PDVSA 2017 into 2020 Exchange Offer - OC - 16 September 2016 - PDFCOFFEE.COM (2024)

OFFERING CIRCULAR

CONFIDENTIAL

Petróleos de Venezuela, S.A. Offers to Exchange Any and all outstanding U.S. dollar denominated Unsecured Notes due April 2017 (the “April 2017 Notes”) and November 2017 (the “November 2017 Notes” and, together with the April 2017 Notes, the “Existing Notes”),

For

U.S. dollar denominated 8.50% Senior Secured Notes due 2020 (the “New Notes”) unconditionally and irrevocably guaranteed (the “Guaranty”) by PDVSA Petróleo, S.A. (“PDVSA Petróleo” or the “Guarantor”).

Petróleos de Venezuela, S.A. (“PDVSA” or the “Issuer”), a corporation (sociedad anónima) organized under the laws of the Bolivarian Republic of Venezuela (“Venezuela”), is offering to exchange newly issued New Notes for all of its outstanding Existing Notes (the “Exchange Offers”) upon the terms and subject to the conditions set forth in this offering circular. The aggregate principal amount outstanding of the Existing Notes as of the date of this offering circular is U.S.$7,100 million. Title of Existing Notes

CUSIP/ISIN

Principal Outstanding Amount

Minimum Authorized Denominations of Existing Notes

5.250% Senior Notes due 2017 (“April 2017 Notes”)

N.A. (Rule 144A)/ XS0294364103 (Regulation S)

U.S.$3,000 million

U.S.$400 and integral multiples of U.S.$100 in excess thereof

8.50% Senior Notes due 2017 (“November 2017 Notes”)

716558AB7 (Rule 144A); P7807HAK1 (Regulation S)/ US716558AB79 (Rule 144A); USP7807HAK16 (Regulation S)

U.S.$4,100 million

U.S.$100 and integral multiples of U.S.$100 in excess thereof

The New Notes will be secured, subject to certain exceptions and permitted liens, by a first-priority lien on 50.1% of the capital stock of CITGO Holding, Inc. (the “Collateral”). The New Notes will rank effectively senior in right of payment to all of our existing and future unsecured indebtedness, including the Existing Notes, to the extent of the value of the Collateral securing the New Notes. The New Notes will be fully and unconditionally guaranteed on a senior secured basis by the Guarantor. The Guaranty by the Guarantor of the New Notes will rank effectively senior in right of payment to all other existing and future unsecured indebtedness, including the Existing Notes, to the extent of the value of the Collateral securing the New Notes. See “Description of the New Notes” for more information on ranking. As described more fully in this offering circular, the consummation of the Exchange Offers is conditioned upon, among other things, the valid tender, without subsequent withdrawal, of at least 50% aggregate principal amount of the Existing Notes. We may, at our option and in our sole and absolute discretion, waive such condition and other conditions that we may assert or waive. See “Terms of the Exchange Offers— Conditions to the Exchange Offers.” We expect to issue the New Notes on or about the third business day following the Expiration Date (the “Settlement Date”). The New Notes will bear interest from the Settlement Date. We will pay on the Settlement Date all accrued and unpaid interest on the Existing Notes exchanged for New Notes for the period from the most recent interest payment date until, but not including, the Settlement Date. You may exchange your Existing Notes for New Notes in the following amounts: (a) for each U.S.$1,000 principal amount currently outstanding of Existing Notes validly tendered and accepted on or prior to the Early Tender Deadline (as defined below), we will deliver to you U.S.$1,000 of New Notes, which includes an Early Tender Premium (the “Early Tender Premium”) of U.S.$50 of New Notes (“Total Exchange Consideration”), and (ii) for each U.S.$1,000 principal amount currently outstanding of Existing Notes validly tendered and accepted after the Early Tender Deadline but on or prior to the Expiration Date (as defined below), we will deliver to you U.S.$950 of New Notes (“Exchange Consideration”), as provided under “Terms of the Exchange Offers - Consideration.” The Exchange Consideration will not include an Early Tender Premium. There is currently no public market for the New Notes. We intend to apply to list the New Notes on the Official List of the Luxembourg Stock Exchange and to trade them on the Euro MTF market of such exchange, although no assurance can be given as to the approval of said applications. The Euro MTF Market of the Luxembourg Stock Exchange is not a regulated market within the meaning of the provisions of Directive 2004/39/EC on markets in financial instruments. The early tender deadline for the Exchange Offers is 5:00 P.M., New York City Time, on September 29, 2016, unless extended by us (the “Early Tender Deadline”). The Exchange Offers expire at 11:59 P.M., New York City Time, on October 14, 2016, unless extended or terminated earlier by us (the “Expiration Date”). You must tender your Existing Notes in the manner described in this offering circular on or prior to the Expiration Date in order to be eligible to participate in the Exchange Offers. You must tender and not validly withdraw your Existing Notes on or prior to the Early Tender Deadline in order to receive the Total Exchange

Consideration. Existing Notes tendered for exchange may be withdrawn on or before 5:00 P.M., New York City Time, on September 29, 2016, unless extended by us (such date and time, as the same may be extended, the “Withdrawal Deadline”). The New Notes will be issued in minimum denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof. The New Notes will not be issued in definitive form except under certain limited circumstances. The Issuer will not accept any tender that would result in the issuance of less than U.S.$150,000 principal amount of New Notes to a participating holder. The principal amount of New Notes you will receive pursuant to the Exchange Offers will be rounded downwards to the nearest integral multiple of U.S. $1,000. No additional consideration will be paid in lieu of fractional New Notes not received as a result of such rounding down. The determination by PDVSA of any calculation or quotation made with respect to the Exchange Offers will be conclusive and binding on you, absent manifest error. Investing in the New Notes involves risks. You should carefully consider the “Risk Factors” beginning on page 18 of this offering circular before you make a decision to tender your Existing Notes. The New Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States. The New Notes are subject to the same restrictions on transfer as the Existing Notes. For the description of certain restrictions on offers, sales or transfers of the New Notes, see “Transfer Restrictions.” Only holders of Existing Notes are authorized to receive and review this offering circular and to participate in the Exchange Offers. We are relying on Section 3(a)(9) of the Securities Act to exempt the Exchange Offers from the registration requirements of the Securities Act. We have not filed and will not file a registration statement under the Securities Act or any other federal or state securities laws with respect to the New Notes. Section 3(a)(9) provides that the registration requirements of the Securities Act will not apply to “any security exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.” We have no contract, arrangement or understanding relating to, and will not, directly or indirectly, pay any commission or other remuneration to any broker, dealer, salesperson, agent or any other person for soliciting tenders in the Exchange Offers. If you do not validly tender your Existing Notes in the Exchange Offers, or if you tender your Existing Notes but validly withdraw the Exchange Offers at or before the Withdrawal Deadline, or if your Existing Notes are not accepted for exchange, you will continue to be entitled to receive interest on the Existing Notes. All announcements and amendments to the documents will be made available via the information agent website: https://sites.dfkingltd.com/pdvsa. It is expected that delivery of the New Notes will be made in book-entry form through The Depository Trust Company (“DTC”), as depositary, for the accounts of its participants including Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg (“Clearstream”) on or about the Settlement Date (as defined herein). See “Description of the New Notes—Book-Entry; Delivery and Form.”

___________________ September 16, 2016

Table of Contents Page Important Dates .............................................................................................................................................................1 Summary of PDVSA .....................................................................................................................................................3 The Exchange Offers ...................................................................................................................................................10 Summary of the New Notes.........................................................................................................................................14 Risk Factors .................................................................................................................................................................18 Capitalization...............................................................................................................................................................47 Selected Consolidated Financial and Operating Data..................................................................................................48 Management’s Discussion and Analysis of Financial Condition and Results of Operations ......................................54 Business.......................................................................................................................................................................84 Management and Employees .....................................................................................................................................123 Principal Shareholders ...............................................................................................................................................129 Related Party Transactions ........................................................................................................................................130 Tax Considerations ....................................................................................................................................................133 Description of the New Notes....................................................................................................................................140 Notice to Prospective Investors .................................................................................................................................170 Transfer Restrictions..................................................................................................................................................173 Legal Matters.............................................................................................................................................................176 Independent Auditors ................................................................................................................................................176 Available Information................................................................................................................................................176 Technical and Regulatory Terms...............................................................................................................................177 Index of Defined Terms.............................................................................................................................................181 Index to the audited Consolidated Financial Statements ........................................................................................... F-1 CITGO Holding, Inc. Report for the Fiscal Year Ended December 31, 2015 .......................................................... A-1

This offering circular is confidential. This offering circular has been prepared by us solely for use in connection with the consideration of the Exchange Offers. This offering circular is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire securities. You are authorized to use this offering circular solely for the purpose of considering the Exchange Offers. Distribution of this offering circular to any other person other than the offeree and any person retained to advise such offeree with respect to the Exchange Offers is unauthorized, and any disclosure of any of its contents, without our prior written consent, is prohibited. Each offeree, by accepting delivery of this offering circular, agrees to the foregoing and to make no photocopies of this offering circular or any documents referred to in this offering circular. Offerees should assume that the information contained in this offering circular is accurate only as of any date on the front of this offering circular. Our business, financial condition, results of operations and prospects may have changed since that date. In making an investment decision regarding acceptance of the Exchange Offers, you must rely on your own examination of the Issuer and the Guarantor and the terms of the Exchange Offers and the New Notes to be delivered in the Exchange Offers, including the merits and risks involved. You should not construe anything in this offering circular as legal, business or tax advice. You should consult your own advisors, as needed, to make your investment decision and to determine whether you are legally permitted to accept the Exchange Offers under applicable legal investment or similar laws or regulations. We have furnished the information in this offering circular. You acknowledge and agree that, none of the Trustee, the Information Agent and the Exchange Agent make any representation or warranty, express or implied, as to the accuracy or completeness of such information, and nothing contained in this offering circular is, or shall be relied upon as, a promise or representation by the Trustee, the Information Agent or the Exchange Agent. This offering circular contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such

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reference. Copies of documents referred to herein will be made available to prospective investors upon request to us. The distribution of this offering circular and the offering and sale of the New Notes in certain jurisdictions may be restricted by law. We require persons into whose possession this offering circular comes to inform themselves about and to observe any such restrictions. This offering circular does not constitute an offer of, or an invitation to exchange or purchase, any of the New Notes in any jurisdiction in which such offer or sale would be unlawful. We intend to apply to list the New Notes on the Official List of the Luxembourg Stock Exchange and to trade them on the Euro MTF market of such exchange, although no assurance can be given as to the approval of said applications, if any. If, as a result of applicable rules and regulations relating to trading on the Euro MTF market, we are required to publish financial information either more regularly than we otherwise would be required to or according to accounting principles which are materially different from the accounting principles which we would otherwise use to prepare our published financial information, we may delist the New Notes from the Euro MTF market or seek an alternate admission to listing, trading and/or quotation for the New Notes on a different section of the Luxembourg Stock Exchange or by such other listing authority, stock exchange and/or quotation system inside or outside the European Union as we may decide. We have prepared this offering circular solely for use in connection with the Exchange Offers and take responsibility for its contents. No other person is responsible for its contents. We and other sources we believe to be reliable have furnished the information contained in this offering circular. Nothing contained in this offering circular is or shall be relied upon as a promise or representation, whether as to the past or the future. The opinions and intentions expressed in this offering circular with regard to us are honestly held, have been reached after considering all known relevant circumstances and are based on reasonable assumptions, and all reasonable inquiries have been made by us to ascertain such facts and to verify the accuracy of all such information and statements. We accept responsibility accordingly. You must comply with all laws and regulations in force in any jurisdiction in connection with the possession or distribution of this offering circular and the exchange of the Existing Notes for the New Notes or the sale of the New Notes, and you must obtain any required consent, approval or permission for the exchange of the Existing Notes for the New Notes or the sale of the New Notes under the laws and regulations applicable to you in force in any jurisdiction to which you are subject or in which you make purchases, offers or sales, and we have no responsibility for those transactions. See “Transfer Restrictions.” You acknowledge that (1) you have been afforded an opportunity to request from us, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this offering circular, (2) you have not relied on us or any person affiliated with us in connection with your investigation of the accuracy of the information or your investment decision, and (3) no person has been authorized to give any information or to make any representation concerning us or the New Notes other than as contained in this offering circular. If given or made, that other information or representation should not be relied upon as having been authorized by us. In making an investment decision regarding the acceptance of the Exchange Offers, you must rely on your own examination of our business and the terms of the Exchange Offers and the New Notes to be delivered in the Exchange Offers, including the merits and risks involved. The New Notes have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not confirmed the accuracy or determined the adequacy of this offering circular. Any representation to the contrary is a criminal offense. The New Notes and the Guaranty have not been, and will not be, registered under the Securities Act or the securities of any state or other jurisdiction of the United States and may not be offered or sold in the United States except in transactions exempt from or not subject to the registration requirements of the Securities Act and any applicable state securities laws. The New Notes will be available initially only in book-entry form. We expect that the New Notes will be represented by beneficial interests in a permanent global note in fully registered form without interest coupons. The global notes will be deposited with The Depository Trust Company. New Notes shall be ii

issued in minimum denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof. See “Description of the New Notes” for more information. The purchase and sale of the New Notes in the secondary market in Venezuela in transactions payable in Bolívares by individuals and legal entities domiciled in Venezuela can occur only through universal banks (under Venezuelan law, a universal bank is a bank that can carry out any financial operation permitted by Venezuelan laws), authorized stock brokers and the Bolsa de Valores Pública Bicentenaria (Bicentennial Public Stock Exchange) and shall be made at the floating exchange market rate (DICOM) pursuant to the Foreign Exchange Agreement No. 35 dated March 9, 2016 published in the Official Gazette No. 40,865 and the Foreign Exchange Agreement No. 33 dated February 10, 2015 published in the Extraordinary Official Gazette No. 6,171. Jurisdictional Restrictions The distribution of this offering circular and related materials is restricted by law in certain jurisdictions. Persons into whose possession this offering circular and related materials come are required by PDVSA to inform themselves of and to observe any of these restrictions. This offering circular does not constitute, and may not be used in connection with, an offer or solicitation by anyone in any jurisdiction in which an offer or solicitation is not authorized or in which the person making an offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make an offer or solicitation. PDVSA does not accept any responsibility for any violation by any person of the restrictions applicable in any jurisdiction. European Economic Area This offering circular has been prepared on the basis that any offer of securities in any Member State of the European Economic Area (“EEA”), which has implemented the Prospectus Directive (each, a “Relevant Member State”) will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of securities. Accordingly, any person making or intending to make any offer in that Relevant Member State of securities which are the subject of the offering contemplated in this offering circular may only do so in circumstances in which no obligation arises for the Issuer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. The Issuer has not authorized, nor does it authorize, the making of any offer of securities in circumstances in which an obligation arises for the Issuer to publish or supplement a prospectus for such offer. The expression “Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State. United Kingdom This offering circular is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This offering circular is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering circular relates is available only to relevant persons and will be engaged in only with relevant persons. France The Exchange Offers are not being made, directly or indirectly, to the public in France.

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Neither this offering circular nor any other document or material relating to the Exchange Offers has been or shall be distributed to the public in France. Such Exchange Offers and distributions have been and shall only been made in France to (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d’investissement de gestion de portefeuille pour le compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés), in each case acting on their own account and all as defined in, and in accordance with, Articles L. 341-2, L. 411-2, D. 411-1 to D. 411-3, D. 744-1, D. 754-1 and D. 764-1 of the French Code monétaire et financier. Neither this offering circular nor any other document or material relating to the Exchange Offers has been or will be submitted for clearance or approved by the Autorité des Marchés Financiers. Netherlands In the Netherlands, the New Notes may only be offered to qualified investors (gekwalificeerde beleggers) within the meaning of section 1:1 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). Belgium No action has been taken or will be taken in Belgium to permit a public offer of the New Notes in accordance with the Belgian Act of 16 June 2006 on the public offer of securities and admission of securities to trading on a regulated market (i.e. the Belgian Prospectus Act) or an takeover bid in accordance with the Belgian Act of 1 April 2007 on takeover bids (i.e. the Belgian Takeover Act) and no New Notes may be offered or sold to persons in Belgium which are not qualified investors within the meaning of Article 10 of the Belgian Prospectus Act or pursuant to another exemption available pursuant to Article 3 of the Belgian Prospectus Act or Article 6 (3) of the Belgian Takeover Act. Switzerland The New Notes may not be publicly offered, sold or advertised, directly or indirectly, in or from Switzerland. Neither this offering circular nor any other offering or marketing material relating to the New Notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Federal Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange Ltd., and neither this offering circular nor any other offering or marketing material relating to the New Notes may be publicly distributed or otherwise made publicly available in Switzerland. Luxembourg The Exchange Offers do not constitute a public offer or an offer requiring the drafting of a prospectus within the meaning of the law dated July 10, 2005 on prospectuses for securities (the “Luxembourg Prospectus Act”) and the New Notes may not be offered or sold within the territory of the Grand Duchy of Luxembourg unless: (a) a prospectus has been approved by the Commission de Surveillance du Secteur Financier in accordance with the Luxembourg Prospectus Act implementing Directive 2003/71/EC of the European Parliament and of the Council of November 4, 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (the “Prospectus Directive”) if Luxembourg is the home member state (as defined in the Prospectus Law); or (b) if Luxembourg is not the home member state, the Commission de Surveillance du Secteur Financier has been notified by the competent authority in the relevant home member state that the prospectus has been duly approved in accordance with the Prospectus Directive; or (c) the offer benefits from an exemption to or constitutes a transaction not subject to the requirement to publish a prospectus. Liechtenstein The Exchange Offers are made solely to qualified investors as defined in Art 3 para 1 lit g) of the Liechtenstein Securities and Prospectus Act (WPPG), limited to: (a) legal entities, which are authorized or regulated to operate in the financial market supervised by the Liechtenstein Financial Market Authority including banks, asset management companies, insurance companies, pension funds, investment undertakings and their management corporations; (b) the Liechtenstein Government, international and supranational organizations similar iv

to international and supranational institutions such as the International Monetary Fund, the European Central Bank, the European Investment Bank; (c) legal entities that do not meet more than one of the following conditions: (i) being an entity having less than 250 employees during the last financial year; (ii) being an entity having a total balance sheet not exceeding €43 million; (iii) being an entity having an annual net turn over not exceeding €50 million; and (d) Small and Medium Sized Enterprises as defined in Art 3 para 1 lit. h) WPPG, registered with and entered in as well as natural persons registered with and entered in the “list of qualified investors” with the Liechtenstein Financial Market Authority. Italy Neither the Exchange Offers nor any of the information contained in this offering circular constitutes an offer or an invitation to offer, exchange or sell or a promotional message of any form to any person (natural or legal) resident in the Republic of Italy to purchase, exchange or acquire the New Notes, within the meaning of articles 1, par.1, lett. (v), and 101-bis et seq., of Legislative Decree dated February 24, 1998, n.58. The Exchange Offers are not being made and will not be made, directly or indirectly, in or into the Republic of Italy, whether by mail or by any means or other instrument (including, without limitation, telephonically or electronically) or any facility of a national securities exchange publicly or privately available in Italy. Accordingly, copies of this offering circular and any related documents should not be mailed or otherwise forwarded, distributed or sent in, into or from the Republic of Italy and persons receiving such documents must not forward, distribute or send them in or into or from the Republic of Italy. Therefore, holders of Existing Notes are hereby notified that, to the extent such holders are Italian residents or are located in the Republic of Italy, the Exchange Offers are not available to them. Any person who may have a legal or contractual obligation to forward this offering circular and any related offer documents in the Republic of Italy should read this offering circular before doing so. No prospectus will be lodged in, or registered by, the Commissione Nazionale per le Società e la Borsa (CONSOB) in respect of the Exchange Offers. Accordingly, neither this offering circular nor any other material relating to the Exchange Offers may be distributed or made available in the Republic of Italy. Japan The New Notes have not been and will not be registered under the Financial Instruments and Ex-change Law of Japan (as amended, the “FIEL”). The New Notes may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan or Japanese corporation, except in accordance with the provisions of, or pursuant to an exemption available under, the applicable laws and regulations of Japan including the FIEL. For the purpose hereof, “resident of Japan” means an individual whose address is in Japan, and “Japanese corporation” means a legal entity organized under the laws of Japan. Enforcement of Judgments Under Venezuelan law, no company or its property, including PDVSA, has any immunity from the jurisdiction of any court or from set-off of any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution or otherwise), except that pursuant to Article 113 of the Law of the Office of the Attorney General of Venezuela (Ley Orgánica de la Procuraduría General de la República) an attachment prior to judgment, attachment in aid of execution, execution or otherwise, on our properties located in Venezuela that are related to the rendering of a public service, such as oil and gas distribution and transportation, must be stayed for a period of 45 days after notice is given to the Venezuelan Attorney General pursuant to which the Venezuelan government may take any action in order to avoid interruption of the services, including taking possession of such assets if such attachment endangers the continuity, quality or security of the services provided. If the Venezuelan Attorney General does not notify the court about the provisional measures taken by the relevant entity to avoid discontinuance of the service within such 45-days’ notice, the court may continue with such enforcement or foreclosure. A foreign judgment arising in connection with the New Notes, the Guaranty or the Indenture rendered by any court referred to above would be enforceable against us and the Guarantor in the courts of Venezuela subject to obtaining a confirmatory judgment (exequatur) from the Supreme Court of Justice (Tribunal Supremo de Justicia) in Venezuela, in accordance with the provisions and conditions of the Venezuelan Private International Law (Ley de Derecho Internacional Privado), without a review of the merits of the judgment, provided that: (i) the foreign v

judgment concerns matters of private civil or commercial law only; (ii) the foreign judgment constitutes res judicata under the laws of the jurisdiction where it was rendered; (iii) the foreign judgment does not relate to real property interests over real property located in Venezuela and the exclusive jurisdiction of Venezuelan courts over the matter has not been violated; (iv) the foreign courts have jurisdiction over the matter pursuant to the general principles of jurisdiction set forth in Chapter IX of the International Private Law (Ley de Derecho Internacional Privado) in Venezuela; (v) we and the Guarantor (as the case may be) are duly served, with sufficient time to appear in the proceedings and are granted due process; (vi) the foreign judgment is not incompatible with a prior judgment that constitutes res judicata and no proceeding initiated prior to the rendering of the foreign judgment is pending before Venezuelan courts on the same subject matter among the same parties to litigation; and (vii) the foreign judgment does not contravene the essential principles of Venezuelan public policy. Presentation of Financial Information As used in this offering circular, unless the context requires otherwise, the terms “we,” “us” and “our” refer to Petróleos de Venezuela, S.A. on a consolidated basis with our subsidiaries. We prepare consolidated financial statements in U.S. dollars and in conformity with International Financial Reporting Standards, or IFRS. In this offering circular, references to “U.S. dollars,” “dollar,” “U.S.$” and “$” are to the legal currency of the United States of America and references to “Bolívar,” “Bolívares” and “Bs.” are to the Venezuelan Bolívar, the legal currency of Venezuela. For the convenience of the reader, certain amounts originally reflected in Bolívares have been translated into U.S. dollars at the exchange rate in effect as of the date of the applicable transaction. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Impact of Inflation and Devaluation” for information regarding the U.S. dollar to Bolívar exchange rate. Certain figures included in this offering circular have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly, and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. Our fiscal year ends on December 31. Our financial information included in this offering circular is for the year ended December 31, 2015. Interim financial information for the six months ended June 30, 2016 is not yet available. Discontinued Operations On December 22, 2015, the shareholder of PDVSA, the Bolivarian Republic of Venezuela, approved a plan to transfer ownership of a portion of PDVSA’s non-oil subsidiaries directly to it at their book value which was U.S.$2,314 million as of December 31, 2015. According to the shareholders resolution, transfer is required to occur within a period of no more than one year following the meeting. The ownership transfer will transfer the subsidiaries outside of the PDVSA corporate structure, and is intended to enable PDVSA to focus on petroleum-related activities. The following affiliates constitute the segregated subsidiaries: PDVSA América, S.A.; PDVSA Industrial, S.A.; PDVSA Naval, S.A.; PDVSA Salud, S.A.; PDVSA Agrícola, S.A.; PDVSA Gas Comunal, S.A.; PDVSA Desarrollos Urbanos, S.A. and Empresa Nacional de Transporte, S.A. See note 6 to our audited financial statements and “Selected Consolidated Financial and Operating Data” for more information on Discontinued Operations. As a result of the foregoing, PDVSA restated its 2013 and 2014 financial statements and has presented the financial results of the segregated subsidiaries as discontinued operations (“Discontinued Operations”) for 2015, 2014 and 2013. See note 6 to our audited financial statements and “Selected Consolidated Financial and Operating Data” for more information on Discontinued Operations. Since PDVSA’s audited financial statements include only two comparative years, the 2014 and 2013 audited consolidated financial statements have been restated to reflect results from Discontinued Operations. Results for 2012 and 2011 have not been restated to reflect results from Discontinued Operations as required by IFRS, and remain as originally presented in the respective year.

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For the years 2015, 2014 and 2013, the results from the discontinued operations are presented as line item “Discontinued Operations” and separately as a “Summary Consolidated Statement of Comprehensive Income Information from Discontinued Operations.” Forward-Looking Statements This offering circular contains forward-looking statements as described under the U.S. Private Securities Litigation Reform Act of 1995, as amended, specifically, certain statements relating to the expected results of exploration, drilling and production activities, refining processes, gas, and related capital expenditures and investments, the expected results of joint venture projects, the anticipated demand for new or improved products, environmental compliance and remediation and related capital expenditures, sales, taxes, dividends and contributions to Venezuela. Words such as “anticipate,” “estimate,” “project,” “expect,” “intend” and similar expressions are used to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties related to Venezuelan and international oil and gas markets, inflation, the availability of continued access to capital markets and financing on favorable terms, regulatory compliance requirements, changes in import controls or import duties, levies or taxes and changes in prices or demand for our products as a result of actions of our competitors or economic factors. Those statements are also subject to the risks of costs and anticipated performance capabilities of technology and performance by third parties of their contractual obligations. Exploration activities are subject to risks arising from the inherent difficulty of predicting the presence, yield and quality of hydrocarbon deposits, as well as unknown or unforeseen difficulties in extracting, transporting or processing any hydrocarbons found or doing the foregoing on an economic basis. Should one or more of these risks or uncertainties materialize, actual results may vary materially from those estimated, anticipated or projected. Specifically, but without limitation, capital costs could increase, projects could be delayed, and anticipated improvements in capacity or performance may not be fully realized. Although we believe that the expectations reflected by such forward-looking statements are reasonable based on information currently available, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this offering circular. We undertake no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this offering circular. Such forward-looking statements are principally contained in the “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Selected Consolidated Financial and Operating Data” sections of this offering circular and include our expectations with respect to our business following the completion of the offering.

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IMPORTANT DATES You should note the following dates and times relating to the Exchange Offers. We reserve the right to extend or modify any of these dates. All announcements and amendments to the documents will be made available via the information agent website: https://sites.dfkingltd.com/pdvsa. Date Calendar Date Launch Date............................................ September 16, 2016

Event Commencement of Exchange Offers

Early Tender Deadline............................ 5:00 P.M. New York City Time, on September 29, 2016, unless extended or terminated earlier by us at our sole discretion.

The last time for you to validly tender Existing Notes to qualify for the Total Exchange Consideration, which includes the Early Tender Premium.

Withdrawal Deadline .............................. 5:00 P.M., New York City Time, on September 29, 2016, unless extended or terminated earlier by us at our sole discretion.

The last time for you to validly withdraw tenders of Existing Notes. If your tenders are validly withdrawn, you will no longer receive the applicable consideration on the Settlement Date (unless you validly retender such Existing Notes on or before the Expiration Date).

Expiration Date....................................... 11:59 P.M., New York City Time, on October 14, 2016, unless extended or terminated earlier by us at our sole discretion.

The last time for you to validly tender Existing Notes to qualify for the payment of the Exchange Consideration payable in respect of Existing Notes tendered after the Early Tender Deadline.

Announcement Date ............................... As soon as practicable after the Expiration Date, (expected to be on or about the first Business Day after the Expiration Date).

The Issuer announces whether it will accept any Existing Notes in exchange of New Notes. The Issuer will also announce the aggregate principal amount of Existing Notes accepted for purchase (which may be zero) and the aggregate principal amount of Existing Notes remaining outstanding following the completion of the Exchange Offers, which will all be subject to the satisfaction or waiver of the conditions set forth herein on or before the Settlement Date.

Settlement Date ...................................... As soon as practicable (upon satisfaction (or waiver by us at our sole discretion) of the conditions set forth herein) after the Expiration Date, but not, in any

1

The date on which the New Notes will be issued to you in exchange for Existing Notes accepted in the Exchange Offers.

event, later than three business days after the Expiration Date (including any applicable Expiration Date following an extension of the Exchange Offers). Holders of the Existing Notes who would like to tender Existing Notes in exchange for New Notes should be sure to allow enough time for the necessary documents to be timely received by the Exchange Agent. We are not required to notify you of defects or irregularities in tenders of the Existing Notes for exchange.

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SUMMARY OF PDVSA This summary highlights information contained elsewhere in this offering circular. It does not contain all the information that you may consider important in making your investment decision. Therefore, you should read the entire offering circular carefully, including in particular the “Risk Factors” section and the annual audited consolidated financial statements and the related notes thereto appearing elsewhere in this offering circular. Overview We are a corporation (sociedad anónima) organized under the laws of Venezuela, formed in 1975 by the Venezuelan government to coordinate, monitor and control all operations relating to hydrocarbons. We are wholly owned by Venezuela and are the holding company for a group of oil and gas companies. We are the fifth largest vertically integrated oil company in the world with daily crude oil production of 2,746 thousand barrels per day as of December 31, 2015, or mbpd, as measured by a combination of operational data, including volume of reserves, production, refining and sales, based on information published in Petroleum Intelligence Weekly on November 16, 2015, a trade publication. We carry out our exploration, development and production (“upstream”) operations in Venezuela and our sales, marketing, refining, transportation, infrastructure, storage and shipping (“downstream”) operations in Venezuela, the Caribbean, North America, South America, Europe and Asia. Through PDV Holding, a wholly-owned subsidiary, we indirectly own 100% of CITGO Holding and CITGO Petroleum Corporation (“CITGO”), the latter a refiner and marketer of transportation fuels, petrochemicals and other industrial oil-based products in the United States. We plan to invest in upstream and downstream projects in Venezuela and abroad in order to satisfy the current and expected global increase in energy demands. All hydrocarbon reserves in Venezuela are owned by Venezuela and not by us. Under the Ley Orgánica de Hidrocarburos de 2001 (Organic Hydrocarbons Law), as amended, every activity relating to the exploration and exploitation of hydrocarbons and their derivatives is reserved to the government of Venezuela, which may undertake such activities directly or through entities controlled by Venezuela through an equity participation of more than 50%. At the current production rate of crude oil and gas, Venezuela has proved hydrocarbon reserves of crude oil for the next 301 years for oil and 73 years for gas. We mainly sell crude oil to the United States, Canada, the Caribbean, Africa, Europe, South America and Asia. In addition, we refine crude oil, with a refining capacity of approximately 2,730 mbpd and other feedstock in Venezuela and abroad into a number of products, including gasoline, diesel, fuel oil and jet fuel, petrochemicals and industrial products, lubricants and waxes, and asphalt. We are also engaged in the exploration and production of gas from offshore sources with a production of 913 barrel-of-oil equivalent, or boe, per day as of December 31, 2015. Our Plan Estratégico Socialista (Strategic Socialist Plan) (the “Business Plan”) outlines the development of production and refining projects totaling U.S.$132 billion in Venezuela, the Caribbean, Latin America and Asia during its initial stage between 2016 and 2025. Such expenditures are subject to the availability of cash from our operations, obtaining financing on reasonable terms and the favorable pricing of crude oil and gas. During the threeyear period ended December 31, 2015, we invested U.S.$66,687 million in development projects in such regions through cash on-hand and issuance of debt. During the year ended December 31, 2015, we invested U.S.$18,106 million in such projects. Our registered office is located at Avenida Libertador, La Campiña, Apartado 169, Caracas 1050-A, Venezuela, and our telephone number is 011-58-212-708-4111. Our website is: www.pdvsa.com. Information contained on our website is not part of this offering circular. Business Strategy Our Business Plan takes into account the impact of the global economic conditions on the demand for oil and the expectations for global economic growth, as well as the projected supply of oil worldwide, the capabilities and challenges related to oil and gas production in Venezuela, and the consolidation of PDVSA’s non-oil businesses. Our Business Plan is based on the following key initiatives approved by the government of Venezuela:

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Exploration of Condensate and Light and Medium Crude Oil. We intend to focus primarily on areas that have been already explored and that are currently producing crude oil. All other exploration areas, both onshore and offshore, are open to third-party participation in partnership with us, under the framework of the Organic Hydrocarbons Law and the Venezuelan Constitution.

