This chapter provides an overview of the oil industry in Venezuela, from the discovery of oil in the 1920s to subsequent developments up to the Chávez presidency. Additionally, by providing the reader with an overview, this chapter will also serve as background information for the first working question, which will discuss Hugo Chávez's main policies. We felt it was necessary to provide the reader with this description of the oil industry, not only because oil has played a central role in Venezuela and shaped many aspects of it, but also because the project focuses on Venezuela's resource curse. We will then examine the history of Venezuela's oil industry before Chávez, which can be divided into four different periods:1. 1912 – 1943: Discovery and birth of the oil industry2. 1943 – 1973: Strengthening of the Venezuelan petro-state3. 1973 – 1993: The oil boom and the “nationalization” of the oil industry4. 1983 – 1998: Denationalization and internalization of the oil industry (Wilpert, 2007). Venezuela's oil riches had been known since pre-Columbian times, where the country's indigenous peoples used oil and asphalt for practical purposes such as medicinal uses, resulting in oil leaking to the surface ( Wilpert, 2007, p. However, it was not until 1912 that the first oil well was drilled in Venezuela, which quickly led to great changes in the social and economic development of the country – such as oil production worth around 300 billion US dollars during the Punto Fijo years (1958-1998) (McCaughan, 2004, p. 15; p. 31). This first step towards the transformation of a petrostate and the beginning of oil production in Venezuela meant that between 1920 and 1935 the ...... middle of paper ... that such refineries could be modernized to process Venezuelan crude and then supply finished petroleum products to the market closest to the refinery (…) so [the idea] was to guarantee a market for Venezuelan heavy crude oil. » (Wilpert, 2007, p. 91). However, this never became a reality because foreign refineries were obtained cheaply because the seller could not make a profit. This meant that once these facilities were acquired by PDVSA, it would try to escape the costs, either by abandoning the costly modernization process altogether or by supplying lighter crude to refineries in other countries. The overall effect of this internationalization process was that the considerable costs of the business abroad were transferred to the domestic branch of the business, leading to a decrease in overall profits and thus also transfers in government (Wilpert, 2007, p.. 91).