It will be noted that under both the Sun Oil Company and the Maracaibo Oil Exploitation Company there are various subsidiaries. The reason for these combinations are, that under the law of 1918, no one company or individual may control more than 80,000 hectares of land for exploration or more than 40,000 for exploitation (1 hectare = 2.471 acres).
In the spring of the year 1920 about 140 concessions were granted under the law of 1918, and the prospective fields were greatly extended. Whereas in 1918 they were restricted to the western part of Venezuela, by 1920 they had been extended to several sections of eastern Venezuela. In the western part of the country, at the present time, the whole Maracaibo Basin is covered with concessions, and most of these are being exploited by American capital.
At the present day there are five companies of importance operating in Venezuela. The Caribbean Petroleum company, a subsidiary of the General Asphalt Company, has completed eight wells, all of them producing, the combined capacity of which is about 6,000 barrels per day, and the average depth of the wells 1,200 feet. All these wells are located in Mene Grande, in the state of Zulia, east of the lake of Maracaibo. This company is now drilling two wells, also in the State of Zulia; they have already drilled nine dry holes in the State of Zulia, west of Lake Maracaibo. The Caribbean Petroleum possesses the only refinery in Venezuela, located at San Lorenzo, on Lake Maracaibo, with a capacity of about 1,200 barrels per day, intended for local consumption in Venezuela. A pipe line 10 miles long connects the wells at Mene Grande with the refinery at San Lorenzo. The large refinery at Curaçao, D. W. I., completed two years ago, is also refining for the Caribbean Petroleum Company, the crude oil being transported up Lake Maracaibo, and through the port of Maracaibo, in barges.
The Colón Development Company, a British Corporation, has completed four wells, two of 900 feet, one of 1,200 feet, and one of 1,600 feet and is now drilling a fifth well, all in the District of Colón, state of Zulia, south and southwest of Lake Maracaibo. Their four wells are believed to have a capacity of from 400 to 500 barrels a day. The British Controlled Oil Fields, Ltd., a British Corporation, is drilling a well in the State of Falcón, 30 miles east of the city of Maracaibo, and about 10 miles from the Caribbean seacoast. The Maracaibo Oil Company, an American corporation, organized in the autumn of 1919, has made four locations, all in the State of Zulia, with the principal locations in the Parija district. Camps have been established, and drilling material is arriving at the port of Maracaibo. The Bermúdez Company, a subsidiary of the General Asphalt Company, has been drilling for petroleum near Guanoco, for the past 23 months. It is understood that after drilling 3,600 feet, three-fourths of which was in black shale, the work was abandoned.
The petroleum now being produced in Venezuela is of an inferior quality. The wells at Mene Grande, controlled by the Caribbean Petroleum Company, produce petroleum which has a specific gravity of 960, with a heavy asphalt base, and contains about 15% light material, and 85% fuel.
The geographical situation of Venezuela makes particularly interesting the various petroleum enterprises which should contribute considerably to the economic development and prosperity of the country. Furthermore, the Panama Canal is not far distant, and vessels that cross through it,—and they are daily increasing in number,—will be able to utilize easily the petroleum of the country.
As other industries have suffered, so has the petroleum industry been seriously handicapped in Venezuela by the lack of adequate transportation facilities. There are undoubtedly many rich fields of petroleum in the interior of the country, but it is clear that they are worthless without adequate means of transporting the product to the seaports or centers of consumption. The Caribbean Petroleum Company has had considerable difficulty in transporting its product to Curaçao from San Lorenzo, a difficulty due to the fact that at the narrow neck of Lake Maracaibo, there is a bar with only 12 feet of water above it. It is obviously impossible for ships of any great size to come over the bar and into the lake. All the petroleum that is shipped from the Maracaibo district at the present time is handled by shallow-draft barges, but with sufficient capital, and some good engineering, this difficulty could undoubtedly be overcome, and it would then be possible for tank steamers to come into the lake and receive cargoes of crude petroleum from the various producing points. The principal port in this section is Maracaibo, in the state of Zulia, and all petroleum for export is handled through it.
There are numerous opportunities offered for foreign capital in Venezuela in the exploitation of petroleum. As noted before, the surface has as yet only been scratched, and indications to-day point out that there are many possibilities as yet untouched.[17] Geologists say that there are signs on all sides of the existence of petroleum, but just where the big producing fields of the future will be located is difficult to ascertain at the present time.
[17] Senator Lodge, addressing the Senate of the United States on April 13, 1920, declared that what are probably the largest oil fields in the world are at the point of development in Venezuela and Colombia.
On the 26th of June, 1920, a new law pertaining to petroleum and asphalt was enacted. A full copy of the act, in Spanish, is presented with this report. (On file in School of Foreign Service.)