Development of the Hugo Chávez Orinoco Oil Belt Magna Reserves. The Hugo Chávez Orinoco Oil Belt (“Orinoco Oil Belt”) area (55,314 km2) has been divided into 36 blocks for reserves quantification and certification of original oil on site purposes. There are approximately 1,469,011 million barrels of Original Oil in Place (“OOIP”) in the Orinoco Oil Belt. Of such amount, approximately 287,096 million barrels have been certified as recoverable reserves, based on a total recovery factor of 20%. See “Risk Factors – Venezuelan proved crude oil and gas reserve estimates involve some degree of uncertainty and may prove to be incorrect over time, which could adversely affect our ability to generate income.” We intend to participate actively in the development of these reserves.

Production Growth in Mature Areas. We are investing in mature areas with a view to achieve a crude oil production capacity in these areas of 1,221 mbpd by 2025. The projected production in mature areas for the period leading up to 2025 includes the following: 767 mbpd from areas where we are the sole operator and 454 mbpd from joint ventures producing light, medium and heavy oil.

Expansion of Orinoco Oil Belt Production. We intend to obtain 1,949 mbpd from the expansion of our existing and future operations in the Orinoco Oil Belt. This growth represents an increase of 629 mbpd from 1,320 mbpd in 2015 to 1,949 mbpd in 2025 (including 112 mbpd in mature areas of the Orinoco Oil Belt), which we plan to implement by developing our extra-heavy crude oil reserves, including a new upgrading facility and pipelines. The expected investment for the years 2016 through 2025 is U.S.$71,567 million. The expected total oil production capacity for 2025, including existing production and the expansion of the Orinoco Oil Belt, offshore crudes, NGL and the mature areas, is 3,180 mbpd. The growth of oil production capacity is expected to occur through joint ventures in which we typically have a 60% stake and international oil companies have the remaining 40% stake.

Development of Major Projects in Refineries. We intend to expand our refinery capacity from approximately 2.5 mmbpd in 2015 (1.3/1.2 mmbpd Venezuela/overseas capacity) to 2.7 mmbpd by 2025 (1.3/1.4 mmbpd Venezuela/overseas capacity). We expect that the implementation of this initiative will allow us to increase our production of refined petroleum products and upgrade our product slate towards higher-margin products, as well as to improve the efficiency of our existing refining capacity. The focus of our refining capacity expansion will be the incorporation of heavier crude oil from the Orinoco Oil Belt expansion into the national refinery system. We currently have in process a major upgrade project to increase the refining capacity of the Puerto La Cruz Refinery. Certain major projects which were part of prior business plans, such as Paraguaná and El Palito, have been postponed due to the decline in oil revenues. In addition, we intend to expand our refining capacity and develop a new refinery in Asia.

Development of the Gas Sector. We have plans to continue developing our onshore and offshore gas reserves with third-party participation under the framework of the Venezuelan Organic Law of Gaseous Hydrocarbons. We intend to maintain our natural gas production from 7,756 mmcfd in 2015 to 7,699 mmcfd by 2025 (equivalent to 1.33 mbpd). In particular, we intend to focus on the development of the Delta Caribe, an initiative consisting of the Northeast Delta Caribbean Project and the Rafael Urdaneta Project in western offshore Venezuela. These projects involve the development of gas reserves located north of Paria (the Mariscal Sucre Project) and Gulf of Venezuela (Cardón IV/Rafael Urdaneta Project). With respect to northeast developments, we intend to link all blocks by a gas pipeline network to the future Güiria Hub, where an industrial complex, Gran Mariscal de Ayacucho, or CIGMA, is expected to be developed. For Gulf of Venezuela natural gas developments, we plan to connect the gas production blocks in the Península de Paraguaná with the domestic gas transportation system.

Development of Infrastructure. We plan to implement an infrastructure program focused on multiple projects with the aim of securing the development of crude oil and gas reserves, particularly in the Orinoco Oil Belt. This program includes the building of about 8.0 million barrels of oil storage capacity, one liquid 4

terminal in Punta Cuchillo (Orinoco River), the expansion of the existing liquid terminal in Jose, approximately 640 km in oil pipelines, the expansion of existing gas pipelines, and 1,924 km in new gas pipelines. 

Marketing of Crude and Products. We intend to continue supplying the local market and exporting crude oil, refined products and natural gas, including refineries and wholesalers in order to improve our margins, and maintaining our markets in Asia, Europe and North America related to the transport logistics. We expect to renew and expand our tanker fleet and increase our maritime transporting capacity from its current controlled fleet of 2,642 tdwt to 9,122 twdt by 2025, as well as increase the number of vessels we own from 26 vessels to 75. In addition, we are expanding and diversifying our marketing efforts in Latin America, the Caribbean and Asia, including China, India and Russia, with the goal of reaching total crude oil exports of 2.6 mbpd by 2025.

Auto Gas Project. Since 2006, we have been developing a project aimed at reducing the domestic gasoline demand by creating natural gas dispatch facilities for vehicles and converting vehicles to dual fuel engines on a national scale. The project’s goals include the construction of 473 new compressed natural gas (“CNG”) stations, as well as the construction and outsourcing of more than 200 vehicle conversion centers and the reactivation of 141 existing CNG stations. As of December 31, 2015, we had 342 CNG stations and 39 vehicle conversion centers. Our total estimated investment in this project for the period beginning 2016 through 2025 is expected to be U.S.$2,189 million.

Production Strategy with Naphtha Stripper for the Orinoco Oil Belt. We have implemented a production strategy in the Orinoco Oil Belt in order to start production before upgraders are built and operational. This strategy consists of the construction of one naphtha stripper that will allow transportation of extra-heavy crude oil diluted with naphtha from the production fields to the port terminals and/or storage tanks where the stripper is to be located. The stripper will remove naphtha from the blend of extra-heavy crude oil with naphtha to send it back to the production field for re-use as a transport diluting agent and to allow the extraheavy crude oil to be blended with other light crudes in order to obtain a commercially viable crude product. The naphtha stripper will have a total capacity of 260 mbpd and will require an investment of U.S.$725 million. The basic engineering for the naphtha stripper is being completed and its construction is expected to be finalized by 2022.

Exploration Projects. Our prior exploration strategy, known as Integral Exploration Projects (PIEX), included eight exploration projects covering the entire national territorial area with the aim of adding an estimated 8,045 million barrels of crude oil and 40.0 trillion cubic feet of gas. Currently, we are focused on an exploration strategy focused on: (i) concentrating the exploration efforts in new and traditional areas that lead to the incorporation of new light and medium crude oil and non-associated gas; (ii) executing an exploration plan for the incorporation of reserves associated to the Cretaceous in the Orinoco Oil Belt and the Lake Maracaibo; (iii) increasing the proved reserves of light and medium crude oil and non-associated gas from the conversion of the probable reserves with the execution of re-exploration and outline projects; (iv) accelerating the integrated characterization of fields with the purpose of establishing the exploitation plans and strategies that enhance the volumetric growth in Venezuela; and (v) executing a Specific Exploration Plan in border areas in Venezuela to strengthen Venezuela. The Exploration Plan includes the acquisition of 7,258 km2 of seismic 2D and 4,065 km2 of seismic 3D in the period 2016 – 2025, 131 exploratory wells, and includes the addition of 1,047 mbpd of oil and 2.3 bcf of new natural gas reserves. The total estimated investment in these projects through from 2016 through 2025 is U.S.$2,386 million. As of December 31, 2015, total disbursements in the projects since 2011 have amounted to U.S.$1,454 million.

Social Development Pursuant to the Venezuelan Constitution, the Organic Hydrocarbons Law and social policy, we are required to foster Venezuela’s socio-economic development and the welfare of its citizens. To that effect, we make and are expected to continue to make significant financial contributions to social programs, including transfers to FONDEN (Fondo de Desarrollo Nacional) and other programs, which are included in our annual budget together with other

5

expenses aimed to fund specific social projects, as determined by our Board of Directors, certain of which are recorded as part of our capital expenditures in accordance with applicable accounting rules. We contributed a total of U.S.$7,829 million in 2013, a total of U.S.$2,015 million in 2014, and a total of U.S.$8,215 million in 2015 to social development, which are reflected as social development expenses in our consolidated statements of income included elsewhere in this offering circular. These contributions are in addition to taxes and dividends we pay annually to Venezuela, as well as the social projects we have funded, which are recorded as part of our capital expenditures because they relate to one of our oil and gas production projects. Recent Developments Exchange Agreement 35 On March 9, 2016, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 35 (Convenio Cambiario No. 35), effective as of March 10, 2016, published in Official Gazette No. 40,865 dated March 9, 2016, which established two exchange rates: (i) a protected exchange rate (known as “DIPRO”) fixed at Bs. 9.975 to buy and Bs. 10.00 to sell for products related to the food and pharmaceuticals sectors as well as other sectors specified in the Foreign Exchange Agreement and; (ii) the complementary floating exchange market rate (known as “DICOM”), which varies in accordance with market needs, for the remaining sectors. The exchange transactions derived from the export and/or sale of hydrocarbons by PDVSA and its affiliates and joint ventures, as well as those derived from financing operations, financial instruments, capital contributions, asset sales, dividends, collection of debts, and provision of services can be made using any of the exchange rates described above, or any other rate; provided, that if any rate other than the exchange rates described above is to be used, such rate shall be reduced in one-quarter of a percent (0.25%) and must be authorized by the Vice-presidency of the Economic Sector, the Ministry for Bank and Finance and the Central Bank. The Foreign Exchange Agreement No. 35 provides that the mechanisms for the exchange transactions provided in the partially abrogated Foreign Exchange Agreement No. 33 of February 10, 2015, published in the Extraordinary Official Gazette No. 6,171 dated February 10, 2015, shall continue to remain in force until such mechanisms are replaced pursuant to a subsequent Foreign Exchange Agreement. Therefore, the acquisition of foreign currency at the DICOM exchange rate shall continue to be executed through the SIMADI system, which consists of auctions that are held on a daily basis by the Central Bank and are open to the general public in Venezuela for the exchange of currency between U.S. dollars and Bolívares. Increase of Domestic Gasoline Prices On February 18, 2016, the Ministry of Petroleum issued Resolution No. 015, effective as of February 18, 2016, which established the increase of fuel prices to: (i) Bs. 6 per liter for the 95 octanes gasoline and; (ii) Bs. 1 per liter for the 91 octanes gasoline. This modification represented a price increase of more than 6,000% with respect to the 95 octanes gasoline and of 1,282% with respect to the 91 octanes gasoline from the prices established by Resolution No. 301 of August 15, 2005 and published in the Official Gazette No. 38,251 dated August 16, 2005. Creation of CAMIMPEG On February 10, 2016, the creation of the Compañía Anónima Militar de Industrials Mineras, Petrolíferas, y de Gas (CAMIMPEG), a state entity affiliated with the Ministry of Popular Power for the Defense, was authorized by Presidential Decree N° 2,231 and published in the Official Gazette N° 40,845. CAMIMPEG will be domiciled in Caracas and will have the purpose of undertaking all lawful activities concerning oil services, gas and mining. In accordance with the decree, CAMIMPEG may provide services to PDVSA, including but not limited to, in connection with the maintenance of oil wells and the repair, maintenance and management of drilling rigs.

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Investigation Case In December 2015, a case was brought against certain third-party (unaffiliated to PDVSA) contractors and suppliers to PDVSA affiliates in the United States District Court for the Southern District of Texas for the violation of anti-corruption and anti-money laundering laws, among other charges, in connection with international supply contracts and service contracts with a PDVSA affiliate during the period between 2009 and 2014. Certain former employees of a PDVSA affiliate were also charged in connection with these violations, and have since pled guilty along with the suppliers. Following the commencement of the foregoing action, PDVSA commenced an internal investigation to, among other things, identify the internal controls that were violated and the manner in which such violations occurred; evaluate whether such internal control violations were isolated incidents; and determine the effects of such violations on the PDVSA audited consolidated financial statements for 2015. While the investigation is currently ongoing, PDVSA has implemented a number of remedial measures, including, reinforcing the design and implementation of certain internal controls related to the compliance with Venezuelan and international law applicable to PDVSA’s activities; establishing new procedures and controls in the internal process of supplier payments; and creating a method for the verification and analysis of all suppliers of goods and related services. See note 32 to the audited consolidated financial statements for more information on the investigation case. Conversion of Commercial Debt with Strategic Suppliers PDVSA has implemented different transactions that allow to partially convert the outstanding commercial debt maintained with certain commercial suppliers into financial debt. This conversion is achieved by the execution of several note agreements which provide for (i) the assumption by PDVSA of a portion of its affiliates’ debt (evidenced in outstanding commercial invoices and contracts) with certain strategic suppliers; (ii) the novation of said commercial debt into a financial debt that cancels the former one; and (iii) the issuance of a three-year note (or several notes) regulated by a Note Agreement, with quarterly amortizations and an annual interest rate of 6.5%, to each of the participating strategic suppliers. From May 2016 to the date of this offering circular, the aforementioned transactions have been successfully executed with GE Capital Financing, Inc., Cementaciones Petroleras Venezolanas, S.A., Petroalianza, C.A., Maritime Contractors de Venezuela, S.A., Weatherford Latin America, S.C.A., Servicios Halliburton de Venezuela, S.A., Environmental Solutions de Venezuela, C.A., Proambiente, S.A., Elecnor, S.A. and Servicios Picardi, C.A. for a total amount of U.S.$1,151 million. The Exchange Offers and the Collateral Reasons for the Exchange Offers The purpose of the Exchange Offers is to extend the maturities of and refinance the Existing Notes, by repurchasing the Existing Notes in consideration for the issuance of New Notes. External factors such as the recent decline in oil prices, exchange rate fluctuations and recent global economic conditions resulting from the recent recession affecting the United States and the European Union, among other factors, have affected the price at which we can sell our products. As a result, we believe that it would be prudent to rearrange our debt profile, which was structured (when incurred) during different political and economic conditions. In any event, we believe that we will continue to service our existing debt (and the New Notes, should we decide to complete the exchange) in accordance with their terms. The Collateral The New Notes will be secured by a first-priority lien on 50.1% of the capital stock of CITGO Holding. The security interest in the Collateral will be perfected on or before the Settlement Date.

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CITGO Holding is a wholly-owned subsidiary of PDV Holding, a Delaware corporation, and is an indirect wholly-owned subsidiary of PDVSA. CITGO Holding is the direct parent of CITGO. CITGO is engaged in the refining, marketing and transportation of petroleum products, including gasoline, diesel fuel, jet fuel, petrochemicals and lubricants, mainly within the continental United States east of the Rocky Mountains. For a more complete description of CITGO Holding, please refer to the information contained in the “Report for the Fiscal Year Ended December 31, 2015” attached hereto. You should consider the information contained under the section “Risk Factors” set forth therein before making a decision to tender your Existing Notes. Recently, PDVSA conducted a valuation of the market value of the equity of CITGO and CITGO Holding. CITGO is the owner and operator of important midstream assets, refineries, inventories and receivables, among others, all of which were taken into consideration during such valuation. This valuation exercise was conducted on the basis of an analysis of CITGO and CITGO Holding’s projected future free cash flows, based on certain assumptions regarding growth and taxes. Such valuation also took into consideration the amount of debt at the CITGO level (approximately U.S.$2.0 billion as of December 31, 2015) and CITGO Holding consolidated level (approximately U.S.$4.2 billion as December 31, 2015), among other factors. Such valuation concluded that the market value of the equity (before taxes) as of December 31, 2015 of CITGO was approximately U.S.$9.3 billion and of CITGO Holding was approximately U.S.$8.3 billion, in each case net of debt. In addition, the enterprise valuation of CITGO was U.S.$11.3 billion with an implied EBITDA multiple of 4.7x (based on an EBITDA of U.S.$2.4 billion for the year ended December 31, 2015 (see “Selected Consolidated Financial and Operating Data” for a reconciliation of net income to EBITDA)), and of CITGO Holding was U.S.$12.5 billion with an implied EBITDA multiple of 5.1x (based on an EBITDA of U.S.$2.4 billion for the year ended December 31, 2015 (see “Selected Consolidated Financial and Operating Data” for a reconciliation of net income to EBITDA)). There can be no assurance that such values with respect to a sale of shares of CITGO Holding or CITGO would be achieved.

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Corporate Structure The following chart summarizes our corporate structure:

Petr óleos de Venezuela, S.A.

100%

PDVSA Petróleo S.A.(1)

(2)

100%

Corporaci ón Venezolana de Petróleo, S.A. (CVP)

100%

PDVSA Gas, S.A.

99%

(1)

100%

100%

PDV Marina, S.A.

PDV Holding Inc.(3)

“Empresas Mixtas”

100%

100%

CITGO Petroleum Corporation (Refineries)

PDV Europa B.V. (Holland)

Petromar (Aruba)

50%

AB Nynas Petrolum (Sweden)

100%

(5)

Refineria Isla

100%

Bariven S.A.

50%

LLC 100%

(1) (2) (3) (4)

PDVSA Servicios S.A.

100% 100%

(Extra Heavy Crude Oil) (4)

Crude and Gas Assets in Venezuela Distribution _____________________________________ Entities

PDVSA Industrial S.A.

PDVSA Isla Curaçao B.V. 100%

“Empresas (Light-Medium Crude Oil) (4)

Propernyn B.V. (Holland)

100%

CITGO Holding, Inc. Mixtas”

100%

Assets in North America

European Assets

PDVSA América, S.A. (5)

Other Assets Incl. Trading Companies (Latin America Caribbean)

Services

Issuer Guarantor PDV Holding will grant a lien on 50.1% of its stock in CITGO Holding on or before the Settlement Date. For a detailed description of the interests CVP holds in the different joint ventures, please see “Business – Conversion of Operating Service Agreements to Empresas Mixtas,” “Business – Overview of Main Projects with Private Sector Participation” and “Business – Other Joint Ventures for Exploration and Production of Light-Medium Crude – Expansion Projects in the Orinoco Oil Belt.” Mainly responsible for the realization and monitoring of regional energy cooperation activities by PDVSA, together with the National Government.

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THE EXCHANGE OFFERS The following summary is qualified in its entirety by reference to detailed information appearing elsewhere in this offering circular. For a more detailed description of the Exchange Offers, see “Terms of the Exchange.” Offeror and Issuer .....................................................

PDVSA

The Exchange Offers .................................................

PDVSA is inviting any and all holders of the Existing Notes to tender their Existing Notes in Exchange for newly issued New Notes on the terms and subject to the conditions set forth in this offering circular. The Exchange Offers are subject to certain conditions (as described below under “—Conditions to the Exchange Offers”) and we expressly reserve the right, in our sole and absolute discretion, subject to applicable law, to terminate the Exchange Offers at any time prior to the Expiration Date, or to waive any condition of the Exchange Offers. The “Early Tender Deadline” for the Exchange Offers is 5:00 P.M., New York City Time, on September 29, 2016, unless extended or terminated earlier by us at our sole discretion. The Exchange Offers expire at 11:59 P.M., New York City Time, on October 14, 2016, unless extended or terminated by us at our sole discretion. We refer to the date on which the Exchange Offers expire as the “Expiration Date.” The following table sets forth, for each series of Existing Notes, the security description of the Existing Notes, the identifier, the aggregate principal amount outstanding and the minimum denominations for tenders of each series of Existing Notes: Title of Security

CUSIP/ISIN

Principal Outstanding Amount

Minimum Authorized Denominations of Existing Notes

5.250% Senior Notes due 2017 (“April 2017 Notes”)

N.A. (Rule 144A)/ XS0294364103 (Regulation S)

U.S.$3,000 million

U.S.$400 and integral multiples of U.S.$100 in excess thereof

8.50% Senior Notes due 2017 (“November 2017 Notes”)

716558 AB7 (Rule 144A); P7807H AK1 (Regulation S)/ US716558AB79 (Rule 144A); USP7807HAK16 (Regulation S)

U.S.$4,100 million

U.S.$100 and integral multiples of U.S.$100 in excess thereof

Subject to the satisfaction or waiver by PDVSA of the conditions to the Exchange Offers, we will accept for Exchange any and all of the outstanding Existing Notes validly tendered by holders in the Exchange Offers on or prior to the Expiration Date (and not validly withdrawn on 10

or prior to the Withdrawal Deadline). Total Exchange Consideration and Exchange Consideration .............................................................

You may exchange your Existing Notes for New Notes in the amounts described below: (i) Total Exchange Consideration for each U.S.$1,000 principal amount currently outstanding of Existing Notes validly tendered and accepted on or prior to the Early Tender Deadline (as defined below), we will deliver to you U.S.$1,000 of New Notes, which includes the Early Tender Premium, and (ii) Exchange Consideration for each U.S.$1,000 principal amount currently outstanding of Existing Notes validly tendered and accepted after the Early Tender Deadline but on or prior to the Expiration Date (as defined below), we will deliver to you U.S.$950 of New Notes. The principal amount of New Notes you will receive pursuant to the Exchange Offers will be rounded downwards to the nearest integral multiple of U.S.$1,000. No additional consideration will be paid in lieu of fractional New Notes not received as a result of such rounding down. The determination by PDVSA of any calculation or quotation made with respect to the Exchange Offers will be conclusive and binding on you, absent manifest error.

Purpose of the Exchange Offers ...............................

The purpose of the Exchange Offers is to extend the maturities of and refinance the Existing Notes, by repurchasing the Existing Notes in consideration for the issuance of New Notes.

Accrued Interest on Existing Notes..........................

We will pay on the Settlement Date all accrued and unpaid interest on the Existing Notes exchanged for New Notes for the period from the most recent interest payment date until, but not including, the Settlement Date.

Holders .......................................................................

Only holders of Existing Notes are authorized to receive and review this offering circular and to participate in the Exchange Offers.

Existing Notes; Principal Amount Currently Outstanding................................................................

Any and all Existing Notes are eligible to participate in the Exchange Offers. The principal amount of the Existing Notes currently outstanding is U.S.$7,100 million.

Procedures for Tendering Existing Notes................

If you wish to participate in the Exchange Offers and your Existing Notes are held in the name of a custodian or other securities intermediary, such as a broker, dealer, bank, trust company or trustee, you must contact such custodian or other securities intermediary and instruct it to tender your Existing Notes on your behalf. You should contact your custodian or other securities intermediary well in advance of the Early Tender Deadline or Expiration Date, since your custodian may have earlier deadlines by which it must receive your instructions in order to have adequate time to submit your tender on time. 11

Custodial entities that are participants of DTC should tender Existing Notes through DTC’s Automated Tender Offer Program (“ATOP”), by which the custodial entity and the beneficial owner on whose behalf the custodial entity is acting to agree to be bound to the terms and conditions set forth herein. If you are a beneficial owner that holds Existing Notes through the Euroclear Bank S.A./N.V. (“Euroclear”) or Clearstream Banking, société anonyme (“Clearstream, Luxembourg”) and wish to tender your Existing Notes, you must contact Euroclear or Clearstream, Luxembourg, as the case may be, directly to ascertain their procedure for tendering Existing Notes and comply with those procedures. For more information on tendering your Existing Notes, please see “Procedures for Participating in the Exchange Offers.” Withdrawal Rights ....................................................

Any tender of Existing Notes in the Exchange Offers may be withdrawn for any reason, at any time prior to 5:00 P.M., New York City Time, on September 29, 2016, unless extended or terminated earlier by us at our sole discretion. We refer to such date and time as the “Withdrawal Deadline.” We may, among other things, extend the Early Tender Deadline without extending the Withdrawal Deadline, unless required by applicable law. For more information about the conditions for withdrawal, see “Terms of the Exchange Offers – Withdrawal of Exchange Instructions.”

Settlement Date ..........................................................

As soon as practicable (upon satisfaction (or waiver by us at our sole discretion) of the conditions set forth herein) after the Expiration Date, but not, in any event, later than three business days after the Expiration Date (including any applicable Expiration Date following an extension of the Exchange Offers). On this date, PDVSA will deliver the New Notes in exchange for the Existing Notes validly tendered and accepted for exchange pursuant to the Exchange Offers.

Tax Considerations....................................................

Please see the section entitled “Tax Considerations” for important information regarding the possible tax consequences to noteholders that tender Existing Notes pursuant to the Exchange Offers.

Information Agent and Exchange Agent .................

D.F. King & Co., Inc. (see the back cover page of this offering circular for contact details).

Further Information..................................................

Any questions concerning the terms of the Exchange Offers should be directed to the Issuer at the telephone numbers listed on the back cover page of this offering circular. Questions concerning tender procedures and requests for additional copies of this offering circular should be directed 12

to the Information Agent at its address or telephone numbers listed on the back cover page of this offering circular. Consequences of Failure to Exchange......................

For a description of certain consequences of failing to exchange your Existing Notes, see “Risk Factors” and “Terms of the Exchange Offers— Certain Consequences to Holders of Existing Notes Not Tendering in the Exchange Offers.”

Use of Proceeds ..........................................................

We will not receive any cash proceeds from the Exchange Offers.

Conditions to the Exchange Offers...........................

The consummation of the Exchange Offers are conditioned upon, among other things, the valid tender, without subsequent withdrawal, of at least 50% aggregate principal amount of the Existing Notes that are the target of the Exchange Offers. The Exchange Offers are also subject to certain conditions that we may assert or waive. These conditions include the condition that nothing has occurred or may occur that, in our reasonable judgment, (a) makes or seeks to make illegal the exchange of Existing Notes for New Notes pursuant to the Exchange Offers; (b) would or might be expected to result in a delay in, or restrict, our ability to issue the New Notes in exchange for Existing Notes, (c) imposes or seeks to impose limitations on our ability to issue the New Notes in exchange for Existing Notes; or (d) impairs or might impair us from realizing the anticipated benefits of the Exchange Offers. See “Terms of the Exchange Offers – Conditions to the Exchange Offers.”

Governing Law ..........................................................

New York.

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SUMMARY OF THE NEW NOTES The following summary is qualified in its entirety by reference to detailed information appearing elsewhere in this offering circular. Issuer...........................................................................

Petróleos de Venezuela, S.A.

Guarantor...................................................................

PDVSA Petróleo, S.A.

New Notes ...................................................................

Up to U.S.$7,100 million aggregate principal amount of 8.50% senior secured notes due 2020, which will be unconditionally and irrevocably guaranteed by PDVSA Petróleo, S.A.

Maturity Date of the New Notes ...............................

The fourth anniversary of the Settlement Date.

Interest........................................................................

Interest will accrue on the New Notes at the rate of 8.50% per annum. Interest will be payable semi-annually in arrears on each six month anniversary of the Settlement Date, until the maturity date. Interest on the New Notes will be calculated on the basis of a 360-day year of twelve 30-day months.

Scheduled Amortization............................................

Principal payments on the New Notes will be payable in four equal installments on the first, second, third and fourth anniversary, respectively, of the Settlement Date.

Collateral ....................................................................

The New Notes will be secured by a first-priority lien on 50.1% of the capital stock of CITGO Holding. See “Description of the New Notes—Collateral.”

Ranking of the New Notes.........................................

The New Notes will: 

be senior secured Obligations of the Issuer;

rank effectively senior in right of payment to all existing and future senior unsecured Obligations of the Issuer to the extent of the value of the Collateral, and any outstanding amounts due after the foreclosure of the Collateral will rank equally in right of payment with all existing and future senior unsecured Obligations of the Issuer (other than Obligations preferred by statute or operation of law);

rank senior in right of payment to all existing and future Obligations of the Issuer that by their terms are subordinated to the New Notes;

be effectively subordinated to all existing and future secured Indebtedness of the Issuer that is secured by liens on assets that do not constitute the Collateral to the extent of the value of the assets securing such Indebtedness; and

be structurally subordinated to all existing and future

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Indebtedness of the Issuer’s subsidiaries (other than the Guarantor). As of June 30, 2016, the Issuer and the Guarantor had total indebtedness of U.S.$37,345 million (of which U.S.$2,583 million was secured indebtedness). As of June 30, 2016, CITGO Holding and CITGO had total indebtedness of U.S.$4,082 million and U.S.$1,927 million, respectively. As of the same date, on a consolidated basis, CITGO had U.S.$817 million of available capacity under its senior secured revolving credit facility and U.S.$67 million of available capacity under its accounts receivable securitization facility. As of June 30, 2016, the non-Guarantor subsidiaries (excluding CITGO Holding) had total indebtedness of U.S.$3,863 million (of which U.S.$760 million was secured indebtedness). Ranking of the Guaranty ..........................................

Book-Entry; Form and Denomination.....................

The Guaranty will: 

be a senior secured Obligation of the Guarantor;

rank effectively senior in right of payment to all existing and future senior unsecured Obligations of the Guarantor to the extent of the value of the Collateral, and any outstanding amounts due after the foreclosure of the Collateral will rank equally in right of payment with all existing and future senior unsecured Obligations of the Guarantor (other than Obligations preferred by statute or by operation of law); and

be effectively subordinated to all existing and future secured indebtedness of the Guarantor that is secured by liens on assets that do not constitute the Collateral to the extent of the value of the assets securing such indebtedness.

The New Notes will be issued in the form of one or more global notes without coupons, registered in the name of a nominee of DTC, as depositary, for the accounts of its participants including Euroclear and Clearstream. The New Notes will be issued in minimum denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof. The New Notes will not be issued in definitive form except under certain limited circumstances. The Issuer will not accept any tender that would result in the issuance of less than U.S.$150,000 principal amount of New Notes to a participating holder. The principal amount of New Notes you will receive pursuant to the Exchange Offers will be rounded downwards to the nearest integral multiple of U.S.$1,000. No additional consideration will be paid in lieu of fractional New Notes not received as a result of such rounding down. See “Description of the New

15

Notes—Book-Entry; Notes.”

Delivery

and

Form—Certificated

Original Issue Discount .............................................

The New Notes are expected to be issued with “original issue discount” for U.S. federal income tax purposes. In such case, regardless of a U.S. Holder’s (as defined under “Tax Considerations”) regular method of tax accounting, the U.S. Holder will be required to accrue the original issue discount on a note on a constant yield basis and include the accruals in gross income, whether or not the U.S. Holder receives a corresponding cash payment on the note during the taxable year. For a summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the New Notes, see “Tax Considerations – Material U.S. Federal Income Tax Consequences.”

Payment of Additional Amounts ..............................

All payments made in respect of the New Notes will be made free and clear of, and without withholding or deduction for or on account of, any present or future Venezuelan taxes, unless such withholding or deduction is required by law. Subject to certain exceptions, in the event of any such withholding or deduction the Issuer or the Guarantor, as the case may be, will pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each holder after such withholding or deduction would not be less than the amount such holder would have received absent the withholding or deduction. See “Description of the New Notes—Additional Amounts.”

Optional Redemption ................................................

We may redeem the New Notes in whole, or in part, at our option, at any time and from time to time prior to the maturity thereof at 100% of the then outstanding principal amount, plus a “make-whole” amount, plus accrued and unpaid interest, if any, and Additional Amounts, if any, to the redemption date upon the satisfaction of certain conditions. See “Description of the New Notes — Redemption.” We may also redeem the New Notes in whole but not in part, at our option, at 100% of the outstanding principal amount, plus accrued and unpaid interest, if any and Additional Amounts, in the event of specific changes affecting taxation on the New Notes. See “Description of the New Notes —Redemption.”

Transfer Restrictions.................................................

The New Notes are subject to the same restrictions on transfer as the Existing Notes. The New Notes have not been, and will not be, registered under the Securities Act or under any state securities laws and are subject to certain restrictions on transfer and resale. We are offering the New Notes pursuant to the exemption from the registration requirements of the Securities Act provided by Section 3(a)(9) thereof. We will not be required to, nor do we intend to, register the New Notes for resale under the Securities Act or to offer to exchange the New Notes for 16

notes registered under the Securities Act or the securities laws of any jurisdiction. The New Notes are subject to the same restrictions on transfer as the Existing Notes. See “Transfer Restrictions.” No Established Trading Market...............................

There is currently no market for the New Notes and there can be no assurance as to the development or liquidity of a market for the New Notes.

Governing Law ..........................................................

New York.

Listing .........................................................................

