Customer Reviews

Creole Petroleum Corporation in Venezuela (American business abroad)

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n the 1950s and 1960s the National Planning Association sponsored a series of studies about American business abroad. The intention was to identify lessons applicable to other businesses as they developed internationally. Consequently the books largely ignored individual management personalities in order to focus on general themes.

This volume by Wayne Chatfield Taylor and John Lindeman, published in 1957 and reissued in 1976, covers the Creole Petroleum Company (i.e. Exxon Mobil) oil operations in Venezuela. These operations were nationalized by the Venezuelan government in 1976.

The book briefly covers the history of oil exploration in Venezuela. It highlights Creole's work in overcoming the technical challenges, for the time, in developing offshore production in Lake Maracaibo. It also notes the 1943 agreement which set a global precedent for the 50/50 split, between private oil companies and host governments, in the pre-OPEC era.

This book is like several in this series inasmuch as it addresses the need for the Company to set up "camps" for its employees. What is unique about this case is that the Company was trying to integrate these into the surrounding communities and, in the long term, eliminate provision of housing, schooling, medical care etc. This was not to reduce expenses, any reduction in direct benefits would be offset by salary increases, but to transition to the governance found in developed countries and to reduce the range of frictions to simple employment matters. Interestingly the main impediment was the fact that Venezuela had no real system of local government, which could provide the services, and was highly centralized.

The book also extensively covers the training and management development activities of Creole; especially those replacing Americans with Venezuelans. Another website, not the book, contained the interesting fact that, upon nationalization, Creole had only two hundred or so Americans in Venezuela compared to ten times that many in the 1950s. So I guess these programs were reasonably effective.

The book also covers the government's economic development activities during this era. The perception in this book, which I have also read elsewhere, was that much of this effort was misguided into "show" projects that resulted in little direct improvement in the living standards of most Venezuelans. Although not discussed in the book I could not help but wonder how much of the average Venezuelan's resentment against the "rich" oil companies should not more appropriately be directed against the government for wasting its share of the resources. However, as with other books in this series, the study does not directly comment on domestic politics.

I noted that Creole was earning approximately 30% return on equity, even after giving the government its 50% and providing the social benefits noted in the book. I doubt that it would have changed history much, the ultimate nationalization of oil companies happened in too many countries, not just Venezuela, but I couldn't help but think that the Company could have done more to promote economic and social development in Venezuela.

Given the subsequent history I can't see the book as having widespread interest to readers. However those specifically interested in the oil industry and Venezuela may find some interesting background.