Social Investment: A Decisive Factor in Venezuela’s Gas and Crude Oil Bidding Processes

The state run Venezuelan Petroleum Corporation (CVP) coordinates the social projects carried out by 35 operational agreements, three associations of exploration-at-risk and shared profits, and four strategic associations.

The new bidding rounds for offshore gas and crude oil projects will include social investment proposals. This effort will go even further, since the contracts being signed establish these issues as obligatory clauses, with the purpose of promoting sustainable development projects in the oil businesses, says José Delgado Salazar, CVP Manager of Sustainable Development.

When the bidding processes begin, for example the ones projected in the Gulf of Venezuela and in the Falcón waters, will one of the decisive factors be the social responsibility issue?

José Delgado Salavaar: Yes. The State -through the CVP- will consider these elements. Because the CVP expansion plans and its businesses must go along with the social investment projects. That is why we are thinking of establishing sustainable territories. And that is why we have forwarded the study of some regions like northern Falcón, the Gulf of Venezuela, the Orinoco Belt, and northern Trujillo (La Ceiba Bloc), to gather information about several social indexes, and thus be able to define various sustainable development projects, based on the economic potentialities in each area.

These activities are being carried out under the same standards required in the oil business projects. Now, of course that in a bidding round, the social investment proposals presented by the competitors are taken into consideration. However, not only are they taken into consideration; the new contracts include, among their clauses, the obligation of carrying out sustainable development projects.

It’s important to say this because social action was not stipulated in the contracts signed during the oil overture. Many firms did it because they were transnational companies with a reputable image; but others, not being in the obligation to do so, transformed social action into donations. Fortunately, the response from the companies has been quite favorable, since they have aligned with the communities to begin to look like part of them.

What is CVP’s concept of sustainable development? Is it the same vision as that of a transnational company? What has CVP done to align the interests of the big foreign companies on this issue? 

The concept of sustainable development was first set forth in Norway, in 1982. It establishes that the development of the peoples must be attained through actions seeking to satisfy the needs of the present, without jeopardizing the possibilities for future generations to satisfy theirs. It is thus a matter of using resources under rational standards of conservation, based on three factors: the economic, the social and the environmental. Therefore, talking about sustainable development is talking about these three areas.

For us in CVP, sustainable development is a model of joint and participative action by both the hydrocarbons industry and the community; one that encourages endogenous growth (developing from within) and the increase of the social capacities and opportunities, in harmony with the environment, to satisfy the aims for decent life standards of the present and future generations.

But the great task for the CVP is to align these actions with the development plans of the State, the municipalities, and the regions where they are carried out. That is why we have established points of encounter like the sustainable development committee of the operational agreements. We have already established projects in synergy with them. Examples of these actions are vaccination and basic education improvement programs in all the states where we have businesses. For this plan, we originally set ourselves a goal of 20,000 children, and now we already have a total of 50,000.

The basic education program includes improvements in the physical structure of the schools, donation of school learning material, training courses, etc.

Another synergy point with our business associates -he adds- is the series of technical and social planning sessions held with the companies in the strategic associations of the Orinoco Belt, Sincor, Petrozuata, Ameriven and Cerro Negro. There, we have the aloe vera planting project, in Caigua, Anzoátegui, south of the Jose complex. This area constitutes an endogenous development nucleus; and as such, it has specific projects defined by the Ministry of Planning and Development. And there, in real synergy with CVP, Petróleos de Venezuela (Pdvsa, the country’s state owned oil corporation), and the Ministry of Energy and Mining, these companies have endowed 286 million bolívares for this year’s cultivation, while Pdvsa is granting the aloe vera processing plant, a 4 billion bolívares investment. This year, we are planting 44 hectares, which will benefit 120 producers, that is, 120 families of a rural population.

We intend that an institution or a non-governmental organization work in the first phase of these projects, in order to instruct the population on them. We will work in the Caigua project for five years; then the community should take over. We thus link the oil business to the real development of the communities. And if we go a little further, we can see how Pdvsa can lever works thanks to its trusteeships. We are generating real action in social work, using the drive of the oil industry, but without diminishing its technical competitiveness.

Do the private companies participating in this type of projects receive any tax incentive from the State or the regional governments? 

No. Today our concept of businesses is that they are not heartless organizations.

They form part of the community. And while operating in such depressed areas, that are paradoxically very rich in oil, they are in the obligation of carrying out a series of actions to grow and develop along with the neighboring communities. All this reinforces the importance of the coordinated actions by the government, the community, and the companies, to guarantee success in all this endeavor. It is not a matter of a company settling in a certain area to extract resources and carrying out the social work that it deems correct; the companies shall be oriented.

How much has been invested in the social area and how many people have benefited so far? 

For 2004, all the businesses coordinated by the CVP (35 operational agreements, three associations of exploration-at-risk and shared profits, and four strategic associations) budgeted 8 million US$ in social investment. And now that they are elaborating their programs for 2005, the budget has been raised to 12 million US$. We have projects in Sucre, Monagas, Delta Amacuro, Anzoátegui, Guárico, Trujillo, Falcón and Zulia. Nevertheless, there are states in which we don’t have businesses; but in which we are carrying out actions thanks to the new trusteeships.

Source: Alia2.net