We intend to apply to list the New Notes on the Official List of the Luxembourg Stock Exchange and to trade them on the Euro MTF market of such exchange, although no assurance can be given as to the approval of said applications.

Trustee ........................................................................

MUFG Union Bank, N.A.

Collateral Agent.........................................................

GLAS Americas LLC.

Paying Agent, Transfer Agent and Registrar..........

Law Debenture Trust Company of New York.

Luxembourg Listing and Paying Agent...................

Banque Internationale À Luxembourg, Société Anonyme

Risk Factors ...............................................................

For a discussion of certain considerations relevant to an investment in the New Notes, see “Risk Factors.”

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RISK FACTORS Before deciding to tender your Existing Notes in exchange for the New Notes, you should carefully read this offering circular and should consider carefully, in light of their own financial circumstances and investment objectives, all of the information set forth in this offering circular and, in particular, certain matters relating to the Issuer and other matters associated with investments in securities of issuers in countries that do not have highly developed capital markets, including, without limitation, the risk factors set forth below. Our respective businesses, financial condition, results of operations and ability to satisfy our obligations under the New Notes could be materially adversely affected by any of these risks. The trading price of the New Notes could decline due to these risks. Risks of Not Participating in the Exchange Offers If the Exchange Offers are completed, the trading market for Existing Notes may become illiquid, which may adversely affect their market value and the ability of holders to sell Existing Notes. The principal amount of Existing Notes that will remain outstanding after the exchange is consummated may be significantly reduced, depending on the overall level of participation in the Exchange Offers. Consequently, the trading market, if any, for Existing Notes outstanding after the Exchange Offers could become limited or nonexistent. As a result, if you elect not to participate in the Exchange Offers it may be difficult for you to trade your Existing Notes and the market value of your Existing Notes may be adversely affected. The Existing Notes will not get the benefit of the Collateral securing the New Notes and will be effectively subordinated to the New Notes to the extent of the value of the Collateral. The Existing Notes will not get the benefit of the Collateral securing the New Notes. The indebtedness evidenced by the Existing Notes and related guaranty will be our (and the guarantor of the Existing Notes) unsecured obligations and therefore will be effectively subordinated, to the extent of the value of the Collateral, to any of our existing or future secured obligations and of the guarantor of the Existing Notes, including the New Notes. Risks of Participating in the Exchange Offers Your decision to tender your Existing Notes for New Notes exposes you to the risk of nonpayment for a longer period of time. The outstanding Existing Notes mature in 2017 and the New Notes will mature on the fourth anniversary of the Settlement Date. If following the maturity date of your Existing Notes, but prior to the maturity date of the New Notes received in exchange for those Existing Notes, we were to become subject to a bankruptcy or similar proceeding, the holders of the Existing Notes who did not exchange their Existing Notes for New Notes could have been paid in full and there would exist a risk that holders who exchanged their Existing Notes for New Notes would not be paid in full, if at all. The market price of New Notes may also decline during this period if our creditworthiness declines. Your decision to tender your Existing Notes should be made with the understanding that the lengthened maturity of the New Notes exposes you to the risk of nonpayment or a decline in our creditworthiness for a longer period of time. We have broad discretion to complete, limit, cancel, extend or amend the terms of the Exchange Offers, which may affect the timing for completion of the Exchange Offers and the ability of holders of the Existing Notes to transfer or sell their notes. The terms of the Exchange Offers allow us to terminate or extend the Exchange Offers past the originally scheduled expiration date, to withdraw or amend the Exchange Offers in one or more jurisdictions, and to reject valid tenders of Existing Notes, in each case pursuant to the terms of the Exchange Offers. Accordingly, we cannot provide any assurance that the exchange of Existing Notes for New Notes pursuant to the Exchange Offers will be completed in any particular jurisdiction, or at all. Even if the Exchange Offers are consummated, we cannot assure 18

holders of Existing Notes that the Exchange Offers will be completed in accordance with the time schedule and terms set forth in this offering circular due to potential legal proceedings or other reasons. Accordingly, holders participating in the Exchange Offers may have to wait longer than expected to receive their New Notes, during which time those holders will not be able to effect transfers of their Existing Notes tendered pursuant to the Exchange Offers. We may in the future purchase Existing Notes at different prices Subject to existing contractual and regulatory restrictions, we may from time to time purchase any Existing Notes that remain outstanding after consummation of the Exchange Offers through open market or privately negotiated transactions, one or more tender or exchange offers or otherwise, on terms that may be more advantageous to holders than the terms of the Exchange Offers. The consideration to be received in the Exchange Offers does not reflect any valuation of the Existing Notes or the New Notes and is subject to market volatility, and none of PDVSA, the trustee or the Information Agent and the Exchange Agent makes any recommendation that any holder participate in the Exchange Offers. We have made no determination that the consideration to be received in the Exchange Offers represents a fair valuation of either the Existing Notes or the New Notes. PDVSA has not obtained a fairness opinion from any financial advisor about the fairness to PDVSA or to you of the consideration to be received by the holders who exchange their Existing Notes. The trading price and the availability of a liquid market of the New Notes following the Exchange Offers cannot be assured. If a market does develop, the trading price of the New Notes will be impacted by other factors such as credit ratings and the trading prices of the Existing Notes. The New Notes may trade at discounts to par. None of PDVSA, the trustee, the Information Agent, the Exchange Agent or any of their respective affiliates, makes any recommendation as to whether holders of the Existing Notes should exchange their Existing Notes for New Notes in response to the Exchange Offers. You should not tender any Existing Notes that you do not wish to have accepted for exchange by us. Existing Notes tendered in any Exchange Offer may be validly withdrawn at any time at or before the Withdrawal Deadline (5:00 p.m. New York City time on September 29, 2016, unless extended or terminated earlier by us at our sole discretion) (but not thereafter). Existing Notes tendered in any Exchange Offer after the Withdrawal Deadline will be irrevocable, except when additional withdrawal rights are provided by law. Accordingly, you should not tender any Existing Notes that you do not wish to have accepted for exchange by us. Risk Factors Relating to the New Notes, the Guaranty and the Collateral The value of the Collateral securing the New Notes may not be sufficient to satisfy all our obligations under the New Notes. The proceeds from the sale of the Collateral may not be sufficient to satisfy all our obligations under the New Notes. The value of the CITGO Holding shares will depend on numerous factors affecting the price of such shares, including, but not limited to, the market value of the shares at such time and the timing and manner of the sale or liquidation, as well as changing economic conditions, competition or other future trends. In addition, some or all of the pledged shares may be illiquid, and may have to be sold at a substantial discount in an insolvency situation or otherwise. See “Risk Factors—Risks Relating to the New Notes —It may be difficult to realize the value of the Collateral pledged to secure the New Notes in a timely manner or at all.” We cannot assure noteholders that the pledged shares will be saleable or, if saleable, that there will not be substantial delays in its liquidation, especially in the event of default under the New Notes. During any such delays, the value of Collateral could decline. Accordingly, we cannot assure noteholders that the proceeds of any sale or liquidation of the Collateral will be sufficient to satisfy, or will not be substantially less than, our obligations under the New Notes. In addition, if the Collateral Agent were to enforce its lien on the Collateral, such enforcement could result 19

in a change of control under instruments governing outstanding indebtedness of CITGO Holding and CITGO. Holders of certain of such outstanding debt could then require CITGO Holding and CITGO to make an offer to repurchase such indebtedness. There can be no assurance that the cash on hand or other assets of CITGO Holding or CITGO would be sufficient to effect such a repurchase in whole or in part, and any such repurchase, or failure to make any such repurchase, could negatively impact the value of the pledged shares. In addition, a change of control would constitute an event of default under certain of CITGO’s outstanding debt if not consented to thereunder. As a result, if the Collateral Agent were to enforce the lien on the Collateral, there is a substantial risk that the value of the pledged shares would not be sufficient to satisfy all our obligations under the New Notes in the event that a change of control occurs under CITGO Holding’s and CITGO’s outstanding debt. Any claim for the difference between the amount, if any, realized by holders of the New Notes from the sale of the pledged shares securing the New Notes and the obligations under the New Notes rank equally in right of payment with all of our other unsecured unsubordinated indebtedness and other obligations. As a result, if the value of the Collateral for the New Notes is less than the amount outstanding under the New Notes at the time the Collateral is liquidated, it is possible that any claims by holders of the New Notes for the difference between the amount realized from the sale of Collateral and the obligations under the New Notes may not be satisfied in full before the claims of such creditors are paid. It may be difficult to realize the value of the Collateral pledged to secure the New Notes in a timely manner or at all. Our obligations under the New Notes will be secured by a pledge by PDV Holding of 50.1% of the outstanding common stock of CITGO Holding. The security agreements governing the Collateral provide the Collateral Agent with significant remedies, including foreclosures and sale of all or parts of the Collateral, but the rights of the Collateral Agent to exercise such remedies are, subject to certain exceptions, generally limited to any Event of Default under the New Notes. Further, the Collateral Agent will only take such action as instructed by the holders of a majority of the outstanding principal amount of the New Notes. The realization of value from the Collateral Agent’s security interest, however, may be limited by other factors that may impede selling the Collateral in a timely manner and at a suitable price. Any delay in the realization of value of Collateral could result in a significant decline in the amount realized. We cannot assure you that, in the event of any attempt to liquidate the pledged shares, such sales will occur on a timely basis or at all, which may have a potentially significant adverse effect on the sale price of the Collateral when compared with amounts due under the New Notes. Therefore, the practical value of realizing on the Collateral may be limited. Under the terms of the New Notes, PDV Holding is not subject to any restrictions to dispose or grant liens on its shares in CITGO Holding that are not part of the Collateral. PDV Holding may dispose or grant a pledge in the remaining 49.9% of the shares it owns in CITGO Holding. Subject to other restrictions affecting the Issuer (including any negative pledge covenants affecting the Issuer and its Subsidiaries), PDV Holding may use such remaining shares to secure other obligations or sell them to a third party. The value of the Collateral may be adversely affected if PDV Holding (and ultimately, PDVSA) ceases to be the owner of such remaining shares. CITGO Holding and its subsidiary, CITGO, are parties to several financing transactions. Pursuant to the terms of the New Notes and the other documents constituting the Transaction Documents, CITGO Holding and CITGO are subject to covenants or other obligations not to dispose their assets. Likewise, CITGO Holding and CITGO are parties to several financial transactions, and are also subject to certain financial covenants, restrictions on their ability to declare or pay dividends, dispose assets, and further, some of their assets are subject to security interests granted for the benefit of their creditors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Loan Agreements—CITGO Loan Agreements.” In the future, CITGO Holding and CITGO may incur more secured or unsecured debt or enter into other financial arrangements with similar or more restrictive covenants. In addition, CITGO Holding and CITGO may make financing or investing decisions in their own interests that may conflict with the interests of the Holders of the New 20

Notes. Finally, the value of the Collateral may be affected by CITGO Holding’s and CITGO’s ability to service its respective debt. Payments on the New Notes and the Guaranty will be effectively subordinated to any debt obligations of PDVSA and the Guarantor that are secured by assets other than the Collateral and to the liabilities of the nonguarantor subsidiaries, affiliates or joint ventures. The New Notes and the Guaranty will be effectively subordinated to our current indebtedness that is secured by our assets other than the Collateral to the extent of the value of the assets securing such indebtedness. Secured creditors will have a senior right to the collateral securing their indebtedness that is not securing the New Notes and the Guaranty in case of an event of default under their secured indebtedness. This right would be to the exclusion of the noteholders, even if we were in default under the New Notes as well. In that event, such collateral would first be used to repay in full all indebtedness and other obligations of such secured creditors, resulting in all or a portion of such assets being unavailable to satisfy the claims of the noteholders (to the extent that the Collateral that will secure the New Notes is insufficient to repay the New Notes in full in the event of its foreclosure) and other of our creditors of their unsecured debt. If any of the foregoing events were to occur, recovery by noteholders may be adversely affected. In addition, we conduct part of our business through subsidiaries and joint ventures, none of which (except for the Guarantor) are obligated under the New Notes or the Guaranty. Our non-guarantor subsidiaries are separate distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the New Notes or the Guaranty or to make any funds available therefor, whether in the form of loans, dividends or otherwise. The claims of any creditor of a subsidiary or joint venture would rank ahead of our ability to receive dividends or other cash flows from these companies. As a result, claims of these creditors would rank ahead of our ability to access cash or other assets from these companies in order to satisfy our obligations under the New Notes. In addition, our unrestricted subsidiaries may be restricted by their own loan agreements, governing instruments and other contracts from distributing cash to us to enable us to perform under the New Notes. The Exchange Offers described herein constitute separate and distinct Exchange Offers and any modifications to the terms of one Exchange Offer will not impact the terms of the other Exchange Offer. This may impact the level of participation in each Exchange Offer and your rights with respect to the Collateral securing the New Notes. The Exchange Offers described herein constitute separate and distinct Exchange Offers and certain modifications made to one Exchange Offer are not required to be made in the other Exchange Offer. This may increase the level of participation in one Exchange Offer. Holders of the New Notes will share on a pro rata basis with the other holders of the New Notes with respect to rights to the Collateral. An increase in the aggregate principal amount of the New Notes as a result of an increase in the participation level in an Exchange Offer or otherwise will increase the amount of obligations secured by the Collateral. This would have the effect of diluting the ability of the holders that tender their Existing Notes to benefit from the Collateral. The Collateral may not be enforceable in the event PDVSA is subject to bankruptcy or reorganization proceedings. If PDVSA were to commence a bankruptcy or reorganization proceeding, or one were to be commenced against PDVSA, the competent bankruptcy court may prevent the Trustee under the indenture and the Collateral Agent from foreclosing on the Collateral. Secured creditors such as the Trustee, the Collateral Agent and the holders of the New Notes may be prohibited from foreclosing upon or disposing of a debtor’s property by the competent bankruptcy court. The market value of the New Notes may depend on economic conditions in Latin America and other developing countries over which we have no control. The market value of securities of Venezuelan companies, including us, is affected to varying degrees by economic and market conditions in other Latin American and developing countries. Although economic conditions in such countries may differ significantly from economic conditions in Venezuela, investors’ reactions to 21

developments in any of these other countries may affect the market value of securities of Venezuelan issuers. We cannot assure you that any economic, social or political deterioration in other Latin American or developing countries or other events in Latin American or developing countries will not affect the market value of the New Notes. The transferability of the New Notes may be limited under applicable securities law. The New Notes have not been registered under the Securities Act or any securities laws of any state of the United States or any other jurisdiction and, unless so registered, may not be offered or sold in the United States or for the account or benefit of a U.S. Person, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the applicable securities laws of any state or any other jurisdiction. Additionally, the purchase and sale of the New Notes in the secondary market in Venezuela in transactions payable in Bolívares by individuals and legal entities domiciled in Venezuela can occur only through universal banks authorized stock brokers and the Bolsa de Valores Pública Bicentenaria (Bicentennial Public Stock Exchange), and it must be made at the complementary floating exchange market rate (DICOM) pursuant to the Foreign Exchange Agreement No. 35 dated March 9, 2016 published in the Official Gazette No. 40,865 and the Foreign Exchange Agreement No. 33 dated February 10, 2015 published in the Extraordinary Official Gazette No.6,171. According to the Decreto con Rango, Valor y Fuerza de Ley de Instituciones del Sector Bancario (Law Decree of the Institutions of the Banking Sector), published in the Official Gazette No. 40,557, dated December 8, 2014, all Venezuelan banks, either public or private, must hold their securities, as well as the securities they hold on behalf of their clients denominated in local or foreign currency, issued or endorsed by the Republic or state-owned companies such as us, through the Central Bank. Also, according to the partially abrogated Foreign Exchange Agreement No. 33 of February 10, 2015, published in the Extraordinary Official Gazette No. 6,171 dated February 10, 2015, the institutions authorized to sell the New Notes in the secondary market through must assure the existence of the securities offered, and thus must hold such securities on behalf of their clients. While in the future, the New Notes might be sold in Venezuela in the Public Securities Exchange (Bolsa Pública de Valores Bicentenaria), created pursuant to the Public Securities Exchange Law (Ley de la Bolsa Pública de Valores Bicentenaria) published in the Special Official Gazette No. 5,999 dated November 13, 2010 and its General Rules (Reglamento General de la Bolsa Pública de Valores Bicentenaria) published in the Official Gazette No. 39,659 dated April 25, 2011, in accordance with the procedures and subject to the terms and conditions established in the Rules relating to the Registration, Negotiation and Settlement of Securities in the Public Securities Exchange (Reglamento de Inscripción, Negociación y Liquidación de Valores en la Bolsa Pública de Valores Bicentenaria) issued by the Venezuelan Superintendency of Securities (Superintendencia Nacional de Valores) and published in the Official Gazette No. 39,600 dated January 24, 2011, we cannot assure you that any such active trading market will develop and provide an additional market for the New Notes. Prospective investors should be aware that investors may be required to bear the financial risks of this investment for an indefinite period of time. The New Notes are a new issue of securities for which there is currently no public market, and you may be unable to sell your New Notes if a trading market for the New Notes does not develop. We intend to apply to list the New Notes on the Official List of the Luxembourg Stock Exchange and to trade them on the Euro MTF market of such exchange, although no assurance can be given as to the approval of said applications, if any. There is currently no market for the New Notes. We cannot assure you that any active trading market will develop for the New Notes, nor can we assure you regarding the liquidity of any such market, your ability to sell the New Notes or the prices at which the New Notes could be sold. We plan to place a portion of the New Notes with Banco de Venezuela, which could also affect the liquidity of the New Notes. If a market for the New Notes develops, the New Notes could trade at prices that may be higher or lower than their initial offering prices depending on many factors, including prevailing interest rates, our results of operations, the markets for similar securities, and other factors beyond our control, including general economic and market conditions. 22

Our liquidity and ability to generate cash depends on many factors beyond our control, and any failure to meet our debt obligations could harm our business, financial condition, and results of operations. Our ability to make payments on and to refinance indebtedness we may incur and to fund planned capital expenditures will depend on our ability to generate sufficient cash flow from operations, accessing the capital markets and making assets sales in the future. For example, decreases in oil and gas prices in the recent past, and any further decreases in oil and gas prices, will adversely affect our ability to generate cash flow from operations. Although we intend to finance a portion of our working capital and capital expenditure requirements with cash we expect to generate from operations, we will nonetheless need to raise substantial additional funds to fully fund our operations. The availability of these sources of capital when the need arises will depend upon a number of factors, some of which are beyond our control. These factors include general economic and financial market conditions, oil and natural gas prices, our credit ratings, interest rates, market perceptions of us or the oil and gas industry, our market value, and our operating performance. As of December 31, 2015, we had current assets of $53,935 million, of which $5,821 were cash and cash equivalents, while we had $52,692 million of current liabilities, resulting in a working capital position of $1,243 million. We historically have addressed our liquidity needs through cash flow from operations and short- and longterm borrowings in U.S. dollars and Bolívares. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.” We must continue to invest capital to maintain or increase the number of hydrocarbon reserves that we operate and the amount of crude oil that we produce and process. Additionally, we are required by Venezuelan law to make significant financial contributions to social programs. Between 2011 and 2015, our average social contributions represented 14% of our revenues. We cannot assure you whether these contributions will increase in the future and that they will not have a material impact on our business, results of operations or our liquidity position and/or ability to make our scheduled debt or other payments. These contribution requirements, which are completely out of our control, have been unpredictable and have varied greatly in the past and are likely to do so in the future. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Operating Results—Contributions for Social Development.” We may not be able to find additional financing on commercially reasonable terms, or at all. Furthermore, we cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in the market in an amount sufficient to enable us to pay principal and interest on our indebtedness or to fund our other liquidity needs. If our cash flow and existing capital resources are insufficient to fund our debt obligations, we may be forced to reduce our planned capital expenditures, sell assets, seek additional equity or debt capital, or restructure our debt, and any of these actions, if completed, could adversely affect our business. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness could harm our ability to incur additional indebtedness on commercially reasonable terms and lenders would have the right to accelerate our debt, which could result in a cross-acceleration of a material portion of our indebtedness, including the Existing Notes. Our cash flow and capital resources may be insufficient for payment of interest on and principal of our debt in the future, and any such alternative measures may be unsuccessful or may not permit us to meet scheduled debt service obligations, which could cause us to default on our obligations and could impair our liquidity. The New Notes are expected to be issued with original issue discount for U.S. federal income tax purposes. The New Notes are expected to be issued with original issue discount for U.S. federal income tax purposes. In such case, regardless of a U.S. Holder’s (as defined under “Tax Considerations”) regular method of tax accounting, the U.S. Holder will be required to accrue the original issue discount on a New Note on a constant yield basis and include the accruals in gross income, whether or not the U.S. Holder receives a corresponding cash payment on the New Note during the taxable year. For a summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the New Notes, see “Tax Considerations – Material U.S. Federal Income Tax Consequences.”

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Investment in emerging markets poses a greater degree of risk. Investing in emerging-market securities generally pose a greater degree of risk than investing in securities from more mature market economies as emerging market economies are more volatile. There can be no assurance that a continuation or acceleration of these economic and financial crises or similar events will not negatively affect investor confidence in emerging markets or the economies of the principal countries in Latin America, including Venezuela. In addition, there can be no assurance that these events will not adversely affect Venezuela’s economy and its ability to raise capital in the external debt markets in the future. The New Notes are not guaranteed by PDVSA’s subsidiaries, other than the guarantor, and are not secured by any other liens, other than the Collateral. Our subsidiaries are separate and distinct legal entities and, other than the guarantor, will have no obligation, contingent or otherwise, to pay any amounts due on our debt or to provide PDVSA with funds for its payment obligations, whether by dividends, distributions, loans or other payments. PDVSA’s right to receive any assets of any of our subsidiaries upon their liquidation or reorganization, and therefore the right to receive any assets of any of our subsidiaries upon their liquidation or reorganization, and therefore the right of the noteholders of PDVSA’s debt (including the New Notes) to participate in those assets, would be effectively subordinated to the claims of those subsidiaries’ creditors, including trade creditors. In addition, even if PDVSA were a creditor of any of our subsidiaries, its rights as a creditor would be effectively subordinated to any security interest in our subsidiaries’ assets and any indebtedness of our subsidiaries senior to that held by PDVSA. If we are subjected to Venezuelan bankruptcy or insolvency law, the ability of the holders of New Notes to recover their investment in the New Notes will be substantially impaired and will be subordinated to several classes of creditors such as secured creditors, our employees and the Venezuelan treasury, among others. If a Venezuelan court were to hold us subject to Venezuelan bankruptcy or insolvency laws, your ability to recover your investment in the New Notes will be impaired and will be subordinated to several creditors such as the bankruptcy trustee, secured creditors, our employees for any unpaid wages and labor benefits set forth in applicable collective bargaining agreements and Venezuelan labor law (including profit-sharing payments, accrued but unpaid vacation and severance) and the Venezuelan treasury for unpaid taxes, among others. Venezuela recognizes the execution of foreign judgments and arbitration awards, subject to certain conditions provided for in Venezuelan laws. Foreign judgments and arbitration awards rendered against PDVSA can be enforced against its assets located in Venezuela only upon compliance with the effectiveness requirements set forth in the Venezuelan Law of Private International Law, the Commercial Arbitration Law and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Notwithstanding these requirements, given that we are a state-owned company which owns assets that serve the public interest, in accordance with the provisions of the Organic Law of the National Attorney’s Office, the execution of a foreign judgment or arbitration award must be stayed for a period of 45 business days during which Venezuela may take actions in order to prevent the interruption of the public services that we provide in Venezuela. We may incur a material U.S. tax liability if the CITGO Holding shares held as part of the Collateral are sold in the future. A sale in the future of the CITGO Holding shares held as part of the Collateral may result in a material U.S. tax liability to us. No assurance can be made that, under the applicable insolvency, bankruptcy and other laws existing at such time, the proceeds from such sale would not be subject to our tax liabilities.

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Risk Factors Relating to Venezuela Events in Venezuela have produced significant social and political tensions, which have had in the past a material adverse effect on us and could again do so in the future. A substantial part of our operations, properties, employees and activities are located in Venezuela. A deterioration in Venezuela’s economic condition, social instability, political unrest or other adverse social developments in Venezuela could adversely affect our business and financial condition. Those events could also lead to increased volatility in the foreign exchange and financial markets, thereby affecting our ability to obtain and service foreign debt. Furthermore, between December 2001 and August 2004, February 2014 and including more recently in 2016, there were and have been periods of intense political and social turmoil involving groups that opposed the Venezuelan government. Between December 2002 and February 2003 a massive strike, also known as the oil strike or oil lockout, took place, in an unsuccessful attempt by the Venezuelan political opposition to President Chávez to force a new presidential election. Among the effects of the oil strike on the Venezuelan economy, was a decrease in the GDP of 15.8% and 24.9% during the fourth quarter of 2002 and the first quarter of 2003, respectively, a substantial reduction in the country’s fiscal revenue and an 8% decline in bank deposits. On December 3, 2006, President Hugo Chávez was re-elected President for a six-year term and from December 2005 to January 2016 the Partido Socialista Unido de Venezuela, or PSUV, the political party formerly headed by President Chávez, controlled a majority of the seats in the Asamblea Nacional, or National Assembly (formerly the Venezuelan Congress), as well as most state governments, and enjoyed broad support among the poorer segments of Venezuelan society. On September 26, 2010, at the election for representatives to the National Assembly, 98 representatives of the PSUV and 67 representatives of opposing parties were elected. The new members of the National Assembly took office in January 2011. On October 7, 2012, President Chávez was re-elected for another six-year term. However, on March 5, 2013, President Chávez passed away, leaving Vice-president Nicolás Maduro as the incumbent president until the next election. On April 14, 2013, Nicolás Maduro was elected as president of Venezuela for a six-year term. On December 6, 2015, at the election for representatives to the National Assembly, 112 representatives of the opposition coalition known as Mesa de la Unidad Democrática, or MUD, and 55 representatives of the PSUV were elected. Since this date, MUD representatives represent a majority of the National Assembly. The new members of the National Assembly took office in January 2016, except for 3 MUD representatives, whose election was challenged before the Supreme Court of Venezuela. There can be no assurance that the significant domestic political, social and economic instability that has existed in Venezuela will not re-emerge. Such instability could have a material adverse effect on Venezuela’s economic growth, our operations and as a result our ability to service our obligations under the New Notes. The significant decline in the price of oil has had an impact on the economy of Venezuela. The economy of Venezuela is highly dependent on petroleum revenues. The average sale export price of crude oil was U.S.$88.92/bl in 2014 and U.S.$44.65/bl in 2015. While as of July 31, 2016, the sale export price of crude oil was U.S.$32.75/bl, in the event the price of oil was to decrease from its current levels, Venezuela’s revenues from oil could significantly decline further. There can be no assurance that government revenues from petroleum exports will not experience significant fluctuations as a result of changes in the international petroleum market. Concerns with respect to the current global recession, weakness of the world economy, terrorism, market volatility and certain geopolitical developments, such as political instability in the Middle East, may have a potentially adverse effect on the petroleum market as a whole. PDVSA’s production levels were 2,991 mbpd, 2,910 mbpd, 2,899 mbpd, 2,785 mbpd, and 2,746 mbpd, for the years 2011, 2012, 2013, 2014 and 2015, respectively. While Venezuela expects to increase production through the development of new fields, future political uncertainty, budget adjustments that affect investments in oil exploration or outages (which have occurred recently in Venezuela from time to time) could result in a decline of 25

overall production. Accordingly, any sustained period of decline in capacity, if exacerbated by a decline in oil production, could adversely affect Venezuela’s fiscal accounts and international reserves. Changes to Venezuela’s credit ratings may adversely affect the value of the New Notes. Since February 2015, Standard & Poor’s credit rating for Venezuela has been CCC with a negative outlook. In December 2014, Fitch lowered Venezuela’s credit rating from B- to CCC, and reaffirmed this rating in July 2016. In March 2016, Moody’s affirmed Venezuela’s Caa3 credit rating, and changed the outlook, which was previously stable, to negative, citing “increased uncertainty surrounding economic and political events in Venezuela [which] could increase the loss severity bondholders could face in the event of a default, a development to which [Moody’s] assign[s] a high probability of occurrence.” Any actual or anticipated changes or downgrades in Venezuela’s credit ratings could affect the market value of the New Notes. Inflation, along with governmental measures to combat inflation, has had significant negative effects on the Venezuelan economy and, as a result, on our operations. Venezuela has experienced relatively high levels of inflation during much of the past two decades, despite the presence of price controls on many core goods during certain periods. The general rate of inflation as measured by the consumer price index was approximately 26.1% in 2011, 21.1% in 2012, 56.20% in 2013, 68.54% in 2014 and 180.90% in 2015. In 2008, the Central Bank changed the calculation base used to determine the consumer’s price index that was used until December 31, 2007, in order to consider, among other factors, a larger geographical area of Venezuela. We cannot assure you that inflation will not continue at or increase from its current level. Future governmental actions, including government spending, and actions to adjust the value of the Bolívar, may trigger increases in inflation. Because some of our costs, such as labor, are Bolívar-based, while the sales prices of substantially all of our products are U.S. dollar-based or U.S. dollar-related, periods of inflation that are not accompanied by commensurate devaluations of the Bolívar can adversely affect our costs, financial condition and ability to meet our obligations under the New Notes. Our products in the Venezuelan domestic market are sold at subsidized prices, thereby reducing our Venezuelan source revenues. The Venezuelan government, rather than the international market, determines the price of products such as gasoline, diesel, natural gas and natural gas liquids, or NGL, sold by us through our affiliates in the domestic market and, as a result, we earn substantially lower revenues on our products sold in Venezuela than on our exports and products sold internationally. The continued existence of such price controls will continue to reduce our Venezuelan source revenues. The Venezuelan economy could be adversely affected by economic developments in regional or global markets. Financial and securities markets in Venezuela are influenced, to varying degrees, by economic and market conditions in regional or global markets. Although economic conditions vary from country to country, investors’ perceptions of the events occurring in one country may substantially affect capital flows into and securities from issuers in other countries, including Venezuela. International investors consider Venezuela to be an emerging market. Economic and market conditions in other emerging market countries, especially those in Latin America, influence the market for securities issued by Venezuelan companies. Volatility in the securities markets in Latin America and in other emerging market countries may have a negative impact on the trading value of our securities and on our ability and the terms on which we are able to access international capital markets. The crisis in the Asian markets, beginning in 1997 negatively affected markets throughout Latin America. Similar adverse consequences resulted from the economic crisis in Russia in 1998, the Brazilian devaluation in 1999 and the Argentine crisis in 2001. Furthermore, the Venezuelan economy may be affected by events in developed economies that are trading partners or that affect the global economy, including the sovereign debt crisis affecting Greece, Spain and Italy. During the most recent global economic and financial crisis, global market conditions had adverse effects on the Venezuelan economy. Negative economic developments in the international markets in the future, including a decline in the demand for the commodities that Venezuela exports, would likely adversely affect the Venezuelan economy and financial system. 26

A significant increase in interest rates in the international financial markets could have a material adverse effect on the economies of Venezuela’s trading partners. If interest rates outside Venezuela increase significantly, our trading partners in Asia, the United States and the European Union could find it more difficult and expensive to borrow capital and refinance their existing debt. These increased costs could in turn adversely affect economic growth in those countries. Decreased growth on the part of these trading partners could have a material adverse effect on the markets for our exports. Risk Factors Relating to our Business The significant decline in the price of oil has had an impact on our revenues. A further decrease in such prices could materially and adversely affect our business. The average sale export price of the Venezuelan crude oil basket was U.S.$88.42/bl in 2014 and U.S.$44.65/bl in 2015. Exports of Venezuelan crude oil represent a substantial portion of our revenues. In the event the price of oil was to decrease from its current levels, PDVSA’s revenues could significantly decline further. There can be no assurance that PDVSA’s revenues from petroleum exports will not experience significant fluctuations as a result of changes in the international petroleum market. Concerns with respect to the current global recession, weakness of the world economy, terrorism, market volatility and certain geopolitical developments, such as political instability in the Middle East, may have a potentially adverse effect on the stability of the petroleum market as a whole. PDVSA’s production levels were 2,991 mbpd, 2,910 mbpd, 2,899 mbpd, 2,785 mbpd, and 2,746 mbpd, for the years 2011, 2012, 2013, 2014 and 2015, respectively. While Venezuela expects to increase production through the development of new fields, future political uncertainty, budget adjustments that affect investments in oil exploration, or outages (which have occurred recently in Venezuela from time to time) could result in a decline of overall production. Accordingly, any sustained period of decline in capacity, if exacerbated by a decline in oil production, could adversely affect PDVSA’s revenues. Our business depends substantially on international prices for oil and refined petroleum products and such prices are volatile. Our business, financial condition, results of operations and prospects depend largely on international prices for crude oil and refined petroleum products. Prices of oil and refined petroleum products are cyclical and highly volatile and have, historically, fluctuated widely due to various factors that are beyond our control, including: 

changes in global supply and demand for crude oil and refined petroleum products;

political events in major oil producing and consuming nations;

agreements among the members of the Organization of Petroleum Exporting Countries (“OPEC”);

availability and price of competing products;

actions of commodity markets, participants, and competitors;

international economic trends;

technological advancements and developments in the industry;

domestic and foreign government regulations that directly impact the supply of crude oil and refined petroleum products;

inflation; and

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variations of the rate of exchange of the U.S. dollar vis-à-vis other currencies, such as the Euro.

