system
of government (the Spanish Crown), by a republican regime of
elective, popular participation and with division of powers, as it
truly constitutes the definition of Republic.
It is important to note that the
Liberator Simon Bolivar, in 1828, on the occasion of the issuance of
the "Organic Decree" of August 27, 1828, which he called
"Fundamental Law" (a kind of first Republican
Constitution), offered some notions Initial, but very important and
fundamental for the country on the connotation, differentiation and
social and political meaning of the terms: Nation, Republic and
State.
It is worth
mentioning that such legislation was promoted by for the notorious
political failure generated in the so-called "Convention of
Ocaña", unsuccessful attempt to try to reform the so-called
"Constitution of Cucuta", to try to put order and refound
the Republic (the Great Colombia). In this context, the Liberator
said: "...
After a detained and mature deliberation, I have resolved to take
charge, as I am doing today, of the Supreme Power of the Republic,
which I will exercise with the denominations of Liberator-President,
who they have given the laws and public suffrages."
Furthermore, in this text the definition of the Republic can be seen
for the first time, as the instance that brings together and
materializes the practical exercise of the supreme powers, generated,
originated and granted through the popular vote.
Additionally, the
aforementioned legislation also refers to the Nation, when it states:
"...
the national vote has been pronounced unanimously in all the
Provinces, whose minutes have already reached this capital, and which
they make up the great majority of the Nation". Regarding
this, it is clear the distinction of the origin that identifies the
nation, as the entity that is composed and represented by all
citizens or inhabitants of the country.”
In addition, the
same legislation of the Liberator, contains an important reference on
the State, when mentioning: "...
that the People in this situation, using the essential rights that
are always reserved to free themselves from the ravages of anarchy
and to provide possible to its conservation and future prosperity,
has entrusted me with the Supreme Judiciary to consolidate the unity
of the State, restore internal peace and make the reforms deemed
necessary." From
this, it follows that this body (State) is concerned fundamentally to
the way of organizing and exercising public power, to administer and
efficiently order the relations between the government, the citizens
and the resources of the country; all this in order to the social,
political and economic well-being of the country or nation.
Based on the
foregoing, which can be inferred or considered that in our country
the genesis of the concepts of Republic, Nation and State, were
originated by Simón
Bolívar,
and making a basic revision of sociology and politics, you can
appreciate the relationship and distinction between the mentioned
terms. Thus, "Nation": consists of the human, historical
foundation and essential subject of constituent power, representing
the group of citizens who in the same territory embody sovereignty
and exercise their political rights, recognizing their origin and
pursuing the same destiny .
On the other hand, "State"
is conceived as the technical, legal and political organization that
composes and regulates the relationship between population, territory
and government; for the attainment of the general welfare. And as for
"Republic", its conception is identified with a form of
government opposed to monarchy and autarky, fundamentally defined by
the division of powers, which discriminates and / or assigns the
State based on a legal framework, elective, representative and
responsible; with the supreme goal of achieving the Nation's welfare.
Review briefly how the definition
or allocation of ownership and administration of hydrocarbons in
Venezuela has varied temporally or historically
a) In the year 1855, the Code of
Mines, stipulated that the ownership of the mines corresponded
originally to the State, that is, not to the Republic, as established
by Simón Bolivar in the Decree of the year 1829.
b) After the Federal War (1859 - 1863)
and the issuance of the new Constitution of the year 1864, a new
change was originated since ownership of natural resources (including
mines) was transferred to the States of the Union , which until then
belonged to the State. As a well-known fact, this regulation implied
that the first oil concessions were granted by the governments of the
provinces.
c) In the year 1881 another variation
is generated, since the new Constitution reformed the principle of
mining property by establishing a dual system, in which the ownership
of the mines was recognized to the States of the Union, but assigning
its fiscal administration to the Federal government; that is, the
State. The latter was obliged to proportionally redistribute the
income or tax benefits generated among all the States of the Union.
It should be noted that this distributive system gave rise to the
current constitutional system (through which the central government
is obliged to distribute annual budgetary resources to the states or
provinces, in proportion to the population density of each entity).
d) Many years later, another variation
in the designation of ownership over such resources was generated,
since the country's first hydrocarbons law (issued in 1920),
separated mining and oil activities, and enshrined the power of the
State to directly exploit the hydrocarbons (which could cede its
exploitation to any legal and operationally relevant instance). But
there is a notorious fact, since said Law did not expressly establish
that ownership of the hydrocarbons corresponded to the State; that is
to say, that in theory it could only develop the exploitation of the
resources (process of extraction to surface of the existing oil in
deposits).
e) A salient fact occurred with the
regulation of the ownership of crude oil in the Hydrocarbons Law of
1943, since it clearly defined and formalized the distinction between
Nation (assigning it as the owner of the hydrocarbon resource) and
the Federal Executive (as administrator delegated thereof).
