1. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002

2. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 1998 1998: Hugo Chávez elected with 80% of votes 1999: 1999: New Constitution: V Republic 2002: 2002: Latest polls indicate popular support at less than 30%

3. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 i. Pressure from: Civil society (NGOs) Federation of Labor Unions Federation of Chambers of Commerce and Industry Political parties (in the process of restructuring) Military group -International Mediation: GTT: OAS, UNDP and Carter Center On November 8th under Chairmanship of Mr. Gaviria, OASPresident a negotiation Round Table composed by 12 memebers started discussions to solve the political crisis -Constitution: Allows referendum by August 2003 Political: route to a transition, as a result of:

4. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 Increase of the oil income Countrys ability to deal with its external debt: High level of international reserves Areas of Concern: Increased cost of internal debt: fiscal deficit covered by devaluation Improve tax collections; Improve control of public expenditures

5. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 OFF-SHORE AS MINORITY INVESTORS (LICENSEES). AS INDEPENDENT CONTRACTOR / OPERATOR / CARRIER OF THE GAS PIPELINE. AS INDEPENDENT CONTRACTOR / OPERATOR / SHAREHOLDER OF THE GUIRIA LNG PLANT. AS SERVICES CONTRACTOR. DELTANA PLATAFORM PROJECT: MARISCAL SUCRE PROJECT: AS INDEPENDENT CONTRACTOR / SERVICES PROVIDER.

6. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 INLAND DOMESTIC DEFICIT / NATIONAL CONSUMPTION: PDVSA OPERATIONAL DEFICIT: WEST/EAST GAS PIPELINE. OIL SUBSTANCES AS REPLACEMENT OF INJECTED GAS. GAS INDUSTRIALIZATION / PROCESSING / CHEMICAL AND PETROCHEMICAL. EXPANSION PLANS NEW GAS FIELDS OIL GAS FIELDS (ANACO) UPGRADE DOMESTIC / RESIDENCITAL / COMMERCIAL: REGIONAL DISTRIBUTION NETWORK (DELAYED).

7. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 PLANS NATIONAL PRODUCTION INCREASE: LIGHT CRUDES (EXPLORATION). PRODUCTS DEVELOPMENT FROM UPGRADED CRUDE (ORINOCO BELT) POTENTIAL 5TH. PROJECT. POTENTIAL BUILDING OF 3RD. AND 4TH. ORIMULSION MODULES. CARBON (CARBOZULIA) / PORT AND TRANSPORT INFRAESTRUCTURE UPGRADE. NEW REFINERY. 2.4 Mbd (2002) - 3.4 Mbd 2008)

8. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 - POST TRANSITION Restructuring and reinforcement of the democratic political parties. More political participation of citizen Reinforcement of the democratic political system: better checks and balances

9. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 More stable and convenient Legal Environment - Law to Promote and Protect Private Investments: in addition to Bilateral Investments Treaties Equal Treatment Right to transfer funds Dispute Resolution Juridical Stability Contracts - It is expected the execution of bi-lateral investment treaty during this period - US Investments can obtain investment guarantees from OPIC - POST TRANSITION

10. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 Modern Telecommunications and Energy Laws E- Commerce: Electronic Messages and Signatures Electronic Crime Concessions Law: advantages to investors who finance or commit to obtain financing of projects Commercial Arbitration Double Taxation Treaties with numerous countries New Gaseous Hydrocarbons Law New Organic Hydrocarbons Law More stable and convenient Legal Environment:

11. Fernando Peláez-Pier. Hoet, Peláez, Castillo & Duque Venezuelan Political and Economic November 2002 IF YOU ARE INTERESTED IN A COPY OF THIS PRESENTATION, PLEASE DOWLOADED IT FROM OUR WEB PAGE www.hpcd.com