OPEC members have historically entered into agreements to reduce their production of crude oil. Such agreements have sometimes increased global crude oil prices by decreasing the global supply of crude oil. Venezuela is a party to and has complied with such production agreement quotas, and we expect that Venezuela will continue to comply with such agreements in the future. Since 1998, OPEC’s production quotas have contributed to substantial increases in international crude oil prices. Beginning with the 160th Meeting of the Conference of OPEC, convened on December 14, 2011 in Vienna, Austria, to the present, OPEC decided to maintain a production level of 30.0 mbpd, including production from Libya, and also agreed that OPEC member countries would, if necessary, take steps (including voluntary downward adjustments of output) to ensure market balance and reasonable price levels. In the 168th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC), held in Vienna, Austria, on December 4, 2015, the Conference, emphasizing its commitment to ensuring a long-term stable and balanced oil market for both producers and consumers, agreed that member countries should continue to closely monitor developments in the coming months, leaving its production ceiling at 30.0 mbpd. Any reduction in our crude oil production or export activities that could occur as a result of changes in OPEC’s production quotas or a decline in the prices of crude oil and refined petroleum products for a substantial period of time may materially and adversely affect our results of operations, cash flows and financial results. We do not own any of the hydrocarbon reserves that we develop and operate. Under Venezuelan law, the hydrocarbon reserves that we develop and operate belong to Venezuela. The rights to exploration of these hydrocarbon reserves are reserved for Venezuela. We were formed to coordinate, monitor and control operations related to Venezuela’s hydrocarbon reserves. While the Venezuelan Constitution requires that Venezuela retain exclusive ownership of us, it does not require the country to continue to conduct its hydrocarbon exploration and exploitation activities through us. If the Venezuelan government elects to conduct its hydrocarbon activities other than through us, our operations will be materially and adversely affected. We can offer no assurance that changes in Venezuelan law or the implementation of policies by the Venezuelan government will not affect our operations, cash flow and financial results. We are controlled by the Venezuelan government, which ultimately determines our capital investment and other spending programs. The Bolivarian Republic of Venezuela is our sole owner. Article 303 of the National Constitution provides that for “reasons of economic and political sovereignty and national strategy,” Venezuela shall retain all of our stock or any other entity to be incorporated to handle the petroleum industry. Furthermore, Article 29 of the Organic Hydrocarbons Law provides that state-owned oil companies, such as PDVSA, will be governed by the Organic Hydrocarbons Law and its regulations and, in particular, by the provisions issued by the National Executive through the Ministry of Petroleum (Ministerio del Poder Popular de Petróleo). The National Executive, through the Ministry of Petroleum, establishes national petroleum policies and also regulates and supervises our operations. The President of Venezuela appoints our president and the members of our Board of Directors by executive decree. Since November 2004, the Minister of Petroleum has also served as our president. However, the Bolivarian Republic of Venezuela is not legally liable for our obligations. We have operated as an independent commercial entity since our formation; however, since hydrocarbons are vital to the economy and future development of Venezuela due to the fact that they are the primary revenuegenerating resource of Venezuela, the revenues received from hydrocarbons activities, according to Article 5 of the Organic Hydrocarbons Law, are required to be used to finance health and education, to create funds for macroeconomic stabilization and to make productive investments, all in favor of the welfare of the Venezuelan people. Those social commitments may affect our ability to place additional funds in reserve for future uses and, indirectly, our commercial affairs. Given that we are controlled by the Venezuelan government, we cannot assure you that the Venezuelan government will not, in the future, impose further material commitments upon us or intervene in our commercial affairs in a manner that will adversely affect our operations, cash flow and financial results. 28

The Bolivarian Republic of Venezuela, our sole owner, may have interests that conflict with ours. The Bolivarian Republic of Venezuela is our sole owner and, through the Ministry of Petroleum, establishes national petroleum policies and also regulates and supervises our operations. Article 8 of the Organic Hydrocarbons Law, along with Articles 29 and 30, grants to the National Executive, acting through the Ministry of Petroleum, direct responsibility for the formulation, regulation, and follow-up of policies in the area of hydrocarbons. Additionally, the Organic Law on Public Administration and the Decree on Organization and Operation of the National Public Administration grant the Ministry of Petroleum the highest administration, direction, inspection and protection of the services, properties and income from revenue related to the energy sector, including PDVSA’s, in order to ensure compliance with the guidelines and policies adopted by the National Executive to serve the public and social interest. In circumstances involving a conflict of interest between Venezuela, as our sole owner, and the holders of the New Notes, Venezuela may exercise the rights arising from its ownership interest in a manner that would benefit Venezuela’s interests above our own interests, which may, in turn, have a negative effect on our financial condition and results of operations. The Bolivarian Republic of Venezuela, as our sole owner, may cause us to pursue certain macroeconomic and social objectives that may adversely affect our results of operations and financial condition. The Bolivarian Republic of Venezuela, as our sole owner, has pursued, and may pursue in the future, certain of its macroeconomic and social objectives through us. As a result, we may engage in activities that give preference to the objectives of the Venezuelan government rather than our economic and business objectives. We may make investments, incur costs and engage in sales on terms that affect our results of operations and financial condition. For instance, pursuant to the Venezuelan Constitution and the Organic Hydrocarbons Law, we are required to foster Venezuela’s socio-economic development and the welfare of its citizens. To that effect, the government requires us to make significant financial contributions to social programs, including transfers to FONDEN, as well as requiring us to fund specific projects. In 2014 and 2015, we made total contributions to FONDEN in the amounts of U.S.$974 million and U.S.$3,306 million, respectively. In addition, in the past the Venezuelan government required us to acquire several electricity generation and distribution companies, as well as certain food companies, all of which have been divested as of the date of this offering circular. The Venezuelan government has also nationalized and continues to nationalize other companies in Venezuela. We cannot assure you that the government of Venezuela will not require us to increase our financial contributions to social programs or to purchase other businesses. Any such actions could expose us to increased costs, litigation and contingent liabilities, which would have a material adverse effect on our financial condition and results of operations. Our investment in capital expenditures has decreased in recent years and our business requires substantial capital expenditures, and if we do not maintain our production levels, our ability to service our debt may be impaired. The exploration and development of hydrocarbon reserves, production, processing and refining and the maintenance of machinery and equipment require substantial capital investments. We must continue to invest capital to maintain or to increase the number of hydrocarbon reserves that we operate and the amount of crude oil that we produce and process. The capital levels required to increase hydrocarbon reserves and the amount of crude oil that we produce and process are described in our Business Plan. Our capital expenditures decreased to U.S.$18,106 million in 2015 from U.S.$25,051 million in 2014 and U.S.$23,530 million in 2013. We cannot assure you that we will maintain our production levels or generate sufficient cash flows or that we will have access to sufficient investments, loans or other financing alternatives to maintain and service our existing infrastructure in order to continue with our current production levels. Achieving our desired production levels, sufficient cash flows and sufficient investments will also depend on the successful completion of our Business Plan, which cannot be guaranteed. We have embarked on an ambitious capital expenditure plan to expand and upgrade our existing production and refining capacity. If we are not able to adequately raise, deploy and invest the necessary capital to expand our existing refining and exploration infrastructure, our business may be materially and adversely affected.

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The expansion and development of our production and refining infrastructure requires substantial capital investment. Our Business Plan outlines the development of projects totaling U.S.$302 billion in Venezuela, the Caribbean, Latin America and Asia during their initial stages from 2014 through 2019. Such expenditures are subject to the availability of cash from our operations, obtaining financing on reasonable terms and the favorable pricing of crude oil and gas. The failure to raise sufficient funds on reasonable terms, if necessary, may require us to modify or significantly curtail our Business Plan. If we are unable to raise the necessary funds or adequately and efficiently deploy these resources in order to expand our refining, exploration, and development activities, our business, results of operations and cash flows may be adversely affected. We are subject to production, equipment, transportation and other risks that are common to oil and gas companies. As an integrated oil and gas company, we are exposed to production, equipment transportation risks and other risks that are common to oil and gas companies, including fluctuations in production volume due to changes in reserve levels, weather conditions, production accidents, mechanical difficulties, business interruptions, adverse natural conditions or events such as a severe hurricane, tsunami or earthquake, unforeseen production costs, the condition of pipelines and vulnerability of other modes of transportation, the adequacy of our equipment and production facilities and employee and/or political conflicts. Due to the increased level of activity in the oil and gas industry, we may experience a shortage of oil rigs and manpower, as well as increasing costs in material and services. If we are unable to contract the necessary equipment and services to develop our exploration and production projects or if the prices for such equipment and services continues to increase, our exploration and production costs will increase. Any such increase in exploration and production costs may affect our results of operations and financial condition. These risks may lower our production levels, increase our production costs and expenses, or cause damage to our property or injury to our employees or others. We maintain insurance to cover certain losses and exposure to liability in order to protect our assets, operations and liability to third parties. Nonetheless, we cannot assure you that such coverage will be sufficient to cover all our losses given the potential increases in the value of assets or modifications in the maximum probable losses. These risks may adversely affect our operations and financial results. Venezuelan proved crude oil and gas reserve estimates involve some degree of uncertainty and may prove to be incorrect over time, which could adversely affect our ability to generate income. The proved crude oil and gas reserves set forth in this offering circular are our estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made). All reserves of oil and natural gas located within Venezuelan territory belong to the Bolivarian Republic of Venezuela and the amounts thereof are estimated by PDVSA and approved by the Ministry of Petroleum. The standards applied by the Ministry of Petroleum are recognized and used worldwide, making the declared results comparable to the ones of other countries. The oil located in the Orinoco Oil Belt has been certified by Ryder Scott Co. LP. Our proved oil and gas reserves have not been verified by any independent third party. Venezuelan proved developed crude oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. In the past, we revised our expected recovery factor for the Orinoco Oil Belt from 8% to 20%, based on existing economic and operating conditions, as well as on the availability of improved recovery technologies and broader information regarding reservoir performance parameters such as cumulative production, production rate, reservoir pressure and gas oil ratio behavior. The foregoing led the addition of 131,421 million barrels to our previously existing internally certified proved reserves over the past five years. There are uncertainties in estimating quantities of proved reserves related to prevailing crude oil and natural gas prices applicable to our production, which may lead us to make revisions to our reserve estimates. Moreover, many of the factors, assumptions and variables involved in estimating proved reserves are beyond our control and are subject to change over time. Consequently, measures of reserves are not precise and are subject to revision.

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Downward revisions in our reserve estimates could lead to lower future production, which could affect our results of operations and financial condition. We are subject to numerous environmental and health regulations in the locations where we conduct operations, particularly in the United States and Venezuela, that may become more stringent and result in increased liabilities and increased capital expenditures. Our activities are subject to a wide variety of national and local laws, regulations, and permit requirements relating to the protection of human health and the environment. Certain environmental laws require us to incur significant costs to cover damage that a project may cause to the environment. These costs may have a negative impact on the profitability of the projects we intend to implement or may make such projects economically unfeasible. In addition, some of our activities are in areas under special protection regimes with very restricted land uses. If the legal and regulatory framework is revised to become more rigorous, we will likely be required to substantially increase the capital expenditures for compliance with our revised legal and regulatory framework to effectively undertake the necessary improvements to comply with the health, safety, and sustainable environmental practices in the future. Any such increased expenditure may affect our results of operations and financial condition. We are subject to numerous laws, regulations and government mandates in Venezuela that may change in the future and adversely affect our operating results and financial condition. In addition to laws, regulations and permit requirements relating to the protection of human health and the environment, our business and activities are subject to numerous other federal, state and local laws, regulations and government mandates relating to various matters such as taxes, production tax payments, social contributions, foreign exchange and capital controls, price controls on the sales of our products, and development and operation of fields and hydrocarbon reserves owned by Venezuela. For example, in the past few years, the Venezuelan government has made numerous amendments to foreign exchange rates for the sale and purchase of foreign currency, which have had significant impact on our results of operations. Similarly, the government has established laws regulating required production tax contributions, dividends and tax revenues that have been modified several times. We have no control over and cannot predict what measures the government will take in the future or which policies it will implement, and these laws and regulations could change at any time depending on the government’s needs or policies. Any substantial change in the regulations applicable to us may have a material adverse effect on our results of operations and financial condition. Likewise, uncertainty over whether the Venezuelan government will implement changes in policy or regulation in the future may contribute to economic uncertainty and heightened volatility in the financial markets, which may have a material and adverse effect on our business, results of operations and financial condition. In addition, the government may require that we increase our social contribution payments, or it may require us to divert a portion of our crude oil production to electricity companies in Venezuela, which would, in both cases, materially adversely affect our results of operations, cash flows and financial condition. We could become subject to laws and regulations affecting our ability to conduct business in certain jurisdictions, such as the United States. On May 24, 2011, the U.S. Department of State announced the imposition of sanctions on seven companies, including PDVSA, under the Iran Sanctions Act of 1996, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. The sanctions imposed on PDVSA prohibited the company from competing for U.S. government procurement contracts, securing financing from the Export-Import Bank of the United States, and obtaining U.S. export licenses for goods and technology requiring a specific license or any other formal written authorization from the U.S. government for exportation or re-exportation to Venezuela. The U.S. State Department’s May 24, 2011 press release stated that “these sanctions do not apply to PDVSA’s subsidiaries and do not prohibit the export of crude oil to the United States,” and this was further confirmed by the formal notice by the State Department published in the Federal Register on September 14, 2011 (76 Fed. Reg. 178 at 56866). The sanctions imposed on PDVSA under the Iran Sanctions Act, as amended by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, were lifted on January 16, 2016, as a result of the Joint Comprehensive Plan of Action (JCPOA) with Iran. In December 2015, a case was brought against certain third-party (unaffiliated to PDVSA) contractors and suppliers to PDVSA affiliates in the United States District Court for the Southern District of Texas for the violation 31

of anti-corruption and anti-money laundering laws, among other charges, in connection with international supply contracts and service contracts with a PDVSA affiliate during the period between 2009 and 2014. Certain former employees of a PDVSA affiliate were also charged in connection with these violations, and have since pled guilty along with the suppliers. We may incur losses arising from our pending arbitrations and litigation. We are currently a party to certain arbitrations and numerous legal proceedings relating to civil, administrative, environmental, labor and tax claims filed against us. These claims involve substantial amounts of money and other remedies. Several individual disputes account for a significant part of the total amount of claims against us. While we believe that we have provisioned such risks appropriately based on the opinions and advice of our external legal advisors and in accordance with applicable accounting rules, in the event that claims involving a material amount and for which we have no provisions were to be decided against us, or in the event that the losses estimated turn out to be significantly higher than the provisions made, the aggregate cost of unfavorable decisions could have a material adverse effect on our financial condition and results of operations. Risk Factors Relating to CITGO Holding Please refer to “Appendix A—CITGO Holding, Inc. Report for the Fiscal Year Ended December 31, 2015,” page A-15 for certain risk factors in connection with CITGO Holding. You should consider the information contained under the section “Risk Factors” set forth therein before making a decision to tender your Existing Notes.

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TERMS OF THE EXCHANGE OFFERS We are inviting owners of Existing Notes, also referred to as “holders,” to tender, on the terms and subject to the conditions of this offering circular, Existing Notes in exchange for New Notes. Each such tender for exchange is referred to as a “tender.” The terms of the New Notes are described under the heading “Description of the New Notes.” Purpose of the Exchange Offers The purpose of the Exchange Offers is to extend the maturities of and refinance the Existing Notes, by repurchasing the Existing Notes in consideration for the issuance of New Notes. For a description of certain restrictions on resale or transfer of the New Notes, see “Transfer Restrictions” in this offering circular. Consideration You may exchange your Existing Notes for New Notes in the amounts described below: (i) for each U.S.$1,000 principal amount currently outstanding of Existing Notes validly tendered and accepted on or prior to the Early Tender Deadline (as defined below), we will deliver to you U.S.$1,000 of New Notes, and (ii) for each U.S.$1,000 principal amount currently outstanding of Existing Notes validly tendered and accepted after the Early Tender Deadline but on or prior to the Expiration Date (as defined below), we will deliver to you U.S.$950 of New Notes. The Issuer will not accept any tender that would result in the issuance of less than U.S.$150,000 principal amount of New Notes to a participating holder. The principal amount of New Notes you will receive pursuant to the Exchange Offers will be rounded downwards to the nearest integral multiple of U.S.$1,000. No additional consideration will be paid in lieu of fractional New Notes not received as a result of such rounding down. The determination by PDVSA of any calculation or quotation made with respect to the Exchange Offers will be conclusive and binding on you, absent manifest error. Early Tender Deadline; Expiration Date For purposes of the Exchange Offers, the term “Early Tender Deadline” means 5:00 P.M., New York City Time, on September 29, 2016, unless extended or terminated earlier by us at our sole discretion, in which case the Early Tender Deadline means the latest date and time to which the Early Tender Deadline is extended. For purposes of the Exchange Offers, the term “Expiration Date” means 11:59 P.M., New York City Time, on October 14, 2016, unless extended or terminated earlier by us at our sole discretion, in which case the Expiration Date means the latest date and time to which the Exchange Offers are extended. Representations, Warranties and Undertakings Relating to Tenders of Existing Notes By validly tendering Existing Notes in the Exchange Offers, the holder and beneficial owner (as defined below) of those Existing Notes, and (if applicable) the relevant direct participant on such holder’s behalf, will acknowledge, represent and warrant to PDVSA, the Information Agent and the Exchange Agent, among other things, that: 

it has received and reviewed this offering circular in its entirety;

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 it has tendered the Existing Notes pursuant to the Exchange Offers for the purpose of their cancellation and accepts the Exchange Offers in respect of such Existing Notes, subject to the terms and conditions of the Exchange Offers as set forth in this offering circular;  subject to and effective upon exchange by PDVSA of the Existing Notes tendered pursuant to the Exchange Offers, it irrevocably (subject to the withdrawal rights granted hereunder) and unconditionally sells, assigns and transfers to or upon the order of PDVSA or its nominee all right, title, interest in and to the Existing Notes tendered by it pursuant to the Exchange Offers, and such exchange will be deemed to constitute full performance by PDVSA of all of its obligations under such Existing Notes, such that thereafter it shall have, now or in the future, no contractual or other rights or claims in law or in equity with respect to its tendered Existing Notes against PDVSA or any of its affiliates, or any of their agents, officials, officers, employees or advisors;   it irrevocably waives any and all rights with respect to its tendered Existing Notes against PDVSA and its affiliates, and any of their agents, officials, officers, employees or advisors, and discharges and releases any of the foregoing from any and all claims such holder may have, now or in the future, arising out of or related to the Existing Notes tendered, including, without limitation, any claims arising from any existing, past or continuing defaults and their consequences in respect of such Existing Notes (such as any claim that such holder is entitled to receive accrued interest or any other payment with respect to Existing Notes tendered, other than as expressly provided for in this offering circular);  it irrevocably waives any and all rights with respect to the Exchange Offers against PDVSA (and its affiliates), the trustee for the New Notes, the trustee for the Exchanged Notes, the Principal Paying Agent, the Exchange Agent, the Information Agent, and any of their agents, officials, officers, employees or advisors, and discharges and releases any of the foregoing from any and all claims such holder may have, now or in the future, arising out of or related to the Exchange Offers, other than as expressly provided for in this offering circular;  all authority conferred or agreed to be conferred pursuant to its representations, warranties and undertakings and all of its obligations shall be binding upon its successors, assigns, heirs, executors, trustees in bankruptcy and legal representatives and shall not be affected by, and shall survive, its death or incapacity;  it is solely liable for any taxes and similar or related payments imposed on it under the laws of any applicable jurisdiction as a result of its participation in the Exchange Offers and agrees that it will not and does not have any right of recourse (whether by way of reimbursement, indemnity or otherwise) against PDVSA (or any of its affiliates), the Information Agent, the Exchange Agent, or any other person in respect of such taxes and payments;  the submission of the Exchange Instructions to the applicable Designated Clearing System shall, subject to a holder’s ability to withdraw its tender prior to the Withdrawal Deadline, and subject to the terms and conditions of the Exchange Offers, constitute the irrevocable appointment of the Exchange Agent as its true and lawful agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as our agent) with respect to all Existing Notes tendered, with full power of substitution, to (a) present such Existing Notes and all evidences of transfer and authenticity to us, or upon our order, (b) present such Existing Notes for transfer or cancellation, as necessary, (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Existing Notes and (d) receive on behalf of such holder and beneficial owner the New Notes issued upon and in exchange for the cancellation of the Existing Notes;  the submission of the Exchange Instructions to the applicable Designated Clearing System shall, subject to a holder’s ability to withdraw its tender prior to the Withdrawal Deadline, and subject to the terms and conditions of the Exchange Offers, constitute the irrevocable appointment of the Exchange Agent as its true and lawful agent and attorney-in-fact, with full power of substitution, and provides an irrevocable instruction to such attorney and agent to complete and execute all or any form(s) of transfer and other document(s) deemed necessary in the opinion of such attorney and agent in relation to Existing Notes tendered thereby in favor of PDVSA or such other person or persons as PDVSA may direct and to deliver such form(s) of transfer and other document(s) in the attorney’s and agent’s opinion and/or the certificate(s) and other document(s) of title relating to such Existing Notes’ registration and to execute all such other documents and to do all such other acts and things as may be in the opinion 34

of such attorney or agent necessary or expedient for the purpose of, or in connection with, the acceptance and settlement of the Exchange Offers;  it is the beneficial owner (as defined below) of, or a duly authorized representative of one or more beneficial owners of, the Existing Notes tendered and has full power and authority to tender, sell, assign and transfer Existing Notes tendered by it;  securities laws;

it is a person for whom it is lawful to participate in the Exchange Offers under applicable

 it has good and marketable title to all Existing Notes being tendered by it, free and clear of all liens, charges, claims, encumbrances, interests, rights of third parties and restrictions of any kind;  it will not sell, pledge, hypothecate or otherwise encumber or transfer any Existing Notes tendered from the date of tender and agrees that any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect;   it holds, and will hold, until the time of cancellation for the purpose of settlement, the Existing Notes it has tendered blocked in the Designated Clearing System through which such securities are held and, in accordance with the requirements of such Designated Clearing System and by the deadline established by such Designated Clearing System, has taken all steps necessary to authorize the blocking of its tendered Existing Notes with effect on and from the date its Exchange Instruction (as defined below under “Procedures for Participating in the Exchange Offers – Procedures for Tendering Existing Notes held through the Designated Clearing System”) is received, has authorized any transfers of the Existing Notes by the Designated Clearing System in furtherance of cancellation and settlement and, pending any such transfers relating to cancellation and settlement of such Existing Notes, it will not instruct or effect any transfers of such Existing Notes;  its Existing Notes are not the subject of any proceedings against PDVSA (or any of its affiliates), or any of their agents, officials, officers, employees or advisors before any court or arbitral tribunal (including claims for payment of past due interest, principal or any other amount sought in connection with its tendered Existing Notes or for compensation of lawyers’ costs and court fees);  in evaluating the Exchange Offers and in making its decision whether to participate therein by tendering its Existing Notes, it has made its own independent appraisal of the matters referred to herein and in any related communications and is not relying on any statement, representation or warranty, express or implied, made to such holder by PDVSA, the Exchange Agent, the Information Agent or any other person, other than those contained in this offering circular (as supplemented prior to the Expiration Date);  the tendering of its Existing Notes pursuant to the Exchange Offers shall constitute an undertaking to execute any further documents, authorize any transfers of the Existing Notes relating to the cancellation and settlement of the Exchange Offers and give any further assurances that may be required in connection with any of the foregoing, in each case on and subject to the terms and conditions set out or referred to in this offering circular; and  PDVSA, the Exchange Agent and other persons will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements, and agrees that if any of the acknowledgements, representations, warranties and agreements deemed to have been made by it by its acquisition of the New Notes is no longer accurate, it will promptly notify PDVSA and withdraw its tender of Existing Notes. The representations, warranties and agreements of a person tendering Existing Notes shall be deemed to be repeated and reconfirmed on and as of the Expiration Date and on and as of the Settlement Date. For purposes of this offering circular, the “beneficial owner” of any Existing Notes shall mean any person or entity that exercises sole investment discretion with respect to such Existing Notes.

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Procedures for Participating in the Exchange Offers Holders who need assistance with respect to the procedures for participating in the Exchange Offers should contact the Information Agent, the contact details for which are on the last page of this offering circular. Summary of Action to be Taken Holders may only participate in the Exchange Offers by way of submitting valid Exchange Instructions in accordance with the procedures set out in this section. To participate in the Exchange Offers, a holder should deliver, or arrange to have delivered on its behalf, via the applicable Designated Clearing System, and in accordance with the requirements of such Designated Clearing System, a valid Exchange Instruction which must be received in each case by the Exchange Agent on or prior to the Expiration Date. Holders who hold Existing Notes through the Depository Trust Company (“DTC”) should exchange notes through its Automated Tender Offer Program (“ATOP”). A holder with Existing Notes held through a custodian must contact that custodian if such holder desires to exchange those Existing Notes and promptly instruct such custodian to exchange such notes on its exchange deadline. By tendering Existing Notes pursuant to the Exchange Offers, Holders will be deemed to have agreed that the delivery and surrender of the Existing Notes is not effective, and the risk of loss of the Existing Notes does not pass to the Exchange Agent, until receipt by the Exchange Agent of a properly transmitted Exchange Instruction, together with all accompanying evidences of authority and any other required documents in form satisfactory to PDVSA. All questions as to the form of all documents and the validity (including time of receipt) and acceptance of tenders and withdrawals of Existing Notes will be determined by PDVSA, in its sole discretion, which determination shall be final and binding. Holders are advised to check with any bank, securities broker, custodian or other intermediary through which they hold Existing Notes, whether such intermediary would require to receive instructions to participate in, or withdraw their instruction to participate in the Exchange Offers, before the deadlines specified in this offering circular. The deadlines set by each Designated Clearing System for the submission or withdrawal of Exchange Instructions will be earlier than the relevant deadlines specified in this offering circular. Procedures for Tendering Existing Notes General If your Existing Notes are held in the name of a custodian or other securities intermediary, such as a broker, dealer, bank, trust company or trustee, to participate in the Exchange Offers, you must contact such custodian or other securities intermediary and instruct it to tender your Existing Notes on your behalf. You should contact your custodian or other securities intermediary well in advance of the Early Tender Deadline or Expiration Date, as applicable, since your custodian may have earlier deadlines by which it must receive your instructions in order to have adequate time to submit your tender on time. By submitting a valid Exchange Instruction in the Exchange Offers, the direct participant in the Designated Clearing System and the tendering holder on whose behalf it is acting, will be deemed to have made the representations and warranties set forth above under “–Representations, Warranties and Undertakings Relating to Tenders of Existing Notes” to PDVSA, the Information Agent and the Exchange Agent, and they will be deemed to have read and agreed to be bound by the terms and conditions of the Exchange Offers contained in this offering circular. It is the responsibility of holders wishing to participate in the Exchange Offers to validly submit Exchange Instructions in respect of their Existing Notes. Only PDVSA has the right to waive any defects of such instructions submitted by holders. However, PDVSA is not required to waive such defects and is not required to notify a holder of defects in its Exchange Instructions. 36

We believe all Existing Notes are held in book-entry form. If you hold Existing Notes in physical form, please contact the Exchange Agent specified on the back cover of this offering circular for assistance in tendering your Existing Notes. There are no guaranteed delivery provisions provided for in conjunction with the Exchange Offers under the terms of this offering circular. Tendering holders must exchange their Existing Notes in accordance with the procedures set forth in this section. The Designated Clearing Systems We have designated DTC, Euroclear and Clearstream, Luxembourg as “Designated Clearing Systems” for purposes of the Exchange Offers. Procedures for Tendering Existing Notes held through the Designated Clearing Systems Any holder who holds Existing Notes through the Designated Clearing Systems must arrange for a person who is shown in the records of the any of the Designated Clearing Systems as a holder of the Existing Notes (each, a “Direct Participant”) to deliver the holder’s Exchange Instructions (as described below) to such Designated Clearing System prior to the Early Tender Deadline or the Expiration Date, as applicable. Only a Direct Participant in a Designated Clearing System may submit Exchange Instructions in respect of Existing Notes to such Designated Clearing System. “Exchange Instructions” in relation to Existing Notes held through a Designated Clearing System and tendered by a holder or its agent pursuant to the Exchange Offers, comprise: (a)

irrevocable instructions to: (i)

block any attempt to transfer the holder’s Existing Notes on or prior to the Settlement Date;

(ii) debit the holder’s account on the Settlement Date in respect of all of the Existing Notes that such holder has tendered, or in respect of such lesser portion of such Existing Notes as are accepted for exchange by PDVSA, upon receipt of an instruction from the Exchange Agent; and (iii) receive, in return for Existing Notes tendered and accepted for exchange pursuant to the Exchange Offers, New Notes as so specified in the relevant Exchange Instructions, which, in the case of holders that are QIBs, must be instructions to credit the New Notes to such holders’ account in the form of global notes, as such term is defined under “Description of the New Notes;” subject in each case to the automatic withdrawal of the irrevocable instructions in the event that the Exchange Offers are terminated by PDVSA prior to the Expiration Date or the holder validly withdraws its election to participate in the Exchange Offers, as notified to the applicable Designated Clearing System by the Exchange Agent; and (b) authorization to disclose the name of the Direct Participant and information about the foregoing instructions. Exchange Instructions must result in an aggregate principal amount currently outstanding of Existing Notes of at least U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof, which are the minimum authorized denominations of the Existing Notes. By participating in the Exchange Offers in this manner, holders will be deemed to have acknowledged that they have received this offering circular and agree to be bound by the terms of the Exchange Offers and that PDVSA may enforce the terms of the Exchange Offers against such holders. Exchange Instructions must be delivered and received by the applicable Designated Clearing System in

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accordance with the procedures, and on or prior to the deadlines, established by them. Holders are responsible for informing themselves of those deadlines and for arranging the due and timely delivery of Exchange Instructions to the applicable Designated Clearing System. Book-Entry Delivery of the New Notes; Exchange though ATOP. Promptly after the date of this offering circular, the Exchange Agent will establish one or more accounts with respect to the Existing Notes at DTC for purposes of the Exchange Offers. Any financial institution that is a participant in DTC may make book-entry exchanges of Existing Notes by causing DTC to transfer such Existing Notes into the appropriate account of the Exchange Agent in accordance with DTC’s procedure for such transfer. Although delivery of the Existing Notes may be effected through book-entry at DTC, an Exchange Instruction and any other required documents, must be transmitted to and received by the Exchange Agent at its address set forth on the back cover of this offering circular prior to the applicable Expiration Date in order for the holder of such Existing Notes to be eligible to receive the applicable Consideration. Delivery of such documents to DTC does not constitute delivery to the Exchange Agent. Holders who are tendering Existing Notes by book-entry transfer to the Exchange Agent’s account(s) at DTC may execute their exchange through DTC’s ATOP system by transmitting their acceptance to DTC in accordance with DTC’s ATOP procedures: DTC will then verify the acceptance, execute a book-entry delivery to the Exchange Agent’s account(s) at DTC and send an Exchange Instruction to the Exchange Agent. Any acceptance of an Exchange Instruction transmitted through ATOP is at the election and risk of the person transmitting such Exchange Instruction and delivery will be deemed made only when actually received. No documents should be sent to PDVSA. Determination of Validity All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any Exchange Instructions pursuant to any of the procedures described above, and the form and validity (including time of receipt of notices of withdrawal) of all documents in relation to the Exchange Offers, will be determined by PDVSA at its sole discretion, which determination will be final and binding. PDVSA reserves the absolute right to: (a)

reject any and all Exchange Instructions or withdrawal instructions not in proper form, or not made in accordance with the terms of the Exchange Offers, or in respect of which, in the opinion of its legal advisers, the acceptance may be unlawful or in breach of applicable regulations;

(b)

waive any defects, irregularities or delay in the submission of any and all Exchange Instructions or withdrawal instructions; and/or

(c)

waive any such defects, irregularity or delay in respect of particular Existing Notes whether or not PDVSA elects to waive similar defects, irregularities or delay in respect of other Existing Notes.