f) The Constitution of 1961, ratified
and established in a direct and concise manner that the Nation owned
the property of the mines and hydrocarbons. Additionally, he said
that the State should attend to the defense and conservation of the
natural resources of its territory (as administrator thereof), and
the exploitation of hydrocarbon resources should at all times
privilege fundamentally the collective benefit of Venezuelans (which
historically it has been denominated "the sowing of petroleum").
g) The previous condition was ratified
in 1971 through the issuance of the so-called Law of Affected Goods
to Reversal in Hydrocarbons Concessions, which ratified the character
of the Nation, as the owner of the hydrocarbons.
h) Continuing with
the variation in the determination of ownership, the legislation that
marked the nationalization of the hydrocarbons industry during 1975
(Organic Law that reserves to the State the Industry and Trade of
Hydrocarbons), assigned the ownership of the hydrocarbon resources to
the State, (not the Nation) and introduced the figure of the National
Executive, as administrator of these resources, interpreting this
denomination as referring to the role assigned to the Ministry of
Mines and Hydrocarbons (denomination of ministry that at the time was
the in charge of the tutelage of the hydrocarbon industry and now
called Ministry
of Petroleum).
What do the current regulations or
regulations on ownership and administration of hydrocarbons
establish?
i) The Constitution of the Bolivarian
Republic of Venezuela establishes in its article 12 that the mineral
and hydrocarbon deposits belong to the Republic, and are public
property, and therefore, inalienable and imprescriptible. On the
other hand, it establishes that the administration of such resources
will be carried out by the State (Article 113), that is, all the
processes developed or related to oil and related activities
(exploration, exploitation, storage, adaptation, transportation and
internal commercialization). and external hydrocarbon resources).
Notwithstanding the
foregoing, the content of Article 113 of the Constitution raises a
confusing fact, referring to: "...
When it concerns the exploitation of natural resources owned by the
Nation or the provision of public services with exclusivity or
without it, the State may grant concessions for a specific period of
time, always ensuring the existence of considerations or counterparts
appropriate to the public interest".
Here there seems to be a conceptual confusion and the union of
different definitions, since it states that the resources are of the
Nation (not of the Republic as indicated in article 12); that is to
say that in the same legal text he uses different terms
interchangeably.
ii) For its part, the current organic
hydrocarbons laws ratify the Republic as the owner of the hydrocarbon
deposits, and establishes that the exploitation activities of the
same are exercised by the State directly (through entities owned by
them) or by companies private or national, with or without the
participation of the State, in the terms established in such
legislation.
Based on the foregoing, we can affirm
that Venezuela has an inaccuracy over the legal nomination of
hydrocarbon property, since in the Constitution and the current
hydrocarbons laws, the Republic and the Nation are nominated, as the
owner thereof, this, even when the sociological and political
definition of both terms, as we saw in previous points, are direct.
By way of conclusion, it is
appropriate to affirm that such nomination should fall on the Nation
instead of the Republic, so the correct thing, unless better
criteria, would be to affirm: "The hydrocarbons in Venezuela
with property of the Nation and are administered by the corresponding
instances of the State"
What is the importance of ownership
and administration of oil and natural gas?
In terms of fiscal economy, ownership
over hydrocarbons by the Nation generates the right to receive the
tax revenue generated by them, that is, access to economic wealth,
which materializes in favor of the Nation through of the collection
of royalties and taxes related to them.
On the other hand, to develop or
materialize the effective management of hydrocarbons by the state,
generates for the Nation, the capture of the benefits or utilities
for the use and commercialization of the energy resource; it is worth
mentioning the utility of the business of production and sale of
hydrocarbons and derivatives (through the dividends).
The above (having the property and
administering the resource), represents a great disjunctive for any
country producing hydrocarbons, always holding only the property,
although it guarantees the obtaining of the fiscal income (taxes and
royalties), limits its domain and range of action on the scope or
amplitude of public energy policies. On the contrary, by jointly
exercising ownership and administration of crude oil and its
derivatives, the Nation obtains maximum wealth and value for such
resources, and fully dominates the design and applicability of public
policies related to that sector (something like: has the resource,
puts the rules of the game and effectively plays)
However, the adequate and optimal
concatenation of these aspects (ownership and administration) has a
high price for every Nation: the necessary possession of extensive
expertise and knowledge of how to manage the hydrocarbons industry,
in a market that becomes everyday more and more complex and
complicated, and in addition to having the economic and financial
capacity to make timely capital investments, required to give
sustainability and sustainability to the said industry. These
achievements, which practical experience indicates are difficult to
achieve, are significantly influenced by the complex network that
reflects the hydrocarbons market, its high volatility and the intense
competition that develops among the players that make it up
worldwide.
Guillermo Souto G
.
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