Politics of oil in Venezuela: A decision-making analysis of PDVSA's internationalisation policy.

The high degree of international vertical integration achieved by the Venezuelan state oil enterprise, Petroleos de Venezuela S.A. (PDVSA), has placed it among the most important oil multinationals (MNs). The policy of creating downstream outlets through the establishment of foreign direct investments (FDIs) in the form of refinery assets was given the term of 'internationalisation'. By analysing PDVSA's internationalisation policy, the thesis explores the difficulties encountered by a major state-owned enterprise (SOE) from a developing country in its efforts to grow beyond national borders. The study focuses on the impact of democratic bargaining on the process of oil policymaking in Venezuela, stressing the constraints posed by politics on PDVSA's efforts to expand its foreign operations. Specifically, the study examines the intricate policymaking process that shaped the origins and the development of PDVSA's internationalisation policy, underlying the events and factors that influenced each one of its three distinguishable phases: adoption, formulation, and implementation. The tensions between politics and corporate strategy are highlighted at the core of the policymaking process. The study also looks at the relationship between the oil industry and the other two key decision-making centres involved in the oil policymaking process: the executive and Congress. In exploring the ways in which each one of them sought to influence policy outcome, the study attempts to gain insight into the main factors that prompted the tensions among the policy actors involved. Three environments, or pressure-generating centres, constantly exert influence on the oil industry: the oil market, the political context and the government's financial situation. By seeking to determine the industry's response to their pervasive influence on policy formulation and implementation, this research ascertains the extent to which these variables influenced the decision-making process that characterised PDVSA's internationalisation policy. Being too powerful a company in a developing country context where the executive and the legislature find it increasingly difficult to exert their means of control over it had the effect of minimising some of PDVSA's characteristics as SOE: accountability to Congress and subordination to the executive. The thesis argues that as a result of its role as oil MN PDVSA has minimised some of its attributes as SOE. In turn, the more PDVSA has diminished its status as SOE, the more the government has increased its dependence over it. The successful accomplishment of PDVSA's internationalisation policy has stressed this equation, highlighting the contentious interaction between an excessively dependent govemment and a company struggling to reconcile its roles as both a SOE and a MN. By examining the policy process that brought about the international expansion of a large SOE from a developing country, the findings of the thesis contribute significantly to the political science and public administration literatures and suggests new paths for further research in the area of public policymaking processes. (Abstract shortened by UMI.)