Any defect, irregularity or delay must be cured within such time as PDVSA may determine, unless waived by it. Exchange Instructions will be deemed not to have been made until such defects, irregularities or delays have been cured or waived. None of PDVSA or the Exchange Agent shall be under any duty to give notice to any holder of any defects, irregularities or delays in any Exchange Instructions or withdrawal instructions nor shall any of them incur any liability for failure to give such notice. Holders must send all materials relating to their tenders through the Designated Clearing Systems to the Exchange Agent and not to PDVSA. Withdrawal of Exchange Instructions Withdrawal Rights The submission of a valid Exchange Instruction in accordance with the procedures set out in this offering

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circular may be withdrawn from any reason at any time prior to 5:00 P.M., New York City Time, September 29, 2016, unless extended or terminated earlier by us at our sole discretion (the “Withdrawal Deadline”). Such Exchange Instructions, however, will be irrevocable from the Withdrawal Deadline except in the limited circumstances described in this section and only in accordance with the withdrawal procedures set out below. We may, among other things, extend the Early Tender Deadline without extending the Withdrawal Deadline, unless required by applicable law. If PDVSA amends the Exchange Offers in any way (including by way of publication of any supplement to the offering circular relating to the Exchange Offers), after the Withdrawal Deadline which, in PDVSA’s opinion, is materially prejudicial to the holders of Existing Notes (the “Affected Notes”) who have already submitted Exchange Instructions in respect of their Existing Notes in respect of the Exchange Offers before the announcement of such amendment (which announcement shall include a statement whether in PDVSA’s opinion such amendment is materially prejudicial to such holders), then, subject to applicable law, such Exchange Instructions in respect of the Affected Notes may be withdrawn at any time from the date and time of such announcement until 5.00 p.m., New York City Time, on the third Business Day (as defined below) following such announcement (subject to the earlier deadlines required by the Designated Clearing Systems and any Direct Participant or other intermediary through which the Existing Notes are held). An Exchange Instruction validly submitted in accordance with the procedures set forth in the section “– Procedures for Tendering Existing Notes” above is otherwise irrevocable after the Withdrawal Deadline. For the avoidance of doubt, and without prejudice to the generality of the foregoing, any decision by PDVSA to extend the Exchange Offers, to defer the announcements of the results of the Exchange Offers, to defer the Settlement Date by up to five Business Days from the original date defined herein, to modify the exchange ratio for the calculation of the consideration payable to holders in respect of Existing Notes validly tendered under the Exchange Offers, or not to accept any or all Exchange Instructions in respect of the Existing Notes received by the Exchange Agent prior to the Expiration Date, shall not require us to extend the Withdrawal Deadline or entitle holders to withdraw any Exchange Instructions. See “Risk Factors—Risk Factors Relating to the New Notes, the Guaranty and the Collateral—The Exchange Offers described herein constitute separate and distinct Exchange Offers and any modifications to the terms of one Exchange Offer will not impact the terms of the other Exchange Offer. This may impact the level of participation in each Exchange Offer and your rights with respect to the Collateral securing the New Notes.” Holders wishing to exercise any withdrawal right should do so in accordance with the procedures set out below. Beneficial owners of Existing Notes that are held through an intermediary are advised to check with such entity when it would require to receive instructions to withdraw an Exchange Instruction submitted in respect of the Exchange Offers in order to meet the Withdrawal Deadline. For the avoidance of doubt, any holder who does not exercise any such withdrawal right in the circumstances and in the manner specified above and as set out in “– Withdrawal Procedures” below, shall be deemed to have waived such withdrawal right and its original Exchange Instruction will remain effective. Withdrawal Procedures Holders wishing to exercise any such withdrawal right should do so by submitting an electronic withdrawal notice in accordance with the procedures of the relevant Designated Clearing System. Beneficial owners of Existing Notes that are held through an intermediary are advised to check with such entity when it would require to receive instructions to withdraw an Exchange Instruction in order to meet the Withdrawal Deadline. For the avoidance of doubt, any holder who does not exercise any such withdrawal right in the circumstances and in the manner specified above, shall be deemed to have waived such withdrawal right and its original Exchange Instruction will remain effective. If a holder has validly withdrawn an Exchange Instruction submitted to a Designated Clearing System in accordance with the procedures set out in this section, it will have the right to submit another Exchange Instruction in respect of the Existing Notes to which such original Exchange Instruction relates prior to the Expiration Date in accordance with the procedures described in this offering circular.

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As used in this section “Terms of the Exchange Offers,” the term “Business Day” means a day other than a Saturday, Sunday or any day on which banking institutions are authorized or required by law to close in the City of New York, New York, United States, the city of London, United Kingdom, or in Venezuela. Termination, Amendments and Extensions At any time before PDVSA announces on the Announcement Date the acceptance of any tenders (in the manner specified below under “—Acceptance of Tenders”), PDVSA may, in its sole discretion and to the extent permitted by the applicable laws, rules and regulations of each jurisdiction in which the Exchange Offers are being made:  termination;

terminate the Exchange Offers, including with respect to tenders submitted prior to the time of the

extend the Exchange Offers past the originally scheduled Expiration Date;

withdraw the Exchange Offers from any one or more jurisdictions; or

 amend the Exchange Offers from time to time in any manner, including amendments in any one or more jurisdictions. If the Exchange Offers are amended in a manner that we determine constitutes a material change, we will extend the Exchange Offers for a period of two to ten Business Days, depending upon the significance of the amendment and the manner of disclosure to the holders, if the Exchange Offers would otherwise have expired during that two- to ten-Business-Day period. We will promptly announce any extension, amendment or termination of the Exchange Offers by issuing a press release. We will announce any extension of the expiration date no later than 9:00 A.M., New York City Time, on the first Business Day after the previously scheduled expiration date. We have no other obligation to publish, advertise or otherwise communicate any information about any extension, amendment or termination. Any change in the consideration offered to holders of Existing Notes pursuant to the Exchange Offers will be paid to all holders whose Existing Notes have previously been tendered and not withdrawn pursuant to the Exchange Offers. There can be no assurance that PDVSA will exercise its right to extend, terminate or amend the Offer. Conditions to the Exchange Offers The consummation of the Exchange Offers are conditioned upon, among other things, the valid tender, without subsequent withdrawal, of at least 50% aggregate principal amount of the Existing Notes that are the target of the Exchange Offers. The Exchange Offers are also subject to certain conditions that we may assert or waive. These conditions include the condition that no event, act or circumstance (including, without limitation, any threatened, instituted or pending action or proceeding before any court or governmental, regulatory or administrative body) has occurred or may occur that, in PDVSA’s reasonable judgment, (a) makes or seeks to make illegal the exchange of Existing Notes for New Notes pursuant to the Exchange Offers; (b) would or might be expected to result in a delay in, or restrict, the ability of PDVSA to issue the New Notes in exchange for Existing Notes; (c) imposes or seeks to impose limitations on the ability of PDVSA to issue the New Notes in exchange for Existing Notes; or (d) impairs or might impair PDVSA from realizing the anticipated benefits of the Exchange Offers. Each of the foregoing conditions is for the sole benefit of PDVSA and may be waived by PDVSA, in whole or in part, at any time and from time to time, in its discretion. Any determination by PDVSA concerning the conditions set forth above (including whether or not any such condition has been satisfied or waived) will be final and binding upon all parties. PDVSA does not intend to grant withdrawal rights in the event that it waives any condition. 40

Acceptance of Tenders PDVSA reserves the right not to accept tenders in its sole discretion, subject to applicable law. If PDVSA elects to accept tenders of Existing Notes submitted pursuant to the Exchange Offers, it will, at or around 6:00 P.M., New York City Time, on the Business Day immediately after the Expiration Date (including any extensions thereunder), as soon as practicable thereafter (the “Announcement Date”), announce by press release, by delivery of notices to the Designated Clearing Systems for communication to Direct Participants, and through publication in the form and manner required in Venezuela and certain other jurisdictions outside the United States:  the approximate aggregate principal amount of Existing Notes duly tendered and accepted by PDVSA for exchange and cancellation,  the approximate aggregate principal amount of New Notes to be issued in the Exchange Offers upon cancellation of tendered Existing Notes, 

the Settlement Date (as defined below), and

the dates correspond to the principal payment dates of the New Notes.

You may obtain such information by contacting the Information Agent. In addition, subject to applicable law, PDVSA will publish the results of the Exchange Offers as described below under “—Announcements.” PDVSA may also publish information concerning tenders in certain jurisdictions prior to the Announcement Date, in the manner and to the extent required in those jurisdictions. The Announcement Date may be postponed by PDVSA for any reason. Once PDVSA has announced the acceptance of exchanges on the Announcement Date as provided above, PDVSA’s acceptance will be irrevocable. Tenders, as so accepted, shall constitute binding obligations of the submitting holders and PDVSA to settle the exchange in the manner described under “—Settlement” below. If PDVSA terminates the Exchange Offers without accepting any exchanges, all exchanges shall automatically be deemed rejected. If PDVSA terminates the Exchange Offers without accepting any exchanges, or does not accept your exchanges, it will instruct the Exchange Agent to instruct the Designated Clearing System through which such tenders were submitted to unblock such Existing Notes held in the direct participant’s account at such Designated Clearing System. Announcements All announcements relating to the Exchange Offers will be made by PDVSA (i) by the issue of a press release; (ii) by the delivery of notices to the Designated Clearing Systems for communication to Direct Participants; and (iii) and through publication in the form and manner required in Venezuela and certain other jurisdictions outside the United States. All announcements and amendments to the documents will also be made available via the information agent website: https://sites.dfkingltd.com/pdvsa. Significant delays may be experienced in respect of notices delivered to the Designated Clearing Systems and holders are urged to contact PDVSA or the Information Agent for the relevant announcements during the course of the Exchange Offers, the contact details for which are on the last page of this offering circular. Settlement The settlement of the Exchange Offers will take place on the date when PDVSA delivers the New Notes in exchange for the Existing Notes validly tendered and accepted for exchange pursuant to the Exchange Offers. It is expected that the Settlement Date will be as soon as practicable (upon satisfaction (or waiver by us at our sole discretion) of the conditions set forth herein) after the Expiration Date, but not, in any event, later than three business days after the Expiration Date (including any applicable Expiration Date following an extension of the 41

Exchange Offers) (the “Settlement Date”). On the Settlement Date PDVSA will deposit the New Notes with the depositary that will hold the New Notes on behalf of DTC. It is expected that the New Notes will be credited to the accounts of tendering holders on or promptly after the Settlement Date. In connection with the settlement, if PDVSA has accepted your tender, you, as the beneficial owner, must have delivered to PDVSA good and marketable title to your Existing Notes, free and clear of all liens, charges, claims, encumbrances, interests, rights of third parties and restrictions of any kind for purposes of cancellation of the Existing Note. If PDVSA accepts your tender, the Exchange Agent will take any and all actions necessary or desirable to complete the transfer and cancellation of Existing Notes in consideration of the issuance of New Notes, including transferring your Existing Notes from your account to the account of the Exchange Agent. The calculation or quotation made with respect to the Exchange Offers by PDVSA will be conclusive and binding on you, absent manifest error. If any tendered Existing Notes are not accepted for any reason described in the terms and conditions of the Exchange Offers, such unaccepted Existing Notes will be returned without expense to the tendering holders as promptly as practicable after the expiration or termination of the Exchange Offers. We will not be obligated to deliver New Notes unless the Exchange Offers are consummated. Certain Consequences to Holders of Existing Notes Not Tendering in the Exchange Offers The following considerations, in addition to the other information described elsewhere in this offering circular, should be carefully considered by each holder of Existing Notes before deciding whether to tender Existing Notes pursuant to the Exchange Offers. Limited Trading Market All Existing Notes tendered and accepted pursuant to the Exchange Offers will be cancelled. Accordingly, the aggregate principal amount of Existing Notes may be reduced substantially if the Exchange Offers are consummated. This is likely to adversely affect the liquidity, market price and price volatility of any Existing Notes not tendered pursuant to the Exchange Offers. Existing Notes not exchanged pursuant to the Exchange Offers will remain outstanding. Treatment of Existing Notes Not Tendered in the Exchange Offers Existing Notes not tendered and exchanged in the Exchange Offers will remain outstanding. The terms and conditions governing the Existing Notes will remain unchanged. No amendment to the terms and conditions of the Existing Notes is being sought. From time to time in the future, we or our subsidiaries may acquire Existing Notes that are not tendered in the Exchange Offers through privately negotiated transactions, tender offers or otherwise, upon such terms and at such prices as we or they may determine, which may be more or less than the price to be paid pursuant to the Exchange Offers and could be for cash or other consideration. There can be no assurance as to which, if any, of these alternatives (or combination thereof) we or our subsidiaries will choose to pursue in the future. Governing Law and Jurisdiction Each Exchange Instruction submitted in a jurisdiction in which the Exchange Offers are being extended on the basis of this offering circular will be governed by and construed in accordance with the laws of the State of New York. By submitting an Exchange Instruction, you (and the Direct Participant on your behalf) irrevocably and unconditionally agree for the benefit of PDVSA, the Information Agent and the Exchange Agent that the New York 42

state or U.S. federal courts sitting in the Borough of Manhattan, City of New York, are to have jurisdiction to settle any disputes which may arise out of or in connection with the Exchange Offers or any of the documents referred to in this offering circular and that, accordingly, any suit, action or proceedings arising out of or in connection with the foregoing may be brought in such courts. No Recommendation None of PDVSA, the Trustee the Information Agent, the Exchange Agent or any Designated Clearing System expresses any opinion regarding: 

the fairness of the terms of the Exchange Offers;

 the accuracy or fairness of the values that result from the methodology for calculations and the setting of other parameters of the Exchange Offers; or  from doing so.

whether you should participate in the Exchange Offers by tendering your Existing Notes or refrain

In addition, no one has been authorized by PDVSA to make any recommendation of any kind regarding your participation in the Exchange Offers or regarding any term, or the fairness or value of any aspect of the Exchange Offers. Repurchases of Existing Notes that Remain Outstanding; Subsequent Exchange Offers PDVSA reserves the right, in its absolute discretion, to purchase, exchange, offer to purchase or exchange, or enter into a settlement in respect of any Existing Notes that are not exchanged pursuant to the Exchange Offers (in accordance with their respective terms) and, to the extent permitted by applicable law, purchase or offer to purchase Existing Notes in privately negotiated transactions, tender offers or otherwise. Any such purchase, exchange, offer to purchase or exchange or settlement will be made in accordance with applicable law. The terms of any such purchases, exchanges, offers or settlements could differ from the terms of the Exchange Offers. Effect of Tender Any tender by a holder, and our subsequent acceptance of that tender, of Existing Notes will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the Exchange Offers described in this offering circular. The participation in the Exchange Offers by a tendering holder of Existing Notes will constitute an express acknowledgement of the representations and warranties set forth under “Representations, Warranties and Undertakings Relating to Tenders of Existing Notes” above. Absence of Dissenters’ Rights Holders of the Existing Notes do not have any appraisal or dissenters’ rights in connection with the Exchange Offers. Financial Advisor Credit Suisse Securities (USA) LLC is acting as the financial advisor for the Exchange Offers. We will pay the financial advisor a fixed fee for its services and will reimburse its reasonable expenses. The financial advisor may hold Existing Notes for its own account and, in addition to its role and compensation as financial advisor, will be permitted to participate in the Exchange Offers on the same terms as are offered to other holders of Existing Notes by this offering circular. Credit Suisse Securities (USA) LLC and its affiliates have engaged in, and may in the future engage in, 43

investment banking and other commercial dealings in the ordinary course of business with PDVSA and its affiliates. They have received, or may in the future receive customary fees and commissions for these transactions. In addition, in the ordinary course of the business activities of Credit Suisse Securities (USA) or its affiliates, they may make or hold investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of PDVSA or its affiliates. Credit Suisse Securities (USA) or its affiliates may have a lending relationship with us and may hedge their credit exposure to us consistent with customary risk management policies. Typically, such arrangers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities of PDVSA and its affiliates. Any such credit default swaps or short positions could adversely affect future trading prices of the New Notes. Credit Suisse Securities (USA) LLC and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. The financial advisor is not being engaged to and will not solicit any holders of Existing Notes in connection with the Exchange Offers. The financial advisor does not make any recommendation to holders of Existing Notes as to whether to exchange or refrain from exchanging their Existing Notes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Loan Agreements.” Other Fees and Expenses We will bear the expenses of soliciting tenders of the Existing Notes. Tendering holders of Existing Notes will not be required to pay any brokerage fee or commission to us, the Exchange Agent or the Information Agent. If, however, a tendering holder handles the transaction through its broker, dealer, commercial bank, trust company or other institution, that holder may be required to pay brokerage fees or commissions. No commission or other remuneration will be paid or given, directly or indirectly, to any party in consideration for soliciting this exchange.

44

EXCHANGE AGENT AND INFORMATION AGENT Exchange Agent D.F. King & Co., Inc. has been appointed the exchange agent for the Exchange Offers (the “Exchange Agent”). All correspondence in connection with the Exchange Offers should be sent or delivered by each holder, or a holder’s nominee, to the Exchange Agent at the address and telephone numbers set forth on the back cover of this offering circular. PDVSA or its affiliates will pay the Exchange Agent reasonable compensation for its services and will reimburse it for certain reasonable expenses in connection therewith. Information Agent D.F. King & Co., Inc. has also been appointed as the information agent for the Offer (the “Information Agent”), and will receive reasonable compensation for its services. Questions concerning tender procedures and requests for additional copies of this offering circular should be directed to the information agent at the address, telephone numbers and website set forth on the back cover of this offering circular. Holders of Existing Notes may also contact their nominee for assistance concerning the Exchange Offers.

45

USE OF PROCEEDS We will not receive any cash proceeds in connection with the Exchange Offers. The Existing Notes exchanged in the Exchange Offers will be retired or cancelled and will not be reissued.

46

CAPITALIZATION The following table sets forth our capitalization, on a consolidated basis, as of December 31, 2015, (A) on an actual basis and (B) as adjusted to give effect to (i) the issuance of U.S.$3,550 million aggregate principal amount of the New Notes, and the cancellation of U.S.$3,550 million Existing Notes exchanged for New Notes (which assumes holders representing at least 50% of the aggregate principal amount of the Existing Notes participated in the exchange and would receive the Total Exchange Consideration and an exchange ratio of 1:1) and (ii) the incurrence of the following principal indebtedness since December 31, 2015: 

In February 2016, PDVSA entered into a revolving credit facility with Banco de Venezuela for a total amount of Bs. 20,000 million (equivalent to U.S.$126 million). The facility has an annual interest rate of 14% and matures in February 2017. In the same month, PDVSA issued in favor of Banco de Desarrollo Económico y Social de Venezuela (BANDES) a renewable investment certificate for a total of U.S.$100 million, with a maturity date of 30 days and a 6.00% interest rate to be paid at maturity. The investment certificate was subsequently renewed under the same conditions in July 2016.

On March 23, 2016, PDVSA entered into a U.S.$300 million credit facility with Banco San Juan Internacional, Inc., comprised of a U.S.$70 million revolving loan facility with a 6.25% per annum interest rate, and a U.S.$230 million term loan facility with a 7.50% per annum interest rate. The maturity date for (i) each revolving loan is 18 months after the date of the relevant disbursement, and (ii) each term loan is 24 months after the date of the relevant disbursement.

In May, June, July and September 2016, PDVSA entered into transactions to partially convert the outstanding commercial debt maintained by various PDVSA affiliates with certain commercial suppliers into financial debt. This conversion has been achieved by the execution of several note agreements which provide for (i) the assumption by PDVSA of a portion of its affiliates’ debt (evidenced in outstanding commercial invoices and contracts) with certain strategic suppliers; (ii) the novation of said commercial debt into a financial debt that cancels the former one; and (iii) the issuance of a three-year note (or several notes) regulated by a note agreement, with quarterly amortizations and an annual interest rate of 6.5%, to each of the participating strategic suppliers. The aforementioned conversions of commercial debt have been successfully executed with GE Capital EFS Financing, Inc., Cementaciones Petroleras Venezolanas, S.A., Petroalianza, C.A., Maritime Contractors de Venezuela, S.A., Weatherford Latin America, S.C.A., Servicios Halliburton de Venezuela, S.A., Environmental Solutions de Venezuela, C.A., Proambiente, S.A., Elecnor, S.A. and Servicios Picardi, C.A., for a total amount of U.S.$1,151 million.

In July 2016, PDVSA issued in favor of Banco de Venezuela three renewable investment certificates for a total amount of Bs. 30,000 million (equivalent to U.S.$ 76 million) with a maturity date of three months and an annual 18% interest rate to be paid monthly. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Loan Agreements.”

This table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Proceeds” and our annual audited consolidated financial statements and the notes to those statements included elsewhere in this offering circular. As of December 31, 2015 Actual As Adjusted (in millions of U.S. dollars) Debt and capital lease obligations: New Notes offered hereby(1) ................................................................................................ __ Other guaranteed notes and bonds(2) ................................................................ 32,318 Other facilities agreements(3) ................................................................................................ 8,053 Loans guaranteed by export credit agencies................................................................ 2,869 476 Capital lease obligations ................................................................................................ Total Debt(4) ................................................................................................................................ 43,716

47

3,550 28,768 9,648 2,869 476 45,311

As of December 31, 2015 Actual As Adjusted (in millions of U.S. dollars) 21,468 Non-controlling interests................................................................................................ 21,468 69,411 69,411 Shareholder’s equity(5) ................................................................................................ 134,595 136,190 Total Capitalization................................................................................................ ___________________________ (1) Reflects the issuance of U.S.$3,550 million of New Notes without giving effect to OID. Assumes the exchange of 50% of Existing Notes for New Notes and an exchange ratio of 1 to 1. (2) Reflects the exchange of 50% of Existing Notes for New Notes. Includes the Existing Notes and other secured and unsecured notes outstanding as of December 31, 2015. See “Management’s Discussion and Analysis and Results of Operations- Loan Agreements.” (3) Includes U.S.$1,595 million consists of U.S.$126 million drawn by PDVSA from financing from Banco de Venezuela, a new investment certificate issued in favor of BANDES of U.S.$100 million, and Senior Guaranteed Notes issued for a total amount of U.S.$1,151 and three investment certificates issued in favor of Banco de Venezuela for a total amount of U.S.$76 million, and U.S.$142 million drawn by PDVSA from a credit facility with Banco San Juan Internacional, Inc. See “Management’s Discussion and Analysis and Results of Operations – Loan Agreements.” (4) Total debt “Actual” does not include U.S.$1,559 million of debt incurred in 2016. See “Management’s Discussion and Analysis and Results of Operations – Loan Agreements.” (5) Excludes non-controlling interests.

Except as disclosed above, there has been no material change to our capitalization since December 31, 2015.

48

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA The following table presents our selected consolidated financial and operating information as of the dates and for each of the periods indicated. This information is qualified in its entirety by reference to, and should be read together with, our annual audited consolidated financial statements, including the notes thereto, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this offering circular. Our selected consolidated statement of comprehensive income data for the years ended December 31, 2015, 2014 and 2013, the selected consolidated statement of financial position data as of December 31, 2015, 2014 and 2013 and the selected consolidated statement of cash flow data as of December 31, 2015, 2014 and 2013, have been derived from our annual audited consolidated financial statements and related notes thereto included elsewhere in this offering circular. Our selected consolidated statement of comprehensive income data for the years ended December 31, 2012 and 2011, the selected consolidated statement of financial position data as of December 31, 2012 and 2011, and the selected consolidated statement of cash flow data as of December 31, 2012 and 2011, have been derived from our annual audited consolidated financial statements and related notes thereto which have not been included in this offering circular. Our annual audited consolidated financial statements were prepared in conformity with International Financial Reporting Standards (IFRS) and audited in accordance with International Standards on Auditing. On December 22, 2015, the shareholder of PDVSA, the Bolivarian Republic of Venezuela, approved a plan to transfer ownership of a portion of PDVSA’s non-oil subsidiaries directly to it at their book value which was U.S.$2,314 million as of December 31, 2015. According to the shareholders resolution, transfer is required to occur within a period of no more than one year following the meeting. The ownership transfer will transfer the subsidiaries outside of the PDVSA corporate structure, and is intended to enable PDVSA to focus on petroleum-related activities. The following affiliates constitute the segregated subsidiaries: PDVSA América, S.A.; PDVSA Industrial, S.A.; PDVSA Naval, S.A.; PDVSA Salud, S.A.; PDVSA Agrícola, S.A.; PDVSA Gas Comunal, S.A.; PDVSA Desarrollos Urbanos, S.A. and Empresa Nacional de Transporte, S.A. As a result of the foregoing, PDVSA restated its 2013 and 2014 financial statements and has presented the financial results of the segregated subsidiaries as Discontinued Operations for 2015, 2014 and 2013. Since PDVSA’s audited financial statements include only two comparative years, the 2014 and 2013 audited consolidated financial statements have been restated to reflect results from Discontinued Operations. Results for 2012 and 2011 have not been restated to reflect results from Discontinued Operations as required by IFRS, and remain as originally presented in the respective year. For the years 2015, 2014 and 2013, the results from the discontinued operations are presented as line item “Discontinued Operations” and separately as a “Summary Consolidated Statement of Comprehensive Income Information from Discontinued Operations.” As of and for the years ended December 31, Summary consolidated statement of comprehensive income information

Continuing operations: Sales of crude oil, products and others(2) Finance income Total income Costs and expenses: Purchases of crude oil and products, net Operating expenses Exploration expenses Depreciation and amortization Selling, administrative and general expenses(5) Production tax, extraction tax and

2014(4) 2013(4) 2012(1) (in millions of U.S. dollars)

2015

2011(1)

55,339 16,830 72,169

101,552 20,343 121,895

110,719 9,316 120,035

124,459 3,152 127,611

124,754 765 125,519

22,965 16,828 50 8,995

37,266 27,400 76 8,038

36,754 23,733 140 8,096

40,012 22,974 492 7,105

39,783 14,511 163 6,871

[0] 6,294

[0] 13,466

[0]

3,998

3,730 17,671

49

As of and for the years ended December 31, Summary consolidated statement of comprehensive income information

other taxes Finance costs Share in equity accounted investees(6) Other expenses, net Profit before contributions for social development and income tax

Social contributions(3) Profit before income tax Income tax Profit from continuing operations Discontinued operations: Gain (loss) from discontinued operations, net of income tax(7) Profit Other comprehensive income: Remeasurements of defined benefits, net of tax Differences on translation of foreign currency Total comprehensive income Net income attributable to: Company’s stockholder Non-controlling interests Profit Total comprehensive income attributable to: Company’s stockholder Non-controlling interests Total comprehensive income

2014(4) 2013(4) 2012(1) (in millions of U.S. dollars)

2015

2011(1)

2,393 [0] 3,986 61,511

4,065 [0] 9,946 100,257

19,262 2,880 [0] 4,239 95,104

17,730 3,401 (64) 3,013 98,661

3,649 278 3,501 90,157

10,658

21,638

24,931

28,950

35,362

9,189 1,469 (3,717) 5,186

5,321 16,317 5,106 11,211

13,023 11,908 7,186 4,722

17,336 11,614 7,279 4,335

30,079 5,283 2,007 3,276

2,159 7,345

(2,137) 9,074

11,113 15,835

4,335

1,353 4,629

(4,998)

1,390

(3,824)

792

(269)

241 2,588

2,001 12,465

896 12,907

22 5,149

87 4,447

6,504 841 7,345

7,386 1,688 9,074

14,254 1,581 15,835

2,798 1,537 4,335

2,773 1,856 4,629

1,747 841 2,588

10,777 1,688 12,465

11,326 1,581 12,907

3,612 1,537 5,149

2,591 1,856 4,447

____________________ (1) For comparative purposes, our summary consolidated statements of comprehensive income information for the years ended December 31, 2012 and 2011 have been restated to reflect the application of IAS 19 enacted by the IASB, pursuant to which a series of changes to the methods used for the accounting of employee benefits, has been instituted. (2) Sales of crude oil, products and others, includes exports and overseas, net in Venezuela and sales of food, services and others. (3) Prior years were reflected as separate line items consisting of “contributions for social development” and “FONDEN.” (4) Our summary consolidated statements of comprehensive income information for the years ended December 31, 2014 and 2013 have been restated to reflect the application of IFRS 5 in order to account for discontinued operations as of December 31, 2015. (5) For presentation purposes, our summary consolidated statements of comprehensive income information for the years ended December 31, 2015, 2014 and 2013, have been reclassified as follows: amounts previously reflected in the “Selling, administrative and general expenses” line item (in the amounts of U.S.$1,712 million, U.S.$9,211 million and U.S.$4,217 million, respectively) have been incorporated into the “Operating expenses” line item. (6) For presentation purposes, our summary consolidated statements of comprehensive income information for the years ended December 31, 2015, 2014 and 2013, have been reclassified as follows: amounts previously reflected in the “Share in equity accounted investees” line item (in the amounts of U.S.$86 million, U.S.$94 million and U.S.$33 million, respectively) have been incorporated into the “Other expenses, net” line item. (7) This amount corresponds to the discontinued operations of the year ended December 31, 2011. On October 15, 2010, PDVSA entered into a purchase agreement with Rosneft Holdings Limited S.A. (Rosneft Holdings) a subsidiary of Rosneft Oil Company OJSC (Rosneft), of U.S.$1,600 million for all the shares held in Ruhr Oël GMBH (ROG) and another amount determined by the values of accounts receivable and inventories of PDVSA Marketing International, S.A. (PMI Panamá) on the transaction date. On May 3, 2011, PDVSA completed the purchase process with Rosneft Holdings and, in accordance with the purchase agreement entered into on October, 2010 received U.S.$3,716 million recognizing a gain of U.S.$1,353 million, which is presented in the consolidated statement of comprehensive income for the year ended on December 31, 2011, under profit (loss) of discontinued operations, net of tax. Summary consolidated statement of financial position information

As of and for the years ended December 31,

50

Assets Property, plant and equipment, net Other non-current assets Restricted cash Total non-current assets Inventories Notes and accounts receivable Restricted cash Prepaid expenses and other assets Assets held for disposal(2) Cash and cash equivalents Total current assets Total assets Equity attributable to: Company’s Stockholder Non-controlling interests Total equity Liabilities Financial debt Other non-current liabilities Total non-current liabilities Financial debt Trade accounts payable Income tax payable Liabilities related to assets held for disposal(2) Other current liabilities Total current liabilities Total liabilities Total equity and liabilities Debt to Equity Ratio(3) Total debt including capital lease Debt / Equity (%)

2013 2012(1) (in millions of U.S. dollars)

2011(1)

2015

2014

127,033 20,371 604 148,008

141,248 30,020 284 171,552

129,831 33,330 227 163,388

115,905 27,419 218 143,542

98,221 26,938 314 125,473

9,676 18,206 326 7,083 12,823 5,821 53,935 201,943

11,764 24,357 1,292 9,884 7,911 55,208 226,760

12,963 36,020 1,327 8,289 9,133 67,732 231,120

11,606 41,706 2,112 11,225 8,233 74,882 218,424

10,116 31,576 1,714 4,665 8,610 56,681 182,154

69,411

67,751

62,263

61,907

59,690

21,468 90,879

22,006 89,757

22,223 84,486

10,579 72,486

9,939 69,629

36,916 21,456 58,372

39,871 41,406 81,277

36,353 45,055 81,408

35,647 39,231 74,878

32,496 32,996 65,492

6,800 19,052 3,444

5,865 20,855 9,554

7,031 21,404 10,116

4,379 16,747 2,267

2,396 12,376 4,452

4,390 19,006 52,692 111,064 201,943

29,006 55,726 137,003 226,760

26,675 65,226 146,634 231,120

47,667 71,060 145,938 218,424

27,809 47,033 112,525 182,154

43,384 51%

40,026 55%

34,892 50%

43,716 48%

45,736 51%

_________ (1) The summary consolidated statements of financial position information as of December 31, 2012 and 2011 have been restated to reflect the application of IAS 19 enacted by the IASB, pursuant to which a series of changes to the methods used for the accounting of employee benefits has been instituted. See note 3(f) to the annual audited consolidated financial statements. (2) Accounts for discontinued operations as of December 31, 2015. See “Presentation of Financial Information—Discontinued Operations.” (3) Calculated as total financial debt and capital leases, including current portion, divided by stockholder’s equity. As of and for the years ended December 31, 2015 Summary consolidated statement of cash flow information Net cash provided by operating activities Net cash used in investment activities Net cash provided from financing activities

2014(2) 2013(2) 2012(1) (in millions of U.S. dollars)

2011(1)

15,183 (17,355)

14,292 (24,448)

21,903 (22,381)

21,543 (25,221)

12,392 (13,728)

467

10,812

1,533

3,301

3,929

_________ (1) The summary consolidated statements of cash flow information as of December 31, 2012 and 2011 have been restated to reflect the application of IAS 19 enacted by the IASB, pursuant to which a series of changes to the methods used for the accounting of employee benefits has been instituted. See note 3(f) to the annual audited consolidated financial statements. (2) Our summary consolidated statements of comprehensive income information for the years ended December 31, 2014 and 2013 have been restated to reflect the application of IFRS 5 in order to account for discontinued operations as of December 31, 2015.

