The country ranks sixth in the world in proven oil reserves. In 1999, Venezuela had 74.1 billion barrels of proven reserves of crude oil, another 270 billion barrels of heavy oil has been found in the belt in and around the Orinoco River, and more has been found in the eastern Venezuela basin. From 1929 to 1970, Venezuela exported more oil than any other country, and, since 1990, has ranked third, behind Saudi Arabia and Iran. In 1989, production and sale of oil accounted for 13 percent of GDP, 51 percent of government revenues, and 81 percent of exports. By 1999, oil accounted for 27.9 percent of GDP, 46 percent of government revenues, and 75 percent of exports. In 1999, the country's national oil company, Petróleos de Venezuela, S.A. (PDVSA), exported 90 percent of its oil and paid 70 percent of its profits to the government. More than 60 percent of oil exports were to the United States.
Although the PDVSA was not formally established until later, it was in 1935 that the government began its policy of "sowing the oil" or using oil wealth to develop the Venezuelan infrastructure. The policy was pursued in earnest in 1958, with the administration of Rómulo Betancourt, Venezuela's first democratically elected civilian president. In 1960, the government established the predecessor of the PDVSA, the Venezuelan Petroleum Corporation, for the purpose of overseeing the oil industry. In 1975, it nationalized the oil industry and, in 1977, the PDVSA was formed, and 14 foreign oil companies were compensated for their assets. This was helped by the fact that the Venezuelan government was flush with capital because the OPEC oil embargo of 1973 had increased oil prices by 400 percent.
From 1975 to 1995, decreases in the price of oil made it clear that Venezuela could not rely completely on itself for the production of its oil. Especially after 1981, the PDVSA began to face financial difficulties. Complete nationalization of the oil industry was proving to be a costly idea. For example, in 1981, decreasing oil prices resulted in decreased government revenues, causing the government to borrow capital and thereby increase the country's foreign debt . In 1982, the Central Bank of Venezuela responded to this crisis by simply seizing US$6 billion of PDVSA's profits to pay off some of the country's foreign debt. In 1995, private companies were once again allowed to explore and mine Venezuela's oil fields. While PDVSA remains a viable entity that has expanded into the oil-refining business, the idea of complete and exclusive nationalization has given way to an arrangement in which the PDVSA coexists with private companies. However, the government has not succeeded in its goal of reducing the country's dependence on the oil industry.