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2015 Venezuela’s proved reserves (mmbls)(1) Crude Oil ............................................. Natural gas in boe(2).............................. Hydrocarbons in boe..........................

As of and for the years ended December 31, 2014 2013 2012 2011 (in millions of U.S. dollars)

300,878 34,715 335,593

299,953 34,201 334,154

298,353 33,981 332,334

297,735 33,864 331,599

297,571 33,661 331,232

Venezuela’s Production (mbpd) PDVSA’s Crude Oil Production........... Total crude oil ....................................

2,746 2,746

2,785 2,785

2,899 2,899

2,910 2,910

2,991 2,991

PDVSA’s production (mbpd) Crude Oil(1)........................................... Natural gas liquids ............................... Natural gas in boe(2).............................. Hydrocarbons in boe..........................

2,746 117 913 3,776

2,785 114 831 3,730

2,899 116 796 3,811

2,910 124 768 3,802

2,991 138 731 3,860

Average production cost ($/boe) Including operating service agreements (3) ........................... Excluding operating service agreements (3) ........................... PDVSA’s refining capacity (mbpd)(4) Venezuela............................................. Caribbean............................................. United States ........................................ Europe.................................................. Total refining capacity .......................

10.68

18.05

11.40

11.09

7.53

3.93

15.10

10.63

10.86

7.23

1,303 401 1,089 29 2,822

1,303 401 1,089 29 2,822

1,303 401 1,089 29 2,822

1,303 401 1,074 29 2,807

1,303 401 1,089 29 2,822

Sales volume exported (mbpd) Crude oil .............................................. Refined products .................................. Total exports.......................................

1,950 475 2,425

1,895 460 2,357

1,935 490 2,425

2,060 508 2,568

1,917 552 2,469

Average sales export price ($/bl) Crude oil .............................................. Refined products .................................. Total exports.......................................

44.65 36.25 39.98

88.42 90.47 85.75

98.21 97.49 99.08

100.75 104.43 103.42

98.67 105.11 100.11

____________________ (1) Proved reserves include both proved developed and undeveloped reserves, as well as our equity participation in former operating agreements with third parties in connection with the Orinoco Oil Belt projects. (2) Gas production is net of gas used for reinjection purposes. Gas is converted to boe at a rate of 5.8 thousand cubic feet of natural gas per barrel of crude oil. (3) Calculated by dividing total costs (excluding depreciation, depletion and production tax payments) and expenses of crude oil, gas and NGL producing activities by total crude oil, NGL and net gas (boe) produced. (4) Amounts represent our interest in the refining capacity of all refineries in which we hold equity or leasehold interest.

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Summary Consolidated Statement of Comprehensive Income Information from Discontinued Operations As of and for the years ended December 31, Summary consolidated statement of comprehensive income information

2015 2014(1) 2013(1) (in millions of U.S. dollars)

Discontinued operations: Total income Costs and expenses Results from operational activities Income tax Gain (loss) from discontinued operations, net of income tax

3,845 1,307 2,538 379

6,544 7,896 (1,352) 785

14,291 2,519 11,772 659

2,159

(2,137)

11,113

____________________ (1) Our summary consolidated statements of comprehensive income information for the years ended December 31, 2014 and 2013 have been restated to reflect the application of IFRS 5 in order to account for discontinued operations as of December 31, 2015.

Summary Consolidated Statement of Cash Flow Information from Discontinued Operations Years ended December 31, 2015 2014(1) 2013(1) (in millions of U.S. dollars) Summary consolidated statement of cash flow information Discontinued operations: Net cash provided by operating activities Net cash used in investment activities Net cash provided from financing activities Cashflows of cash resulting from (used in) discontinued operations

1,971 (1,370)

3,703 (3,312)

(412) (756)

(146)

(51)

137

455 340 (1,031) _________ (1) Our summary consolidated statements of comprehensive income information for the years ended December 31, 2014 and 2013 have been restated to reflect the application of IFRS 5 in order to account for discontinued operations as of December 31, 2015.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our annual audited consolidated financial statements including the notes thereto, contained elsewhere in this offering circular. This section contains forwardlooking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Risk Factors” and other matters set forth in this offering circular. For a description of our critical accounting policies, please see note 4 of our annual audited consolidated financial statements. Overview We are a corporation (sociedad anónima) organized under the laws of Venezuela, formed in 1975 by the Venezuelan government to coordinate, monitor and control all operations relating to hydrocarbons. We are wholly owned by Venezuela and are the holding company for a group of oil and gas companies. We are the fifth largest vertically integrated oil company in the world with daily crude oil production of 2,746 thousand barrels per day as of December 31, 2015, or mbpd, as measured by a combination of operational data, including volume of reserves, production, refining and sales, based on information published in Petroleum Intelligence Weekly on November 16, 2015, a trade publication. We carry out our exploration, development and production (“upstream”) operations in Venezuela and our sales, marketing, refining, transportation, infrastructure, storage and shipping (“downstream”) operations in Venezuela, the Caribbean, North America, South America, Europe and Asia. Through PDV Holding, a wholly-owned subsidiary, we indirectly own 100% of CITGO, a refiner and marketer of transportation fuels, petrochemicals and other industrial oil-based products in the United States. We plan to invest in upstream and downstream projects in Venezuela and abroad in order to satisfy the current and expected global increase in energy demands. Factors Affecting Operating Results Our operating results are a function of oil and gas prices, the volumes and the mix of crude oil and gas and refined petroleum products supplied to customers, refinery margins, utilization rates of refining capacity and operational costs. Contributions for Social Development Pursuant to the Venezuelan Constitution, the Organic Hydrocarbons Law and social policy, we are required to foster Venezuela’s socio-economic development and the welfare of its citizens. To that effect, we make and are expected to continue to make significant financial contributions to social programs, including transfers to FONDEN (Fondo de Desarrollo Nacional) and other programs, which are included in our annual budget together with other expenses aimed to fund specific social projects, as determined by our Board of Directors, certain of which are recorded as part of our capital expenditures in accordance with applicable accounting rules. FONDEN is a special fund that was created by the government of Venezuela in 2005 as a corporation (sociedad anónima) to finance and manage investment projects, public education, health care and other welfare projects in Venezuela, in order to promote the economic and social development of the country. We contribute funds to FONDEN through mandatory transfers required under the Decreto con Rango, Valor y Fuerza de Ley que Crea Contribución Especial por Precios Extraordinarios y Precios Exorbitantes en el Mercado Internacional de Hidrocarburos (Law Decree on the Creation of Special Contribution on Excess Prices and Exorbitant Prices in the International Hydrocarbons Markets) as amended on February 20, 2013, published in the Official Gazette No. 40,114 dated as of February 20, 2013, pursuant to which any time the oil basket prices are higher than the price established in the National Budget Law of the respective fiscal year, a tax is assessed based on the formula described below. Pursuant to the law decree, in any month in which the average Venezuelan oil basket price exceeds the budgeted price per barrel, but is equal to or less than U.S.$80 per barrel, oil and oil derivatives exporters (including us) must pay a tax on exports calculated by multiplying the number of barrels they export in such month by 20% of 54

the amount of the average Venezuelan oil basket price for such month that is greater than the budgeted price per barrel and equal to or less than U.S.$80. In any month in which the average Venezuelan oil basket price is greater than U.S.$80 and less than U.S.$100 per barrel, the tax is assessed at the amount specified in the previous sentence for the first U.S.$80 and at 80% of the total amount of the difference between U.S.$80 and the average price. In any month in which the average Venezuelan oil basket price is equal to or greater than U.S.$100 and less than U.S.$110 per barrel, the tax is assessed at the amount specified in the preceding sentences for the first U.S.$100 and at 90% of the amount in the excess of U.S.$100. Finally, in any month in which the average Venezuelan oil basket price is equal to or greater than U.S.$100, the tax is assessed as specified in the preceding sentences for the first U.S.$110 and at 95% of the excess of the average Venezuelan oil basket price over U.S.$110. The contributions received from this tax are paid directly to FONDEN in U.S. dollars on a monthly basis to carry out social development and infrastructure projects. Historically, our social development contributions, whether made through financial contributions to FONDEN or to other social programs directly funded by us, have been calculated based on our revenues in U.S. dollars. PDVSA, through its annual budget, determines the social contributions to be made by PDVSA during the course of the year. However, PDVSA sends monthly reports to the Venezuelan government for the approval of such disbursements for social contributions, and the Venezuelan government may approve or request a change in the levels of such contributions. In the past, there has always been a margin between our revenues and social development contributions. Between 2011 and 2015, the average social contributions represented 14% of our revenues. We contributed a total of U.S.$30,079 million in 2011, a total of U.S.$17,336 million in 2012, a total of U.S.$13,023 million in 2013, a total of U.S.$5,321 million in 2014, and a total of U.S.$9,189 million in 2015 to social development, which are reflected as social development expenses in our consolidated statements of income included elsewhere in this offering circular. These contributions were made in addition to taxes and dividends we paid to Venezuela in such fiscal years, as well as the social projects we have funded, which are recorded as part of our capital expenditures because they relate to one of our oil and gas production projects. Trends Affecting our Business In our upstream operations, we are focused primarily on completing the quantification of our proved reserves of crude oil in the Orinoco Oil Belt, increasing the overall recovery factor of crude oil by improving existing technology, continuing the development of extra-heavy crude oil projects through new joint ventures with selected partners, and increasing the availability and industrialization of gas, particularly in our offshore reservoirs. With respect to our downstream business, we are investing in upgrading our refining infrastructure in Venezuela, increasing refining capacity in new markets such as Latin America, the Caribbean and, particularly, in Asia. We comply with all environmental standards in these areas and in all areas in which we operate. As of December 31, 2015, PDVSA had invested U.S.$29.06 million in Venezuela towards the implementation of an environmental protection plan and various environmental projects, such as programs for monitoring the conservation of environmental and natural resources, measuring the quality of liquid effluents, and performing annual measurements of atmospheric emissions and air quality studies. The refining business represents an important challenge over the next few years. The combination of reduced refining margins, particularly for deep conversion capacity refiners, stringent environmental requirements, and a depressed economy with a weak demand for refined products, have caused many businesses to cease operations. We have been reducing costs, delaying certain investment projects and reformulating debt structures with respect to some of our international subsidiaries to manage the effects of the depressed economy. In Venezuela, we continue to supply the local market in order to satisfy an increasing demand. However, we are developing a project to convert an important portion of vehicles in Venezuela to natural gas consumption, which will enable us to export more gasoline. In addition, we are developing an important project in Venezuela to increase deep conversion capacity in the Puerto La Cruz Refinery. With respect to our gas business, we are actively promoting private sector participation, in partnership with us, in the exploration, production and processing of non-associated offshore gas reserves.

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Impact of Production Quotas Our consolidated financial results depend primarily on the volume of crude oil we produce and the price levels for hydrocarbons. The level of crude oil production and the capital expenditures needed to achieve such level of production have been among the principal factors determining our financial condition and results of operations since 1990 and are expected to remain the principal factors in determining our financial condition and results of operations for the foreseeable future. Historically, members of OPEC have entered into agreements to reduce their production of crude oil. Such agreements have sometimes increased global crude oil prices by decreasing the global supply of crude oil. Venezuela is a party to and has complied with such agreements, and we expect that Venezuela will continue to comply with such production agreements with other OPEC members. Since 1998, OPEC’s production quotas have resulted in a worldwide decline in crude oil production and substantial increases in international crude oil prices. Beginning with the 160th Meeting of the Conference of OPEC, convened on December 14, 2011 in Vienna, Austria, to the present, OPEC decided to maintain a production level of 30.0 mbpd, including production from Libya, and also agreed that OPEC member countries would, if necessary, take steps (including voluntary downward adjustments of output) to ensure market balance and reasonable price levels. During 2015, the OPEC crude basket price decreased by U.S.$46.77 per barrel, or 49%, from U.S.$96.30 per barrel in 2014 to U.S.$49.53 per barrel in 2015. The average price of our exports, including refined products, decreased by U.S.$45.77 per barrel, or 53%, from U.S.$85.75 per barrel in 2014 to U.S.$39.98 per barrel in 2015. The prices of crude were impacted by market volatility, as well as excess demand resulting from a lift of sanctions against Iran and the utilization of US producers of fracking techniques. Accordingly, OPEC, led by Venezuela, proposed the maintenance of the production quota, with the goal of stabilizing prices; however, OPEC modified production quotas. Impact of Inflation and Devaluation While more than 76% of our revenues from sales and a significant portion of our expenses are in U.S. dollars, some of our operating costs (including income, production and extraction taxes) are incurred in Bolívares. As a result, our financial condition and results of operations are affected by the Venezuelan inflation rate and the timing and magnitude of any change in the $/Bs. exchange rate during a given financial reporting period. Since 1998, the Venezuelan government has used exchange rates to moderate inflation, by devaluing the Bolívar within a pre-determined range. Effective February 13, 2002, however, the Venezuelan government and the BCV adopted a floating exchange rate system, as opposed to the band system previously in effect. As a result of the adoption of a floating exchange rate system, the Bolívar devalued substantially against the U.S. dollar and inflation accelerated in 2002. On February 5, 2003, the Venezuelan government established an exchange control regime, and fixed the exchange rates for the sale and purchase of non-Venezuelan currency at Bs. 1.6 to U.S.$1 and Bs. 1.596 to U.S.$1, respectively. On February 7, 2004, a new foreign exchange rate for the sale and purchase of non-Venezuelan currency was established at Bs. 1.920 to U.S.$1 and Bs. 1.915 to U.S.$1, respectively. On March 1, 2005, a new foreign exchange rate for the sale and purchase of non-Venezuelan currency was established at Bs. 2.150 to U.S.$1 and Bs. 2.145 to U.S.$1, respectively. During 2006, the exchange rate remained unchanged at Bs. 2.150 to U.S.$1. Pursuant to Foreign Exchange Agreement No. 9, which was amended on March 22, 2007 and on August 11, 2009, we may only sell to the Central Bank non-Venezuelan currency required to meet our operational costs in local currency and other obligations. We may maintain funds in non-Venezuelan currencies to cover our non-Venezuelan currency operational, investment and financing expenditures and other obligations, up to a maximum amount not to exceed at any time certain thresholds determined by the Central Bank. On March 2, 2006, the Central Bank authorized us to maintain, at any time, up to U.S.$2 billion in non-Venezuelan currency to cover 56

our non-Venezuelan currency operational, investment and financing expenditures, as well as other obligations. In addition, on February 8, 2007, the Central Bank authorized us to maintain, at any time, up to U.S.$3.5 billion in nonVenezuelan currency to cover expenditures related to our Business Plan. On March 6, 2015, the Central Bank renewed the authorization to maintain up to U.S.$3.5 billion in non-Venezuelan currency to cover our expenditures related to our Business Plan. On January 8, 2010, the Venezuelan government, through the Ministry of Finance and the Central Bank, enacted Foreign Exchange Agreement No. 14, which established a dual exchange rate regime (Convenio Cambiario No. 14), and was in place throughout 2010. As of January 11, 2010, the dual exchange rate regime established an exchange rate of Bs. 2.60 to U.S.$1 for essential goods, including food, health, imports of machinery and equipment, science and technology, as well as all non-petroleum public sector transactions and other special cases. The exchange rate for all other transactions was set at Bs. 4.30 to U.S.$1. This dual exchange rate regime abrogated Foreign Exchange Agreement No. 2 from March 1, 2005, which established a single exchange rate for all transactions of Bs. 2.15 to U.S.$1. Pursuant to Article 5 of Foreign Exchange Agreement No. 14, the exchange rate applicable to the sale of non-Venezuelan currency by PDVSA to the Central Bank to cover local currency expenditures was either Bs. 4.2893 to U.S.$1 or of Bs. 2.5935 to U.S.$1, depending on the Central Bank’s requirements to cover the sale of nonVenezuelan currency to third parties at the rates of Bs. 2.60 to U.S.$1 or Bs. 4.30 to U.S.$1 as provided by Foreign Exchange Agreement No. 14. In addition, Article 5 of Foreign Exchange Agreement No. 14 required that at least 30% of the non-Venezuelan currency sales to the Central Bank be at the rate of Bs. 2.5935 to U.S.$1. On December 30, 2010, the Venezuelan government, through the Ministry of Finance and the Central Bank, enacted an amendment to Foreign Exchange Agreement No. 14 (Convenio Cambiario No. 14), effective as of January 1, 2011, which abrogated the multiple official exchange rates regime in effect since January 2010, establishing a single official fixed exchange rate. Pursuant to such amendment to the Foreign Exchange Agreement No. 14, the single official exchange rate was fixed, for all purposes, at Bs. 4.30/U.S.$1 for the sale of nonVenezuelan currency and at Bs. 4.2893/U.S.$1 for the purchase of non-Venezuelan currency. On January 13, 2011, an amendment to Foreign Exchange Agreement No. 15 (Convenio Cambiario No. 15) was published (and amended on January 27, 2011), extending the application of the Bs. 2.60 /U.S.$1 exchange rate for the sale of non-Venezuelan currency in transactions involving non-Venezuelan currency (or AAD) issued by the Venezuelan Foreign Exchange Commission (Comisión de Administración de Divisas, or CADIVI) on or before December 31, 2010, provided that such transactions have not settled as of the date of the amendment. In addition, in order to qualify for the extended application of the Bs. 2.60/U.S.$1 exchange rate, the transactions involved must relate to imports into Venezuela of food and health products, payments of expenses of Venezuelan students studying abroad, the payment of expenses for health recovery, sports, culture and scientific investigations, payments to retired persons abroad and other cases as determined by CADIVI in its discretion. On February 8, 2013, the Ministry of Finance and the Central Bank enacted an amendment of the Foreign Exchange Agreement No. 14 (Convenio Cambiario No. 14), effective as of February 9, 2013. Pursuant to this amendment, the official exchange rate was fixed at Bs. 6.30/U.S.$1 for the sale of foreign currency, and Bs. 6.2842/U.S.$1 for the purchase of foreign currency. On December 30, 2013, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 24 (Convenio Cambiario No. 24), effective as of December 30, 2013. Pursuant to this Foreign Exchange Agreement, foreign currency originating from activities and transactions that differ from exports of hydrocarbons of PDVSA and its affiliates, joint ventures created under the Organic Hydrocarbons Law, and service companies that are part of the so-called Petroleum Industrial National Conglomerate (Conglomerado Nacional Industrial Petrolero) may be sold at an exchange rate based on the most recent foreign currency auction granted through the direct and indirect currency conversion mechanism, “Supplementary System for the Administration of Foreign Currency” (“SICAD”), as published by the BCV on its web page, less 0.25%. This Foreign Exchange Agreement No. 24 was abrogated on April 4, 2014 by Foreign Exchange Agreements No. 27 and No. 28. On March 10, 2014, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 27 (Convenio Cambiario No. 27), effective as of March 10, 2014, published in Official Gazette No. 40,368 57

dated March 10, 2014, which established SICAD II, a new system for currency exchange that operates in parallel to SICAD. This new system created a new legal variable exchange rate, and unlike SICAD, SICAD II operates via auctions that are held on a daily basis by the Central Bank and are open to the general public in Venezuela for the exchange of currency between U.S. dollars and Bolívares. Unlike SICAD, the proceeds from SICAD II transactions are not restricted to a specific list of uses, provided that SICAD II is not available for use by PDVSA directly. The SICAD II exchange rate may not be lower than the exchange rate established in Foreign Exchange Agreement No. 14 dated February 8, 2013, published in Official Gazette No. 40,108 dated February 8, 2013 (Bs. 6.30/U.S.$1 for the sale of foreign currency, and Bs. 6.2842/U.S.$1 for the purchase of foreign currency). The Central Bank publishes a reference exchange rate for SICAD II operations on a daily basis on its official website. On April 3, 2014, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 28 (Convenio Cambiario No. 28), effective as of April 4, 2014. Pursuant to this Foreign Exchange Agreement, foreign currency originating from activities and transactions other than from sales and/or exports of hydrocarbons by PDVSA, its affiliates and joint ventures created under the Organic Hydrocarbons Law, may only be sold at an exchange rate based on the most recent foreign currency auction granted through SICAD II, as published by the BCV, less 0.25%. The sale of foreign currency originating from oil exports by PDVSA, its affiliates and joint ventures are made at the exchange rate of Bs. 6.2842/U.S.$1 set forth in Exchange Agreement No. 14. Additionally, pursuant to this Foreign Exchange Agreement, foreign currency originating from activities carried out by service companies that are part of the so-called Petroleum Industrial National Conglomerate (Conglomerado Nacional Industrial Petrolero) may only be sold at an exchange rate equivalent to the most recent last foreign currency auction granted through SICAD II, as published by the BCV. Both Foreign Exchange Agreement No. 27 and 28 abrogate and replace Foreign Exchange Agreement No. 24 enacted on December 30, 2013. On February 10, 2015, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 33 (Convenio Cambiario No. 33), published in the Official Gazette No. 6,171 dated February 10, 2015. Through this Foreign Exchange Agreement No. 33, a new foreign exchange system was created, known as Sistema Marginal de Divisas (SIMADI). This system replaced SICAD II, which ceased its operations on February 12, 2015. SIMADI consists of a mechanism to buy and sell foreign currency at a rate set by market transactions where the general public and private and public entities can offer and buy foreign currency without such funds being limited to a specific use or purpose. Likewise, this system established two types of operations based on the amount to be offered or bought in the relevant transaction: (i) high value operations, where the minimum amount to be offered or bought was set at U.S.$3,000; and (ii) retail operations, where the minimum amount to be offered or bought is set at U.S.$300, as published in an Official Communication issued by the Central Bank, dated February 11, 2015. Under the regime of Foreign Exchange Agreement No. 33 there were three (3) official exchange rates: (i) the exchange rate of the CENCOEX of Bs. 6.30/U.S.$1; (ii) the exchange rate of SICAD I and (iii) the exchange rate of SIMADI. On March 9, 2016, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 35 (Convenio Cambiario No. 35), effective as of March 10, 2016, published in Official Gazette No. 40,865 dated March 9, 2016, which established two exchange rates: (i) a protected exchange rate (known as “DIPRO”) fixed at 9.975 to buy and Bs. 10.00 to sell for products related to the food and pharmaceuticals sectors as well as other sectors specified in the Foreign Exchange Agreement and; (ii) the complementary floating exchange market rate (known as “DICOM”), which varies in accordance with market needs, for the remaining sectors. The exchange transactions derived from the export and/or sale of hydrocarbons by PDVSA and its affiliates and joint ventures, as well as those derived from financing operations, financial instruments, capital contributions, asset sales, dividends, collection of debts, and provision of services can be made using any of the exchange rates described above, or any other rate; provided, that if any rate other than the exchange rates described above is to be used, such rate shall be reduced in one-quarter of a percent (0.25%) and must be authorized by the Vice-presidency of the Economic Sector, the Ministry for Bank and Finance and the Central Bank. The Foreign Exchange Agreement No. 35 provides that the mechanisms for the exchange transactions provided in the partially abrogated Foreign Exchange Agreement No. 33 of February 10, 2015, published in the Extraordinary Official Gazette No. 6,171 dated February 10, 2015, shall continue to remain in force until such mechanisms are replaced pursuant to a subsequent Foreign Exchange Agreement. Therefore, the acquisition of foreign currency at the DICOM exchange rate shall continue to be executed through the SIMADI system, which

58

consists of auctions that are held on a daily basis by the Central Bank and are open to the general public in Venezuela for the exchange of currency between U.S. dollars and Bolívares. The annual devaluation rate based upon the official exchange rate for 2014 and 2015 was 0% and 0%, respectively, and the inflation rate was 68.54% and 180.90% for 2014 and 2015, respectively. The following table presents the exchange and inflation rates at December 31 for the years ended 2011 through 2015:

2015

As of and for the year ended December 31, 2014 2013 2012 (in millions of U.S. dollars)

Exchange rates at period-end derived from 6.30 exchange agreement with the BCV (Bs./$1).................. Exchange Rate in SICAD (Bs/$1) ................................13.50 Exchange Rate in SICAD II (Bs/$1) 52.10 Exchange Rate in SIMADI (Bs/$1) 198.69 NCPI(1) Increase (%)...................................................... 180.90 ______________________ (1) National Consumer Price Index

6.30

6.30

12.00 49.99

11.30 -

68.54

56.20

4.30 -

20.07

2011 4.30 -

27.57

In 2014 and 2015, PDVSA conducted foreign exchange operations with the Central Bank through various exchange agreements. Based on these agreements, PDVSA modified its exchange rate contained in its audited consolidated financial statements for 2014 and 2015, and as a result, recognized an exchange gain of U.S.$17,656 million in 2014 and U.S.$15,039 million in 2015, due to the fact that on the dates of the modifications to the exchange rates established in such agreements PDVSA held a net passive monetary position in Bolívares. From January 1, 2016 through the date of this offering circular, PDVSA conducted foreign exchange operations with the Central Bank through various exchange agreements. As a result of these agreements, PDVSA utilizes a modified exchange rate and all 2016 amounts referenced in U.S. dollars in this offering circular, unless otherwise noted, reflect such modified exchange rate. Functional and Presentation Currency Our operations are conducted mainly in the international market for crude oil and refined petroleum products. Therefore, the U.S. dollar is our functional currency. See note 3 to our annual audited consolidated financial statements. Presentation of Consolidated Results Descriptions contained in the Results of Operations sections below, with the exception of the descriptions of “Profit” and “Results from Discontinued Operations,” do not include the results from Discontinued Operations. Results of operations for the year ended December 31, 2015 compared to the year ended December 31, 2014 Production All of our crude oil, liquid natural gas and gas production operations are located in Venezuela. Our production of crude oil averaged 2,746 mbpd in 2015, a 1% decrease from 2,785 mbpd in 2014, primarily because the efforts to increase the production of additional barrels were not sufficient to offset the rate of decline of mature reservoirs. Our production of liquid natural gas averaged 117 mbpd in 2015, as compared to 114 mbpd in 2014. This increase was primarily due to increased output as a result of the gas segregation projects in the North of Monagas, which increased the richness of the gas in the entrance of the gas processing plants in Santa Barbara. Our production of gas (net of amounts re-injected) was 5,296 mmcfd in 2015, a 10% increase as compared to 4,818 mmcfd in 2014. This increase is primarily due to the growth in the production of gas in the Eastern Executive Direction of Production due to the increase in the gas-oil ratio (GOR) in the wells at the Furrial Division and Punta de Mata. The net output of refined petroleum products (including output representing our equity interest in refineries held by our affiliates in the United States and Europe) was 2,055 mbpd in 2015, as compared to 2,184 mbpd in 2014.

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This decrease was primarily the result of the exclusion of refined petroleum products originating from the Chalmette Refinery, as PDVSA’s share of this refinery was sold in 2015. Total Income Total income decreased by U.S.$49,726 million, or 41%, to U.S.$72,169 million in 2015 from U.S.$121,895 million in 2014. This decrease was primarily due to a decrease in the average export price of the Venezuelan basket. Exports of Crude Oil and Refined Products Exports represented 85% of our sales volumes for the year ended December 31, 2015. Our exports increased in volume by 3% to 2,425 mbpd in 2015 from 2,357 mbpd in 2014. This increase was primarily due to an increase in the sale of crude oil outside of Venezuela as a result of reallocation of domestic sales. In addition, exports of refined petroleum products increased by 15 mbpd, or 3%, to 475 mbpd, from 2014 to 2015 due to a decrease in volume of refined petroleum products placed in the domestic market, which resulted in the increase of the volume to be exported. The average export price per barrel for Venezuelan crude oil, refined petroleum products and natural gas liquids was U.S.$44.65 in 2015, as compared to U.S.$88.42 in 2014, representing a 50% decrease. Sales Revenues of International Subsidiaries During 2015, our total sales of crude oil, refined petroleum products and natural gas liquids were 2,357 mbpd during 2014 as compared to 2,425 mbpd of total sales of such products for 2015. CITGO generates most of the sales in excess of our crude oil and natural gas liquids production because it purchases crude oil and refined petroleum products from third parties (including unconsolidated affiliates) to supply CITGO’s refining and marketing network in the United States. CITGO’s sales revenues decreased by U.S.$14.6 million, or 37%, to U.S.$24.6 million in 2015 from U.S.$39.2 million in 2014, due to a decrease in average sales price. Domestic Sales We sold 594 mbpd of refined petroleum products (including liquid natural gas) domestically in 2015, a 10% decrease as compared to 663 mbpd sold domestically in 2014. This decrease was mainly due to effect of the legislation and related measures passed to prevent the smuggling and extraction of fuel, which reduced sales in border cities. We also sold 239 mbpd of oil equivalent of gas in 2014 and 278 mbpd of oil equivalent of gas in 2015. Domestic sales decreased 10% from U.S.$663 million in 2014 to U.S.$594 million in 2015. This decrease was primarily due to exchange rates used in transactions pursuant to the exchange control regulations on the financial statements. Sales of crude oil, products and others Sales of crude oil, products and others decreased by 45.5%, from U.S.$101,552 million in 2014 to U.S.$55,339 million in 2015. The decrease was mainly due to the decline in the average price of the Venezuelan export basket. Finance Income Our finance income decreased by U.S.$3,513 million, or 17%, from U.S.$20,343 million in 2014 to U.S.$16,830 million in 2015. This decrease was principally due to the adjustment of the exchange rate. Costs and Expenses Purchases of Crude Oil and Refined Petroleum Products, Net of Inventory Variation Our purchase of crude oil and refined petroleum products, net of inventory variation decreased by 38% to U.S.$22,965 million in 2015 from U.S.$37,266 million in 2014, despite an increase on a volume basis. This decrease was primarily due to the decline in oil prices.

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Operating Expenses Our operating expenses decreased by U.S.$10,572 million, or 39%, to U.S.$16,828 million in 2015 from U.S.$27,400 million in 2014. This decrease was the result of a decrease in the sales and administration expenses and the adjustment of the exchange rate. Exploration Expenses Our total exploration expenses were U.S.$50 million in 2015, which was a decrease of U.S.$26 million, or 34%, as compared to U.S.$76 million in 2014. The decrease in exploration expenses is primarily attributable to the fluctuation in the average Bolívares/USD exchange rate applicable to exploration expenses. Depreciation and Amortization Depreciation and amortization increased by U.S.$957 million, or 12%, to U.S.$8,995 million in 2015 from U.S.$8,038 million in 2014. This increase was primarily a result of the capitalizations and increase of the regular operations of PDVSA’s and its affiliates’ oil business, mainly of PDVSA Gas. Production Tax, Extraction Tax and Other Taxes Production tax, extraction tax and other taxes decreased by U.S.$7,172 million, or 53%, to U.S.$6,294 million in 2015 from U.S.$13,466 million in 2014. This decrease is primarily due to a decrease in the average settlement price to U.S.$34 per barrel. Finance Costs Finance costs decreased by U.S.$1,672 million, or 41%, to U.S.$2,393 million in 2015 from U.S.$4,065 million in 2014. This decrease in financial expenses resulted primarily from the fluctuation in the average Bolívares/USD exchange rate, which impacted the Bolívar-denominated portions of financing costs. Contributions for Social Development Contributions for social development increased by U.S.$6,200 million, or 308%, to U.S.$8,215 million in 2015 from U.S.$2,015 million in 2014 mainly due to disbursements through Fondo Independencia, a fund funded by the differential gained by PDVSA as a result of the difference between the official exchange rate and the rate applicable to the production tax calculation. These disbursements were made, despite the fact that the oil barrel price was lower than the price required by law for such disbursement. In support of social projects carried out by the Bolivarian Republic of Venezuela, PDVSA contributed U.S.$4,010 million to the “Gran Misión Vivienda Venezuela,” created by the Bolivarian Republic of Venezuela in April 2011, in order to address housing needs in Venezuela. During 2013, 2014 and 2015, PDVSA did not provide contributions to this program. For the year ended December 31, 2015, contributions to FONDEN decreased by U.S.$2,332 million, or 70%, to U.S.$974 million, from U.S.$3,306 million for the year ended December 31, 2014, as a result of decrease in oil prices. Share in Equity Accounted Investees Share in equity accounted investees increased by U.S.$8 million, or 9%, to a loss of U.S.$86 million in 2015 from a loss of U.S.$94 million in 2014. This increase resulted mainly from the exclusion of the results from Discontinued Operations, and the sale of PDVSA’s share of the Chalmette Refinery. Income Tax Income tax during 2015 decreased by U.S.$8,823 million, or 173%, to a credit of U.S.$3,717 million from a debit of U.S.$5,106 million in 2014. This decrease was principally due to the sale of foreign currency made by CVP through SIMADI, the decrease in total income, exchange rate losses, and inflation adjustments.

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Results from Discontinued Operations Income from Discontinued Operations during 2015 decreased by U.S.$2,699 million, or 41.2%, to U.S.$3,845 million from U.S.$6,544 million in 2014. Costs and expenses from Discontinued Operations during 2015 decreased by U.S.$6,589 million, or 83.5%, to U.S.$1,307 million from U.S.$7,896 million in 2014. Results for operational activities from Discontinued Operations during 2015 increased by U.S.$3,710 million, or 274.4%, to a profit of U.S.$2,538 million from a loss of U.S.$1,352 million in 2014. Income tax from Discontinued Operations during 2015 decreased by U.S.$406 million, or 52%, to U.S.$379 million from U.S.$785 million in 2014. Profit Profit during 2015 decreased by U.S.$1,729 million, or 19.1%, to U.S.$7,345 million from U.S.$9,074 million in 2014. This decrease was principally due to the decrease in sales of crude oil, products and others, and losses from differential exchange rates in transactions pursuant to the exchange control regulations. Results of operations for the year ended December 31, 2014 compared to the year ended December 31, 2013 Production All of our crude oil, liquid natural gas and gas production operations are located in Venezuela. Our production of crude oil averaged 2,785 mbpd in 2014, a 4% decrease from 2,899 mbpd in 2013, primarily because efforts to increase the production of additional barrels were not sufficient to offset the rate of decline of mature reservoirs. Our production of liquid natural gas averaged 114 mbpd in 2014, as compared to 116 mbpd in 2013. This decrease was primarily due to a decrease in the quality of the gas being supplied to certain liquid natural gas extraction plants. Our production of gas (net of amounts re-injected) was 4,818 mmcfd in 2014, a 4% increase as compared to 4,616 mmcfd in 2013. This increase is primarily due to an increase in the gas-oil ratio (GOR) in the deposits of northern Monagas as a result of gas injections. The net output of refined petroleum products (including output representing our equity interest in refineries held by our affiliates in the United States and Europe) was 2,184 mbpd in 2014, as compared to 2,207 mbpd in 2013. This was primarily caused by the decrease in the volume of refined petroleum products produced in Venezuela. Total Income Total income increased by U.S.$1,860 million, or 2%, to U.S.$121,895 million in 2014 from U.S.$120,035 million in 2013. This increase was primarily due to an increase in our finance income, which was due primarily to the effect of changes in the applicable exchange rate Bolívar/U.S. dollar. This increase in total income was partially offset by a decrease in the total amount of our exports and overseas sales, due to a decrease in the average export price of the Venezuelan basket. Exports of Crude Oil and Refined Products Exports represented 81% of our sales volumes for the year ended December 31, 2014. Our exports decreased in volume by 2% to 2,357 mbpd in 2014 from 2,425 mbpd in 2013. This decrease was primarily due to an increase in sales of crude oil in Venezuela. In addition, exports of refined petroleum products decreased by 30 mbpd, or 6%, to 460 mbpd, from 2013 to 2014, due to an increase in the consumption and demand for refined petroleum products in the Venezuelan domestic market. The average export price per barrel for Venezuelan crude oil, refined petroleum products and natural gas liquids was U.S.$88.42 in 2014, as compared to U.S.$98.08 in 2013, representing a 10% decrease. Sales Revenues of International Subsidiaries During 2014, the total volume of crude oil and refined petroleum products that we sold exceeded our total production of crude oil and natural gas liquids. Our total sales of crude oil, refined petroleum products and natural 62

gas liquids were 2,425 mbpd during 2013 as compared to 2,357 mbpd of total sales of such products for 2014. CITGO generates most of the sales in excess of our crude oil and natural gas liquids production because it purchases crude oil and refined petroleum products from third parties (including unconsolidated affiliates) for supply to CITGO’s refining and marketing network in the United States. CITGO’s sales revenues decreased by U.S.$3.0 million, or 7%, to U.S.$39.2 million in 2014 from U.S.$42.2 million in 2013 due to a decrease in average sales price as sales volumes remained relatively flat. Domestic Sales We sold 663 mbpd of refined petroleum products (including liquid natural gas) domestically in 2014, a 6% decrease as compared to 703 mbpd sold domestically in 2013. This decrease was mainly due to effect of the legislation passed and related measures taken to prevent the smuggling and extraction of fuel. We also sold 247 mbpd of oil equivalent of gas in 2013 and 231 mbpd of oil equivalent of gas in 2014. Domestic sales increased 153% from U.S.$1,064 million in 2013 to U.S.$2,690 million in 2014, primarily due to the increase in gas stations under PDVSA’s control, resulting from the takeover of stations under wholesaler names pursuant to the Local Market Reorganization Plan (Plan de Reordenamiento del Mercado Interno). Sales of crude oil, products and others Sales of crude oil, products and others decreased by 8%, from U.S.$110,719 million in 2013 to U.S.$101,552 million in 2014. The decrease was mainly due to a decrease in the average export price of crude oil and refined products. Finance Income Our finance income increased by U.S.$11,027 million, or 118%, from U.S.$9,316 million in 2013 to U.S.$20,343 million in 2014. This increase was principally due to the effect of the change in the exchange rate, pursuant to which balances in Bolívares of monetary items were translated into U.S. Dollars using the new exchange rate, giving rise to an exchange gain derived from holding a net passive monetary position in Bolívares at the date of the change to the exchange rate. Costs and Expenses Purchases of crude oil and products, net Our purchase of crude oil and refined petroleum products, net increased by 1.3% to U.S.$37,266 million in 2014 from U.S.$36,754 million in 2013. This increase was primarily due to the increase in the volume of sales to third parties. Operating Expenses Our operating expenses increased by U.S.$3,667 million, or 15%, to U.S.$27,400 million in 2014 from U.S.$23,733 million in 2013. This increase was the result of the increased cost of labor benefits as a result of the collective bargaining agreement entered into in February 2014, which was partially offset by the decrease in the Bolívar-denominated portion of these expenses due to the differential exchange rates in transactions pursuant to the exchange control regulations. Exploration Expenses Our total exploration expenses were U.S.$64 million in 2014, which was a decrease of U.S.$76 million, or 46%, as compared to U.S.$140 million in 2013. The decrease was the result of the decline in the portion in Bolívares due to the fluctuation in the exchange rates in transactions pursuant to the exchange control regulations. Depreciation and Amortization Depreciation and amortization decreased by U.S.$58 million, or 7.2%, to U.S.$8,038 million in 2014 from

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U.S.$8,096 million in 2013. This decrease was primarily a result of the exclusion of the results from Discontinued Operations. Production Tax, Extraction Tax and Other Taxes Production tax, extraction tax and other taxes decreased by U.S.$5,796, or 30%, to U.S.$13,466 million in 2014 from U.S.$19,262 million in 2013. This decrease is primarily due to the decrease in production and the decline of the average wellhead price. Finance Costs Finance costs increased by U.S.$1,185 million, or 41%, to U.S.$4,065 million in 2014 from U.S.$2,880 million in 2013. This increase in financial expenses resulted primarily from the issuance of the new debt. Contributions for Social Development Contributions for social development decreased by U.S.$7,702 million, or 59%, to U.S.$5,321 million in 2014 from U.S.$13,023 million in 2013 mainly due to the modification of the oil prices considered as extraordinary from U.S.$70 USD/bbl to U.S.$80 USD/bbl pursuant to the Ley que Crea Contribución Especial por Precios Extraordinarios y Precios Exorbitantes en el Mercado Internacional de Hidrocarburos (Law that Creates Special Contributions for Extraordinary Prices and Exorbitant Prices in the International Hydrocarbons Market), as well as due to a decline in the average price of the Venezuela crude oil basket and the reduction of the Bolívar-denominated portion of expenses as a result of the conversion of such portion to foreign currency. In support of social projects carried out by the Bolivarian Republic of Venezuela, PDVSA contributed U.S.$4,010 million to the “Gran Misión Vivienda Venezuela,” created by the Bolivarian Republic of Venezuela in April 2011, in order to address housing needs in Venezuela. During 2013 and 2014, PDVSA did not provide contributions to this program. Likewise, contributions to FONDEN decreased by U.S.$1,888 million, or 36%, to U.S.$3,306 million, for the year ended December 31, 2014, from U.S.$5,194 million for the year ended December 31, 2013, as a result of the decrease of Venezuela’s crude oil basket price. Share in Equity Accounted Investees Share in equity accounted investees increased by U.S.$29 million, or 24%, to a U.S.$94 million loss in 2014 from a loss of U.S.$123 million in 2013. This increase resulted mainly from the exclusion of the results from Discontinued Operations. Income Tax Income tax during 2014 decreased by U.S.$2,080 million, or 29%, to U.S.$5,106 million from U.S.$7,186 million in 2013. This decrease was principally due to the reduction in the current income tax. Results from Discontinued Operations Income from Discontinued Operations during 2014 decreased by U.S.$7,747 million, or 54.2%, to U.S.$6,544 million from U.S.$14,291 million in 2013. Costs and expenses from Discontinued Operations during 2014 increased by U.S.$5,377 million, or 213.5%, to U.S.$7,896 million from U.S.$2,519 million in 2013. Results for operational activities from Discontinued Operations during 2014 decreased by U.S.$13,124 million, or 111.5%, to a loss of U.S.$1,352 million from a profit of U.S.$11,772 million in 2013. Income tax from Discontinued Operations during 2014 increased by U.S.$126 million, or 19.1%, to U.S.$785 million from U.S.$659 million in 2013. Profit Profit during 2014 decreased by U.S.$6,761 million, or 42.7%, to U.S.$9,074 million from U.S.$15,835

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million in 2013. This decrease was principally due to an increase in operating, sales and general expenses as a result of an increase in labor benefits. Additionally, the decrease was due to a loss resulting from discontinued operations in the non-oil sector and the depreciation of the value of assets associated with certain refineries, which was offset by the increase in finance income and the decline in the contributions to social development. Impact of Taxes on Net Income and Cash Flows In accordance with Venezuelan income tax law, our income tax expense is based on our accounting records as recorded in Bolívares. For fiscal purposes, Venezuelan companies are required to reflect the impact of inflation and, subject to certain conditions, the variations in the rate of the Bolívar relative to the U.S. dollar and other foreign currencies by adjusting non-monetary assets and stockholder’s equity on their fiscal balance sheets. The Venezuelan income tax law considers any gain resulting from this adjustment as taxable income and any loss as a deductible expense. Such adjustments affect our taxable income and therefore the amount of our income tax liability in Bolívares. When such tax liabilities are translated into U.S. dollars, the adjustments may create a material difference between the effective tax rate paid when expressed in U.S. dollars and the statutory rate in Bolívares. On May 24, 2006, an amendment to the Organic Hydrocarbons Law modified existing taxes and created new taxes as described below. Production tax. The Organic Hydrocarbons Law provides for the payment by oil companies of a royalty levied at a 30% rate on the volume of extracted hydrocarbons, which can be paid in kind or in cash, at the government of Venezuela’s option. For mature reservoirs or extra-heavy crude oil from the Orinoco Oil Belt, the Organic Hydrocarbons Law provides for a tax of 20% to 30%. The tax is fully deductible for the purposes of determining net taxable income. Surface tax. The surface tax is calculated at the annual rate of 100 tax units for each square kilometer or fraction thereof. Surface tax is determined based on the concession area not under production, with an annual increase of 2% for five years and 5% in subsequent years. General consumption tax. The general consumption tax is determined at a rate ranging between 30% and 50% of the price paid by the final customer and is applicable to each liter of hydrocarbon-derived product sold in the domestic market. The consumption tax rate is determined annually. We are also taxed on our own consumption, equivalent to 10% of the value of each cubic meter of hydrocarbon-derived product consumed as fuel oil in our operations, calculated based on the final sale price. Extraction tax. The extraction tax is calculated at a rate of one third of the value of all the liquid hydrocarbons extracted from an oil field (from the same base established by the law for production tax calculation). The taxpayer may deduct from the amount to be paid what it will pay as a production tax, including any additional royalty paid in advance. Export registration tax. The export registration tax is calculated at a rate of one thousandth of the value of all hydrocarbons exported from a port in the national territory (based on the sale prices of these hydrocarbons). Income tax. Our Venezuelan subsidiaries engaged in the production of hydrocarbons and related activities are subject to a 50% income tax. Article 11 of the Venezuelan Income Tax Law provides for a 34% reduced tax rate for companies that carry out exploration and exploitation activities of non-associated gas or processing, transport, distribution, storage, commercialization and export activities of gas and their components and those companies devoted exclusively to the refining or upgrading of heavy and extra-heavy crude oil. Pursuant to the Venezuelan Income Tax Law, taxpayers subject to income tax who carry out import, export and loan operations with related parties domiciled abroad are obliged to determine their income, costs and

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deductions by applying transfer pricing rules. We have obtained studies supporting our transfer pricing methodology. The resulting effects are included as a taxable item in the determination of our income tax. We undertake significant operations regulated by such transfer pricing rules. Windfall contribution. We contribute funds to FONDEN through mandatory transfers required under the Decreto con Rango, Valor y Fuerza de Ley que Crea Contribución Especial por Precios Extraordinarios y Precios Exorbitantes en el Mercado Internacional de Hidrocarburos (Law Decree on the Creation of Special Contribution on Excess Prices and Exorbitant Prices in the International Hydrocarbons Markets) as amended on February 20, 2013, published in the Official Gazette No. 40,114 dated February 20, 2013. This amendment provides for an increase of U.S.$10 per barrel (from U.S.$70 to U.S.$80 per barrel) the budgeted price per barrel on which the excess windfall contribution described below is imposed. Under this windfall contribution, any time the oil basket prices are higher than the price established in the National Budget Law of the respective fiscal year, a tax is assessed based on the formula described below. The Board of Directors does not have discretion to declare and/or retain contributions, and all contributions are made in accordance with Venezuelan law. Pursuant to the law decree, in any month in which the average Venezuelan oil basket price exceeds the budgeted price per barrel, but is equal to or less than U.S.$80 per barrel, oil and oil derivatives exporters (including us) must pay a tax on exports calculated by multiplying the number of barrels they export in such month by 20% of the amount of the average Venezuelan oil basket price for such month that is greater than the budgeted price per barrel and equal to or less than U.S.$80. In any month in which the average Venezuelan oil basket price is greater than U.S.$80 and less than U.S.$100 per barrel, the tax is assessed at the amount specified in the previous sentence for the first U.S.$80 and at 80% of the total amount of the difference between U.S.$80 and the average price. In any month in which the average Venezuelan oil basket price is equal to or greater than U.S.$100 and less than U.S.$110 per barrel, the tax is assessed at the amount specified in the preceding sentences for the first U.S.$100 and at 90% of the amount in the excess of U.S.$100. Finally, in any month in which the average Venezuelan oil basket price is equal to or greater than U.S.$110, the tax is assessed as specified in the preceding sentences for the first U.S.$110 and at 95% of the excess of the average Venezuelan oil basket price over U.S.$100. The per barrel prices described above were each increased by U.S.$10 per barrel from the prices that were in effect prior to the amendment of the law decree on February 20, 2013. The contributions received from this tax are paid directly to FONDEN in U.S. dollars on a monthly basis to carry out social development and infrastructure projects. Value Added Tax (VAT). Venezuela levies a value added tax at a 12% rate on sales. As an exporter, each of our Venezuelan operating subsidiaries is entitled to a refund for a significant portion of such taxes paid, which we classify on our balance sheet as recoverable value added tax. The Venezuelan tax authority issues tax recovery certificates, or CERTs, which can be used to pay future tax liabilities. In 2001, we were able to pay U.S.$209 million through CERTs. In 2002, 2003, 2004, 2005, 2007, 2009, 2010, 2011, 2012, 2013, 2014, and 2015, we did not settle any tax liabilities through CERTs. In 2008 and 2006, we settled tax liabilities amounting to U.S.$682 million and U.S.$647 million through CERTs, respectively. A summary of the tax effects on our consolidated operations for the years ended December 31, 2015, 2014 and 2013 is as follows:

For the year ended December 31, 2014 2013 (in millions of U.S. dollars) (3,717) 5,106 7,186 6,294 13,466 19,262 2,577 18,572 26,448 2015

Income tax.................................................................................................................... Production and other taxes ........................................................................................... Total ............................................................................................................................

Liquidity and Capital Resources Liquidity As of December 31, 2015, we had cash and cash equivalents of $5,821 million. Our primary sources of liquidity are cash flow from operations and short- and long-term borrowings in U.S. dollars and Bolívares. We must continue to invest capital to maintain or increase the number of hydrocarbon reserves that we operate and the 66

amount of crude oil that we produce and process. In the ordinary course of business, we and our subsidiaries enter into loan agreements and credit facilities to fund our capital requirements and liquidity needs. A number of the credit facilities and loan agreements entered into by our subsidiaries contain covenants that restrict their ability to, among others, make certain payments, incur additional debt, pay dividends, encumber assets and dispose of certain assets. We do not have funds designated for, or subject to, permanent reinvestment in any country in which we operate. Distributions of the earnings of our subsidiaries are subject to the withholding taxes imposed by the subsidiaries’ jurisdictions of incorporation. From time to time, however, we may be unable to receive dividends from our subsidiaries and associated company as a result of a lack of distributable reserves or limitations under our contractual arrangements. In addition, we are also limited in usage of certain cash, with such restricted cash constituting an aggregate amount of $930 million as of December 31, 2015, either because such cash deposits are time deposits or as a result of the loan covenants relating to our assets in Bolívares. Our principal needs for liquidity generally consist of capital expenditures related to oil and gas exploration and production, refining, trade and supply and working capital requirements (e.g., maintenance costs). As part of our growth strategy, we have embarked on an ambitious capital expenditure plan to expand and upgrade our existing production and refining capacity. These and our activities in the future may require us to make significant capital expenditures and/or raise significant capital. Additionally, we are required by Venezuelan law to make significant financial contributions to social programs. While we determine the social contributions to be made by us during the course of the year, we send monthly reports to the Venezuelan government for the approval of such disbursements for social contributions, and the Venezuelan government may approve or request a change in the levels of such contributions. Between 2011 and 2015, our average social contributions represented 14% of our revenues. See “— Contributions for Social Development.” The availability of these sources of capital when the need arises will depend upon a number of factors, some of which are beyond our control. Additionally, we may not be able to find additional financing on commercially reasonable terms. See “Risk Factors— Our liquidity and ability to generate cash depends on many factors beyond our control, and any failure to meet our debt obligations could harm our business, financial condition, and results of operations.” We believe that our liquidity is sufficient to cover our working capital needs in the ordinary course of our business. Contractual Obligations The following table presents our contractual obligations as of December 31, 2015 (by maturity):

Book Value Long term debt ................................ 43,240 476 Finance lease obligations................................ 43,716 Total ................................................................

Contractual Cash Flow 65,102 633 65,735

Payments due by period Less than 1 year 1 to 3 years 3 to 5 years (in millions of U.S. dollars) 9,947 16,698 12,326 90 290 52 10,036 16,988 12,378

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More than 5 years 26,132 201 26,333

Cash Flows from Operating Activities For the year ended December 31, 2013, our net cash provided by operating activities amounted to U.S.$21,903 million, which represents an increase of U.S.$360 million, or 2%, from our net cash provided by operating activities of U.S.$21,543 million in 2012. The main factors contributing to this increase were an increase in net income, a gain from sale and exchange operations, and higher deferred tax benefits. For the year ended December 31, 2014, our net cash provided by operating activities amounted to U.S.$14,292 million, which represents a decrease of U.S.$7,611 million, or 35%, from our net cash provided by operating activities of U.S.$21,903 million in 2013. The main factor contributing to this decrease was a decrease in net income due to an increase in operating costs. In addition, a significant increase of the income derived from exchange gain was recorded. For the year ended December 31, 2015, our net cash provided by operating activities amounted to U.S.$15,183 million, which represents an increase of U.S.$891 million, or 6.23%, from our net cash provided by operating activities of U.S.$14,292 million in 2014. The main factor contributing to this increase was a decrease in the net foreign exchange gain. Cash Flows from Investing Activities For the year ended December 31, 2013, net cash used in investment activities totaled U.S.$22,381 million compared to U.S.$25,221 million for 2012. This decrease was due to a decline in acquisitions of property, plants and equipment. For the year ended December 31, 2014, net cash used in investment activities totaled U.S.$24,448 million compared to U.S.$22,381 million for 2013. This increase was due to an increase in the addition of properties, plants and equipment, which were mainly acquired by PDVSA Petróleo, S.A. as a result of the execution of investment programs. For the year ended December 31, 2015, net cash used in investment activities totaled U.S.$17,355 million compared to U.S.$24,448 million for 2014. This decrease resulted from acquisitions of properties, plants and equipment. In addition, restricted cash decreased by U.S.$646 million in 2015, compared to a U.S.$146 million increase registered in 2014, due to the decline in the balance of certain letters of credit and liquidity accounts. For the three-year period ended December 31, 2015 our capital expenditures were as follows: For the year ended December 31, 2015 2014 2013 (in millions of U.S. dollars) In Venezuela: Exploration and Production ......................................... Refining, trade and supply ........................................... Gas .............................................................................. Others .......................................................................... Foreign-Refining ......................................................... Others .......................................................................... Total............................................................................

13,132 1,764 959 1,336 17,191 607 308 18,106

13,854 2,088 4,295 4,181 24,418 426 207 25,051

12,750 4,342 2,868 2,938 22,898 400 232 23,530

Restricted Cash The purpose of the FEM (formerly known as FIEM) is to achieve budgetary stability at the national, state and local levels. Under the original terms of the regulations governing the FEM, we and the Venezuelan government, acting on its own behalf and on behalf of states and municipalities, contributed royalties, dividends, tax revenues and transfers related to the petroleum sector in excess of the average of payments on account of royalties, dividends, tax revenues and transfers.

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In February 2011, in accordance with instructions by the Bolivarian Republic of Venezuela, all of the funds held by PDVSA in the FEM were transferred to the Fondo de Desarrollo Nacional (FONDEN). As of December 31, 2015, there were no funds deposited in the FEM. Funds for Extra-heavy Crude Oil Projects in the Orinoco Oil Belt. Certain restricted funds allocated to the extra-heavy crude oil projects in the Orinoco Oil Belt correspond to restricted cash that cannot be utilized in the operations of the subsidiary of PDVSA Petróleo. The funds, deposited mainly in money market accounts in financial institutions abroad, are restricted in order to comply with commitments related to the financing received for the development of these projects. See note 16 to our annual audited consolidated financial statements. Trusts in BANDES. During 2003 and 2004, CVP and the Bank for Social and Economic Development of Venezuela (known as “BANDES”) entered into trust agreements for the administration and investment of certain trust assets intended for (i) Programs and Projects of Housing and Infrastructure Development, (ii) Programs and Projects related to Ezequiel Zamora Fund for Agricultural Investment, (iii) Programs and Projects of the Works, Goods and Services intended for the Development of Infrastructure, Agricultural Activity, Highways, Health and Education (“FONDESPA”), and (iv) the Integral Agreement for cooperation with the Republic of Argentina between Venezuela and the Republic of Argentina, and approved by the Board of Directors of PDVSA on July 15, 2004. Fund for Social and Economic Development of the Country (FONDESPA). This fund was approved on January 23, 2004 and established in dollars at BANDES with funds from crude oil exports and its products exceeding the budgeted average price per barrel, net of production tax, taxes and other direct expenses in 2004, 2005 and 2006. No funds have been transferred to this trust since 2006. During 2014, we retired part of the funds held in this trust. See note 16 to our annual audited consolidated financial statements. The Integral Agreement of Cooperation with the Argentine Republic. This fund was created in July 2004 and comprises cash and securities in dollars received from Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima (CAMMESA), Argentina’s State energy company, for the sales of crude oil and related products by PDVSA under the agreement. Payments from this fund will be made only to companies in the Argentine Republic for the import of products from Argentina into Venezuela, which are included as contributions for social development. In 2012, a new trust was set up under this agreement that additionally includes collections from Energía Argentina, S.A. (ENARSA). During 2015 and 2013, contributions made to this trust were U.S.$431 million and U.S.$567 million, respectively. No contributions were made to this trust in 2014. See note 16 of our annual audited consolidated financial statements. Cash Flows from Financing Activities As of December 31, 2013, we had outstanding aggregate indebtedness amounting to U.S.$43,384 million maturing on various dates through 2035. As of December 31, 2013, consolidated net cash flow received from financing activities totaled U.S.$1,533 million, a decrease of U.S.$1,768 million from our net cash flow received from financing activities for the year ended on December 31, 2012, which amounted to U.S.$3,301 million. This decrease was due to an increase in the payments of financial debt and a decline in the issuance of new debt instruments. For the year ended December 31, 2014, consolidated net cash flow received from financing activities totaled U.S.$10,812 million, which represents an increase of U.S.$9,279 million from our net cash flow received from financing activities for the year ended on December 31, 2013, which amounted to U.S.$1,533 million. This increase was due to the issuance of new debt instruments. For the year ended December 31, 2015, consolidated net cash flow received from financing activities totaled U.S.$467 million, which represents a decrease of U.S.$10,345 million from our net cash flow received from financing activities for the year ended on December 31, 2014, which amounted to U.S.$10,812 million. This decrease was mainly related to a decrease in the cash flow proceeds from the issuance of financial debt and a stable trend of payments of financial debt.

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The most recent dividends declared during 2013, 2014 and 2015 were paid in the year they were declared. In April 2013, dividends were declared and paid in the amount of U.S.$952 million to the Bolivarian Republic of Venezuela, and charged to accumulated income. In December 2013, dividends were declared to the Bolivarian Republic of Venezuela in the amount of U.S.$10,000 million. In March 2014, dividends were declared to the Bolivarian Republic of Venezuela in the amount of U.S.$5,000 million. In September 2014, dividends were declared and paid in the amount of U.S.$289 million to the Bolivarian Republic of Venezuela, and charged to accumulated income. In March 2015, dividends were declared in the amount of U.S.$87 million to the Bolivarian Republic of Venezuela. Payments of these dividends were offset against accounts receivable owed by the Bolivarian Republic of Venezuela arising from agreements related to the sale of crude oil by PDVSA to other countries. Loan Agreements Below is a description of the material loan agreements and credit facilities entered into by us and our subsidiaries. Investment Certificates In February 2009, we issued three 18-month term investment certificates in favor of Fondo de Protección Social de los Depósitos Bancarios (“FOGADE”) having an aggregate total principal dollar equivalent amount of U.S.$1,000 million. These certificates were issued and are payable in Bolívares, and interest accrues annually on the certificates at 9.5%. In 2010, we paid an aggregate principal amount of U.S.$500 million, while the amortization of the remaining balance under each certificate was extended until February 2012 and then renewed until August 2013. At the end of 2012 and 2011, the aggregate principal amount outstanding under these certificates was U.S.$500 million and U.S.$500 million, respectively. These certificates were renewed in August 2013, August 2014 and August 2015, for additional 12-month periods. In December 2010, we issued two 8% short term investment certificates having an aggregate principal amount of U.S.$465 million in favor of Banco del Tesoro, Banco Universal C.A. (“Banco del Tesoro”) (whollyowned by the Bolivarian Republic of Venezuela). These certificates were renewed in January 2011, January 2012, January 2013, January 2014, January 2015 and January 2016 for additional 12-month periods. In 2011, we issued six 8% short term investment certificates totaling U.S.$721 million, denominated in Bolívares, in favor of Banco del Tesoro, Banco Universal C.A. (“Banco del Tesoro”), payable upon maturity. In January 2012, we paid off one of the certificates having a principal amount of U.S.$116 million (equivalent to Bs. 500 million). The remaining certificates were renewed in 2013, 2014 and 2015. In April 2016, we renewed four of remaining certificates, which are to have a maturity of July 2016, and we renewed one certificate, which is to have a maturity of August 2016. In February 2012, we issued two 8% investment certificates totaling U.S.$465 million, denominated in Bolívares, in favor of Banco de Venezuela, Banco Universal S.A. (“Banco de Venezuela”). These certificates have a three-month term and an option to renew. These certificates have been subsequently renewed and mature in August 2016. In December 2015, PDVSA issued in favor of Banco de Venezuela seven renewable investment certificates for a total of U.S.$145 million (Bs. 10.000 million) maturing in 2018, 2019 and 2020, with an annual interest rate of 14% to be paid on a quarterly basis. In October 2015, PDVSA issued in favor of Banco de Desarrollo Económico y Social de Venezuela (BANDES) a renewable investment certificate for a total of U.S.$150 million, with a maturity date of 30 days and a 6.00% interest rate to be paid at maturity. The investment certificate has been subsequently renewed under the same conditions in June 2016 and July 2016. In June 2016, U.S.$30 million of such certificate were amortized. In February 2016, PDVSA issued in favor of Banco de Desarrollo Económico y Social de Venezuela (BANDES) a renewable investment certificate for a total of U.S.$100 million, with a maturity date of 30 days and a 6.00% interest rate to be paid at maturity. The investment certificate has been subsequently renewed under the same conditions in July 2016. 70

In July 2016, PDVSA issued in favor of Banco de Venezuela three renewable investment certificates denominated in Bolívares in an aggregate amount of U.S.$76 million with a maturity date of three months and an annual 18% interest rate to be paid monthly. Unsecured Bonds and Long-Term Debt On April 12, 2007, PDVSA issued three series of U.S. dollar denominated bonds irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A., having a U.S.$7,500 million face amount and maturing in 2017, 2027 and 2037. Interest on these series of bonds accrues at a 5.25%, 5.375% and 5.5% rate per annum, respectively. On October 29, 2010, we received the equivalent in Bolívares of U.S.$3,000 million from the issuance and placement of U.S.$3,000 million U.S. dollar denominated senior notes due 2017, irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A. Interest on such notes accrues at a rate per annum equal to 8.5%. In October 2009, PDVSA completed the public offering U.S.$1,413 million, U.S.$1,413 million and U.S.$435 million in bonds (“Petrobonos”) due 2014, 2015 and 2016, respectively. This public offering was made in coordination with the BCV and the Ministry of People’s Power for Economy and Finance. As a result of this issuance, PDVSA received the Bolívar-equivalent of U.S.$4,501 million from local buyers. In August 2010, PDVSA reopened the Petrobonos due 2014 and issued an additional U.S.$1,587 million in bonds. Furthermore, in November 2013, PDVSA reopened the Petrobonos due 2016 and issued an additional U.S.$565 million in bonds. In November 2013, the bonds due 2013 (which were issued in November 2010 and reopened in July 2011 and September 2011), were swapped for 8% PDVSA bonds due November 2016, which were held by the Fund of Active Workers and Pensioned Workers of PDVSA. In October 2015, following the maturity of the Petrobonos due 2015, PDVSA paid U.S.$515 million in cash and exchanged the remaining bonds held by PDVSA’s related entities were for one-year promissory notes for an aggregate amount of U.S.$898 million with a 10% rate per annum payable semiannually, subject to automatic renewal. In November 2010, we completed a swap process of zero-coupon bonds issued in July 2009 with a 2011 maturity, and exchanged U.S.$550 million of these bonds, for U.S.$618 million U.S. dollar denominated senior notes maturing on November 17, 2013 using an exchange ratio of 1.125. The senior notes are irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A. Interest on such notes accrues at a rate per annum equal to 8.0%. These notes were subsequently exchanged in November 2011 for 9% senior notes due 2021 as described further below. In addition, in January 2011, we issued U.S.$3,150 million aggregate principal amount of additional senior notes due 2017 through a reopening of the notes issued on October 29, 2010. On February 17, 2011, we completed the public offering of U.S.$3,000 million in bonds, payable in U.S. dollars upon maturity in 2022 with an annual performance coupon of 12.75%. In such offering, we received from local buyers a total of Bs. 12,900 million (U.S.$3,000 million). The issuance of these New Notes was authorized by the National Securities Superintendence under the Article N°2 of the Securities Market Law. On July 8, 2011, PDVSA carried out a private placement of bonds with the Central Bank and certain pension funds for U.S.$1,783 million, through the reopening of the 8% senior notes due 2013 issued in November 2010. Such bonds in the amount of U.S.$1,372 million were delivered to the Central Bank on July 14, 2011, and in the amount of U.S.$410 million were delivered to such pension funds on September 9, 2011. On November 17, 2011, PDVSA issued U.S.$2,394 million 9% senior notes due 2021 for cash and in exchange for certain outstanding U.S. Dollar denominated 8% senior notes due 2013. On May 17, 2012, PDVSA issued U.S.$3,000 million senior notes due 2035, irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A. Interest on such notes accrues at a rate per annum equal to 9.75%. These notes were purchased by the Central Bank and several government-owned banks in Venezuela. In July 2012, PDVSA issued agricultural bonds denominated in Bolívares in aggregate amounts of U.S.$140 million, U.S.$279 million and U.S.$279 million, maturing in 2015, 2016 and 2017, respectively. This 71

issuance was carried out in coordination with the BCV and the ministry of People’s Power for Economy and Finance and the bonds were placed with national banks by means of auctions, resulting in a premium in the bond issuance of U.S.$11 million. In November 2013, upon the maturity of the U.S. Dollar denominated 8% senior notes due 2013, PDVSA exchanged U.S.$440 million of these notes held by a workers’ pension fund and paid the remaining U.S.$705 million outstanding on the notes. In the same month, PDVSA reopened the U.S. Dollar denominated 8% senior notes due 2016 and issued an additional U.S.$565 million (Bs. 3,560) in notes. These bonds were exchanged in full for the 2013 bonds held by the workers’ pension fund and a discount of U.S.$126 million was generated by the transaction. On November 15, 2013, PDVSA issued U.S.$4,500 million senior notes due 2026, irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A. Interest on such notes accrues at a rate per annum equal to 6.00%. All such notes were purchased by the Central Bank, certain PDVSA suppliers and vendors and Banco de Venezuela. On May 16, 2014, PDVSA issue U.S.$5,000 million senior notes due 2024, irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A. Interest on such notes accrues at a rate per annum equal to 6.00%. All such notes were purchased by Banco de Venezuela. On October 28, 2014, PDVSA issued U.S.$3,000 million of senior notes due 2022, irrevocably and unconditionally guaranteed by PDVSA Petróleo, S.A. Interest on such notes accrues at a rate per annum equal to 6.00%. All such notes were purchased by the Central Bank. For a description of all our consolidated long-term debt incurred prior to December 31, 2015, see note 23 to our annual audited consolidated financial statements for the year ended on such date. Conversion of Commercial Debt with Strategic Suppliers PDVSA has implemented different transactions that allow to partially convert the outstanding commercial debt maintained with certain commercial suppliers into financial debt. This conversion is achieved by the execution of several note agreements which provide for (i) the assumption by PDVSA of a portion of its affiliates’ debt (evidenced in outstanding commercial invoices and contracts) with certain strategic suppliers; (ii) the novation of said commercial debt into a financial debt that cancels the former one; and (iii) the issuance of a three-year note (or several notes) regulated by a Note Agreement, with quarterly amortizations and an annual interest rate of 6.5%, to each of the participating strategic suppliers. From May 2016 to the date of this offering circular, the aforementioned transactions have been successfully executed with GE Capital Financing, Inc., Cementaciones Petroleras Venezolanas, S.A., Petroalianza, C.A., Maritime Contractors de Venezuela, S.A., Weatherford Latin America, S.C.A., Servicios Halliburton de Venezuela, S.A., Environmental Solutions de Venezuela, C.A., Proambiente, S.A., Elecnor, S.A. and Servicios Picardi, C.A. for a total amount of U.S.$1,151 million. JBIC In February 2007, a group of banks, led by the JBIC, issued us two 15-year term credit facilities having a combined aggregate principal amount of U.S.$3,500 million. Interest on such loans accrues at a rate per annum equal to LIBOR plus a margin ranging from 0.5% to 6.5%. During 2010, 2011, 2012, 2013 and 2014, PDVSA paid U.S.$233 million per year. As of December 31, 2015, the outstanding loans amounted to U.S.$1,459 million. Under the terms and conditions of this facility, we are subject to certain restrictive covenants, including an obligation to maintain certain financial ratios. As of December 31, 2015, we were in compliance with all such ratios based on annual determinations. In February 2011, Panavenflot Corp, a PDV Marina affiliate entered into a facility agreement with JBIC in an aggregate amount of ¥20,000 million (equivalent to U.S.$257 million) to finance the construction of four aframax tankers, which related loans mature in March 2023, July 2023, February 2024 and April 2024. As of December 31, 2015 the outstanding amount under this agreement is U.S.$110 million. 72

On June 28, 2011, we entered into: (i) a U.S.$750 million advance facility loan agreement with Santa Inés B.V. and The Bank of Tokyo-Mitsubishi UFJ, LTD and (ii) a U.S.$750 million advance facility loan agreement with Oriente Financing Company B.V. and Mizuho Corporate Bank, LTD. These loan agreements each have three tranches: Tranche A is a commitment of U.S.$338 million with a LIBOR plus 4.10% annual interest rate, Tranche B is a commitment of U.S.$338 million with a LIBOR plus 1.50% annual interest rate, and Tranche C is a commitment of U.S.$75 million with a LIBOR plus 8.75% annual interest rate. Interest for each tranche is paid quarterly and the final maturity date is the sixtieth quarter. The proceeds from these facilities will be allocated to the support of various oil and gas projects. On August 17, 2011, funds from these loan agreements, for a total amount of U.S.$1,500 million, were drawn by PDVSA for the financing of the deep conversion project of the Puerto La Cruz and El Palito refineries upon satisfaction of the conditions precedent for the loans. As of December 31, 2015, the outstanding balance for this loan was U.S.$1,050 million. China Development Bank Corporation On February 27, 2012, we entered into a credit agreement with CDBC for the purchase of petroleum related goods and services from the People’s Republic of China for U.S.$500 million. The rate of interest under this facility is LIBOR plus 4.55%, quarterly amortization payments, a maturity of 6 years or 72 months and a 30-month grace period, during which time no interest accrues or interest payments become due. Payments under this facility may be made with the proceeds from the sale of crude oil and related products at market prices. As of December 31, 2015, an amount of U.S.$495 million from this credit agreement was drawn by PDVSA. In June 2013, Petrolera Sinovensa, S.A. (or Petrosinovensa), a joint venture in which we have a majority interest, entered into a facility agreement with CDBC, in an aggregate principal amount of U.S.$4,015 million to finance the development and construction of facilities for the purpose of increasing Petrosinovensa’s oil production capacity. Loans made under the facility agreement accrue interest at LIBOR plus 5.8% or 5.9% per annum and mature 10 years from the date all conditions precedent in the facility agreement have been satisfied or waived. Pursuant to an associated guarantee, PDVSA has a payment guarantee obligation of 60% of Petrosinovensa’s payment obligations under the facility agreement. As of December 31, 2015, U.S.$699 million from this facility agreement was drawn by Petrosinovensa. In December 2014, PDVSA entered into a U.S.$1,500 million working capital loan facility with CDBC. The rate of interest under this facility is LIBOR plus 6.25%. Interest payments are made quarterly and the term of the facility is 36 months. As of December 31, 2015, U.S.$150 million has been amortized. Payments under this facility may be made through the delivery of crude oil and related products at market prices. As of December 31, 2015, the outstanding balance for this loan was U.S.$1,200 million. Banco del Tesoro In November 2011, we entered into a loan agreement with Banco del Tesoro for a total aggregate amount of Bs. 500 million (equivalent to U.S.$116 million). The rate of interest is 9.50% annually and the term is five years with a 12-month grace period. The proceeds from this loan were allocated to the manufacturing sector. As of December 31, 2015, the outstanding balance for this loan was Bs. 143 million (equivalent to U.S.$2 million). In November 2011, we entered into a loan agreement with Banco del Tesoro for a total aggregate amount of Bs. 500 million (equivalent to U.S.$116 million). The rate of interest is 9.50% annually and the term is six years with a 24 -month grace period, during which time no interest accrues or interest payments become due. The proceeds from this loan will be allocated to the agricultural sector. As of December 31, 2015, the outstanding balance for this loan was Bs. 273 million (equivalent to U.S.$4 million). In January 2012, we entered into a Bs. 500 million loan agreement with Banco del Tesoro (equivalent to U.S.$116 million). The rate of interest is 9.50% annually and the term is six years with a 24-month grace period, during which time no interest accrues or interest payments become due. The proceeds from this loan were allocated to the agricultural sector. As of December 31, 2015, the outstanding balance for this loan was Bs. 334 million (equivalent to U.S.$5 million).

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In March 2013, PDVSA entered into a credit facility with Banco del Tesoro for Bs. 4,000 million (equivalent to U.S.$635 million), with an annual variable interest rate initially equivalent to 9.50% for use in the agro-industrial sector. As of December 31, 2015, the total aggregate amount of the loan has been drawn by PDVSA. As of December 31, 2015, the amount outstanding under this loan was Bs. 1,779 million (equivalent to U.S.$26 million). In September 2013, PDVSA entered into two loan agreements with Banco del Tesoro for a total aggregate amount of Bs. 2,000 million (equivalent to U.S.$317 million). The annual variable rate of interest for each loan was initially equivalent to 12.00% and the term is five years. The proceeds from one of these loans will be allocated to industrial projects and proceeds from the other loan will be allocated to working capital. As of December 31, 2015, the outstanding balance for each of these loans was Bs. 642 million (equivalent to U.S.$9 million). In February 2014, PDVSA entered into a Bolívar denominated loan agreement with Banco del Tesoro for U.S.$476 million (Bs. 3,000 million) with an initial annual variable interest rate of 12% and a term of five years. The proceeds from the loan were used to finance the deep conversion project of the Puerto La Cruz Refinery. As of December 31, 2015, the outstanding balance under this loan was Bs. 2,850 million (U.S.$41 million). In August 2014, PDVSA entered into a loan agreement with Banco del Tesoro for a total aggregate amount of Bs. 1,100 million (equivalent to U.S.$175 million). The interest rate is 12% annually and the term is eight years. The proceeds from this loan were allocated to the manufacturing sector. As of December 31, 2015, the outstanding balance for this loan was Bs. 928 million (equivalent to U.S.$13 million). Banco de Venezuela On June 3, 2011, PDVSA entered into agreements with Banco de Venezuela (owned by BANDES) for two loans with a total amount equal to Bs. 4,000 million (equivalent to U.S.$930 million), both due in 2018 with an initial annual fixed interest rate of 9.5% for the first calendar quarter and a variable rate for subsequent quarters, not to exceed interest rates fixed by the Central Bank. These loans are for use in the manufacturing and agriculture sector. As of December 31, 2015, the outstanding balance for these loans was Bs. 3,360 million (equivalent to U.S.$49 million). In November 2011, we entered into two loan agreements, one in the amount of Bs. 2,000 million (equivalent to U.S.$465 million), and the other in the amount of Bs. 300 million (equivalent to U.S.$70 million), with Banco de Venezuela. The rate of interest for each loan is 9.50% annually. The Bs. 2,000 million loan (equivalent to U.S.$465 million) has a term of 6 years with a 24-month grace period. The proceeds from this loan were allocated to the agricultural sector. The term of the Bs. 300 million loan (equivalent to U.S.$70 million) expired in February 2012 and it was paid in full in March 2012. As of December 31, 2015, the outstanding balance for the Bs. 2,000 million loan was Bs. 1,200 million (equivalent to U.S.$17 million). In December 2011, we entered into a loan agreement with Banco de Venezuela in the amount of Bs. 2,000 million (equivalent to U.S.$465 million). The rate of interest for the loan is 9.50% annually. The loan has a term of 5 years with a 12-month grace period. The proceeds from this loan will be allocated to the manufacturing sector. As of December 31, 2015, the outstanding balance on this loan was Bs. 700 million (equivalent to U.S.$11 million). In 2012, PDVSA entered into the following additional loan agreements with Banco de Venezuela:  A March 2012 loan for Bs. 2,000 million (equivalent to U.S.$465 million) with an annual interest rate of 9.5%, variable every quarter, variable principal amortizations and a grace period of six months, which matured in March 2015 and was paid in full. The proceeds from this loan were allocated to working capital.  A March 2012 loan for Bs. 2,000 million (equivalent to U.S.$465 million) with an annual interest rate of 9.5%, variable every quarter, and with variable principal amortizations and a grace period of 30 months, during which time no interest accrues or interest payments become due, maturing on March 23, 2017. The proceeds of this loan were allocated to the manufacturing sector. As of December 31, 2015, the outstanding balance of this loan was Bs. 1,480 million (equivalent to U.S.$22 million).

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In March 2013, PDVSA entered into a credit facility with Banco de Venezuela for a total amount of Bs. 10,000 million (equivalent to U.S.$1,587 million), with an annual variable interest rate equivalent to 9.50%, which interest rate was modified in April, 2014 to 12% and further modified in April, 2015 to 12.5%, maturing between 2015 and 2018, and for use in the agro-industrial sector. As of December 31, 2015, PDVSA has drawn Bs. 9,293 million on this loan (equivalent to U.S.$1,475 million). As of December 31, 2015, the amount outstanding under this loan was Bs. 3,081 million (equivalent to U.S.$45 million). In September and October 2013, PDVSA entered into two commercial loan agreements with Banco de Venezuela for a total amount of Bs. 1,200 million (equivalent to U.S.$190 million) and Bs. 2,800 million (equivalent to U.S.$444 million), respectively. Each loan has an annual variable interest rate initially equivalent to 12.00% and matures in September 2016. As of December 31, 2015 the amount outstanding under these loans was Bs. 2,760 million (equivalent to U.S.$40 million). In July 2012, January 2013 and May 2013, Venezuelan Heavy Industries, C.A. a subsidiary of PDVSA Industrial, S.A., entered into loan agreements with Banco de Venezuela for an aggregate amount of Bs. 900 million (equivalent to U.S.$147 million). The July 2012 and January 2013 loans each have an annual variable interest rate equivalent to 13.50%, and mature in July 2014, January 2015, respectively. The May 2013 loan has an annual variable interest rate initially equivalent to 9.50% and matures in May 2018. As of December 31, 2015, the amount outstanding under this loan was Bs. 400 million (equivalent to U.S.$5.9 million). These July 2012 and January 2013 loans have matured and were paid in full. In December 2013, PDVSA entered into a Bolívar denominated loan agreement with Banco de Venezuela for a total amount of U.S.$476 million (Bs. 3,000 million), with an initial variable interest rate of 12% and a term of five years. The proceeds from this loan were used to finance the deep conversion project of Puerto La Cruz Refinery. As of December 31, 2015, the outstanding amount under this loan is Bs. 3,000 million. In 2014, PDVSA entered into the following additional loan agreements with Banco de Venezuela:  In March 2014, PDVSA entered into a Bolívar denominated loan agreement with Banco de Venezuela for a total amount of U.S.$476 million (Bs. 3,000 million), with an initial variable interest rate of 12% and a term of five years. The proceeds from this loan were used to finance the deep conversion project of Puerto La Cruz Refinery. As of December 31, 2015 the outstanding balance on this loan was Bs. 2,850 million (equivalent to U.S.$41 million).  Two loans entered into in September 2014 for Bs. 4,000 million (equivalent to U.S.$635 million) with an annual interest rate of 12% and maturing in September 2022. These loans were used in the agriculture and manufacturing sectors. As of December 31, 2015, the amount outstanding under these loans was Bs. 3,375 million (equivalent to U.S.$49 million). In February 2016, PDVSA entered into a revolving credit facility with Banco de Venezuela for a total amount of Bs. 20,000 million (equivalent to U.S.$126 million). The facility has an annual interest rate of 14% and matures in February 2017. Banco de Desarrollo Económico y Social de Venezuela (BANDES) In December 2015, PDVSA entered into a loan agreement with Banco de Desarrollo Económico y Social de Venezuela (BANDES) for a total amount of U.S.$30 million. The rate of interest is LIBOR plus 6.5%. Interest payments are made monthly. The term of the agreement is 39 months. The outstanding amount under this loan is U.S.$30 million. Amortization under this loan will begin on September 3, 2016. Deutsche Bank Trust Company Americas In June 2014, PDV Marina, S.A. entered into a loan agreement with Deutsche Bank Trust Company Americas for a total aggregate amount of U.S.$111 million with an interest rate of 7% for the acquisition of tugs, which matures in May 2019. As of December 31, 2015 the outstanding amount under this loan is U.S.$39.5 million.

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In March 2015, PDVSA entered into a U.S.$500 million credit facility with Deutsche Bank Trust Company Americas. The rate of interest under this credit facility is LIBOR plus 7.2%. Interest payments are made monthly and the term of the credit facility is 24 months. As of December 31, 2015, U.S.$20,833 million has been amortized. Payments under this facility may be made with the proceeds received from sales of crude oil and related products at market prices. As of December 31, 2015, the outstanding balance on this credit facility was U.S.$312 million. CT Energía Holding Ltd. In December 2015, CT Energía Holding Ltd, a Maltese company, granted a Bolívar denominated loan to the joint venture Petrodelta, S.A for Bs. 4,023 (equivalent to U.S.$20 million). This loan has an annual interest rate of 12% per annum and matures on third anniversary of the disbursement of the full loan amount. The proceeds of this loan may be used to cover the working capital needs of PDVSA. The outstanding amount under this loan as of December 31, 2015 was Bs. 4,023 (equivalent to U.S.$20 million). Credit Suisse In June 2012, PDVSA Petróleo, S.A. entered into a credit facility with Phoenix Infrastructure Funding (Ireland) Limited, other lenders referred to therein and Credit Suisse AG, as arranger and administrative agent, to finance part of PDVSA’s modification and expansion of its refining facilities in Puerto La Cruz, Venezuela. The total amount available to be drawn under the credit agreement is U.S.$1,000 million, loans drawn on the facility have a term of seven years and interest on any such loans is 8.70% per annum. PDVSA Petróleo’s obligations under the credit agreement are guaranteed by PDVSA. On September 3, 2014, PDVSA Petróleo, S.A. extended and modified the facility in the amount of U.S.$1,289 million dated June 2012. The modified facility amount is U.S.$2,206 million, which shall have quarterly amortizations and a 14-month grace period. As of December 31, 2015, the entire amount of the facility was drawn by PDVSA Petróleo, S.A. As of December 31, 2015, the outstanding amount under this facility was U.S.$1,950 million. Chevron Boscan Finance B.V. In May 2013, Petroboscan, S.A., a joint venture in which we have a majority interest, entered into a facility agreement with Chevron Boscan Finance B.V., in an aggregate principal amount of U.S.$2,000 million to finance projects for purposes of increasing Petroboscan’s hydrocarbon production. Loans made under the facility agreement accrue interest at LIBOR plus 4.5% per annum and mature approximately ten years from the applicable draw date. Pursuant to an associated guarantee agreement, PDVSA has a payment guarantee of 60% of Petroboscan, S.A.’s payment obligations under the facility agreement. Such guarantee can increase to 100% of the borrower’s payment obligations under certain circumstances. As of December 31, 2015, the outstanding amount for this facility was U.S.$461 million. ENI Investments PLC Loan Agreement. In November 2012, PDVSA entered into a loan agreement with ENI Investments PLC for U.S.$1,742 million, with an interest rate of LIBOR plus 5.00%, for financing new developments in the Orinoco Oil Belt. As of December 31, 2015, the outstanding amount for this facility was U.S.$96 million. Banco Nacional de Desenvolvimento Económico e Social (BNDES) Credit Agreement In September 2011, PDVSA entered into a credit agreement with the Brazilian Development Bank (BNDES), for the construction of the Astillero del Alba (Alba Shipyard), a project managed by the subsidiary PDVSA Naval, for an amount of up to U.S.$638 million with an interest rate of LIBOR plus 2.20% and a maturity date in 2024. As of December 31, 2015, an amount of U.S.$240 million from this credit facility has been drawn by PDVSA. Banco Bicentenario Banco Universal Commercial Loan Agreement In November 2013, PDVSA entered into a Bolívar denominated loan agreement with Banco Bicentenario Banco Universal, C.A. for Bs. 500 million (equivalent to U.S.$79 million) with a variable interest rate of 9.50%, 76

maturing in 2018. As of December 31, 2015, the outstanding amount for this facility was Bs. 333 million (equivalent to U.S.$5 million). In February 2014, PDVSA entered into a Bolívar denominated loan agreement with Banco Bicentenario Banco Universal, C.A. for Bs. 4,000 million (equivalent to U.S.$635 million) with a variable interest rate of 12%, maturing in 2019. The proceeds from this loan were used to finance the deep conversion project of Puerto La Cruz Refinery. As of December 31, 2015, the outstanding amount for this facility was Bs. 3,800 million (equivalent to U.S.$55 million). In August 2014, PDVSA entered into a Bolívar denominated loan agreement with Banco Bicentenario Banco Universal, C.A. for Bs. 1,200 million (equivalent to U.S.$190 million) with a variable interest rate of 12%, maturing in 2022. The proceeds from this loan were used in the agriculture sector. As of December 31, 2015, the amount outstanding under this loan was Bs. 1.012 million (equivalent to U.S.$15 million). Deutsche Bank, S.A.E. In June 2010, PDVSA entered into a facility agreement with Deutsche Bank, S.A.E., in an aggregate amount of €59 million (equivalent to U.S.$78 million), to finance investments in the domestic refining sector. This facility was paid in full in March 2016. GE Note In March 2015, PDVSA issued a U.S.$257 million note in favor of General Electric Capital Corporation, with amortizations and interest to be paid monthly and an interest rate of 6.5% per annum. As of December 31, 2015, the outstanding amount under this note was U.S.$171 million. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with General Electric Capital Corporation into financial debt. Second GE Note In May 2016, PDVSA issued a three-year note for the amount of U.S.$194 million in favor of GE Capital Financing, Inc., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with GE Capital Financing, Inc. into financial debt. As of August 31, 2016, the outstanding amount under this note is U.S.$178 million. CPVEN Note In June 2016, PDVSA issued a three-year note for the amount of U.S.$100 million in favor of Cementaciones Petroleras Venezolanas, S.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Cementaciones Petroleras Venezolanas, S.A. into financial debt. As of August 31, 2016, the outstanding amount under this note is U.S.$100 million. Petroalianza Note In June 2016, PDVSA issued a three-year note for the amount of U.S.$100 million in favor of Petroalianza, C.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Petroalianza, C.A. into financial debt. As of August 31, 2016, the outstanding amount under this note is U.S.$100 million. Maritime Note In June 2016, PDVSA issued a three-year note for the amount of U.S.$117,571,234.31 in favor of Maritime Contractors de Venezuela, S.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with

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Maritime Contractors de Venezuela, S.A. into financial debt. As of August 31, 2016, the outstanding amount under this note is U.S.$117,571,234.31. Weatherford Note In June 2016, PDVSA issued a three-year note for the amount of U.S.$120,000,009.00 in favor of Weatherford Latin America, S.C.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Weatherford Latin America, S.C.A. into financial debt. As of August 31, 2016, the outstanding amount under this note is U.S.$120,000,009.00. Halliburton Note In June 2016, PDVSA issued a three-year note for the amount of U.S.$200,000,123.50 in favor of Servicios Halliburton de Venezuela, S.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Servicios Halliburton de Venezuela, S.A. into financial debt. As of August 31, 2016, the outstanding amount under this note is U.S.$200,000,123.50. ESVENCA Notes In June 2016, PDVSA issued two three-year notes in the amounts of U.S.$30,000,000.00 and 36,082,436.00 in favor of Environmental Solutions de Venezuela, C.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. These notes were issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Environmental Solutions de Venezuela, C.A. into financial debt. As of August 31, 2016, the outstanding amounts under these notes are U.S.$30,000,000.00 and 36,082,436.00. PROAMSA Notes In June 2016, PDVSA issued two three-year notes for the amount of U.S.$13,518,837.80 each in favor of Proambiente, S.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. These notes were issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Proambiente, S.A. into financial debt. As of August 31, 2016, the outstanding amount under each of these notes is U.S.$13,518,837.80. Elecnor Notes In July 2016, PDVSA issued two three-year notes for the amount of U.S.$50 million each and two threeyear notes for the amount of U.S.$45 million each, all in favor of Elecnor, S.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. These notes were issued a result of the conversion of PDVSA’s outstanding commercial debt maintained with Elecnor, S.A. into financial debt. As of August 31, 2016, the outstanding amounts under these notes are U.S.$50 million for the two three-year notes issued the amount of U.S.$50 million each, and U.S.$45 million for the two three-year notes issued in the amount of U.S.$45 million each. Servicios Picardi Note In September 2016, PDVSA issued a three-year note for the amount of U.S.$36,753,463.54 in favor of Servicios Picardi, C.A., with amortizations and interest to be paid quarterly and an interest rate of 6.5% per annum. This note was issued as a result of the conversion of PDVSA’s outstanding commercial debt maintained with Servicios Picardi, C.A. into financial debt. As of September 12, 2016, the outstanding amount under this note was U.S.$ 36,753,463.54.

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Perenco Holdings In August 2014, Perenco Holdings, a Bahamian company, approved a facility for an amount of U.S.$420 million for the joint venture Petrowarao, S.A. This facility had a variable interest rate of LIBOR plus 4.5% per annum. The maturity date of this facility is December 21, 2025. The proceeds of this facility were used to finance the business plan of Petrowarao. As of December 31, 2015 the outstanding amount under this facility was U.S.$17 million. Banco San Juan Internacional Credit Facility On March 23, 2016, PDVSA entered into a U.S.$300 million credit facility with Banco San Juan Internacional, Inc., comprised of a U.S.$70 million revolving loan facility with a 6.25% per annum interest rate, and a U.S.$230 million term loan facility with a 7.50% per annum interest rate. The maturity date for (i) each revolving loan is 18 months after the date of the relevant disbursement, and (ii) each term loan is 24 months after the date of the relevant disbursement. CITGO Loan Agreements With respect to outstanding debt of CITGO Holding as of December 31, 2015, please refer to “Appendix A—CITGO Holding, Inc. Report for the Fiscal Year Ended December 31, 2015,” page A-72 and note 9, page A-107. CITGO Senior Secured Credit Facility. On July 29, 2014, CITGO replaced its former senior secured credit facility due 2017 with a new U.S.$1.6 billion senior secured credit facility, which consists of a five-year U.S.$900 million revolving credit facility and a seven-year U.S.$650 million term loan B (collectively, the “CITGO Senior Secured Credit Facility”), which are described further below. A portion of the proceeds from the CITGO Senior Secured Term Loan B, after deducting original issue discounts of U.S.$7 million and debt issuance costs of U.S.$29 million, together with a portion of the proceeds from CITGO's senior secured notes due 2022 issued on July 29, 2014 (the “CITGO Senior Secured Notes”) described further below, were used to (i) repay all amounts outstanding under CITGO's former senior secured credit facility, (ii) purchase and redeem all of CITGO's former senior secured notes due 2017 and (iii) pay a U.S.$300 million onetime dividend to the CITGO shareholder. The outstanding amount under this facility as of December 31, 2015 is U.S.$822 million, which consists of the sum of U.S.$180 million for the revolving credit facility and U.S.$642 million for the CITGO term loan B. CITGO Senior Secured Credit Facility is secured by CITGO’s interests in its Lake Charles, Louisiana, Corpus Christi, Texas and Lemont, Illinois refineries, its trade accounts receivable and its inventories and guaranteed by CITGO’s material subsidiaries and is subject to covenants customary for senior secured financings. Material covenant provisions under the CITGO Senior Secured Credit Facility include: 

CITGO’s debt to capitalization ratio must not be more than 0.6 to 1.0 at the end of each quarter;

 CITGO may not dispose of assets, subject to certain exceptions, including inventory in the normal course of business and a general exception for dispositions of assets (not including CITGO’s refineries or certain other properties); provided the proceeds in excess of an aggregate amount of U.S.$750 million are reinvested in assets related to the business of CITGO and its subsidiaries or applied to repay debt; 

CITGO may not incur additional indebtedness, subject to certain exceptions;

 CITGO may not incur any liens on its properties or assets, subject to certain exceptions, including liens incurred in connection with permitted indebtedness;  CITGO may not enter into any hedging agreements, except in the ordinary course of business and for the purpose of directly managing certain risks;

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 CITGO’s termination obligations under hedging agreements that are secured by the collateral that also secures the CITGO Senior Secured Credit Facility and CITGO’s Senior Secured Notes cannot exceed U.S.$200 million;  CITGO may not make new investments, subject to certain limited exceptions, including, limited investments in subsidiaries and joint ventures and a general exception for investments including loans to and other investments in affiliates, not to exceed at any time the greater of U.S.$200 million and 3% of consolidated net tangible assets; and  In addition to the one-time dividend of U.S.$300 million, CITGO may declare and pay dividends out of (i) 100% of its net income arising after April 1, 2014 on a cumulative basis, plus (ii) amount equal to the U.S.$170 million dividend paid in May 2014, plus (iii) certain permitted proceeds of dispositions of assets; dividend payments will be subject to minimum liquidity requirement of U.S.$500 million and a maximum debt to capitalization ratio of 0.55 to 1.0, in each case after giving effect to the declaration and payment of such dividend. CITGO Secured Revolving Credit Facility. CITGO obtained in July 2014 a U.S.$900 million secured revolving credit facility due July 29, 2019. As of December 31, 2015 and 2014, there was U.S.$180 million and U.S.$50 million, respectively, outstanding under this secured revolving credit facility. As of December 31, 2015 CITGO had U.S.$712 million of available borrowing capacity under this facility and outstanding letters of credit totaling approximately U.S.$8 million issued against this facility. The interest rate at December 31, 2015 for this facility was 5.25%. At December 31, 2015, CITGO’s quarterly commitment fee was 0.50%. CITGO Senior Secured Term Loan. As set forth above, CITGO entered into a U.S.$650 million term loan B due July 29, 2021. A portion of the total proceeds from the CITGO Senior Secured Credit Facility and CITGO Senior Secured Notes was used to repay the former CITGO term loans due 2015 and 2017, which at the time of repayment had a total outstanding principal amount of U.S.$667 million plus accrued and unpaid interest. The interest rate on December 31, 2015 was the 1.00% LIBOR floor plus 3.50%, or 4.50%. The CITGO Term Loan B amortizes in amounts equal to 1.00% of its initial principal amount annually, payable in equal quarterly installments with the balance payable at maturity. The outstanding amount under this facility as of December 31, 2015 is U.S.$642 million. CITGO Tax-Exempt Bonds. As of December 31, 2015 and December 31, 2014, CITGO had U.S.$108 million of outstanding industrial development revenue bonds, respectively, the proceeds of which have been enlisted in certain projects at its Lake Charles, Louisiana; Corpus Christi, Texas; and Lemont, Illinois refineries. An additional U.S.$290 million of industrial revenue bonds were repurchased by CITGO in 2010 and will be held in treasury until such time as these selected industrial revenue bonds are either retired or remarketed at CITGO’s option. The U.S.$108 million in principal amount of outstanding industrial revenue bonds are secured on an equitable basis by the same collateral and have similar covenants as the senior secured credit facility. The outstanding bonds bear interest at various fixed rates which ranged from 4.875% to 8.0% on both December 31, 2015 and 2014. The final maturity dates for the outstanding industrial revenue bonds range from 2023 to 2032. CITGO Senior Secured Notes. On July 29, 2014, CITGO closed on a private placement of U.S.$650 million aggregate principal amount of 6.25% senior secured notes due August 15, 2022 (the “CITGO Senior Secured Notes”). At each of December 31, 2015 and December 31, 2014, CITGO had U.S.$650 million CITGO Senior Secured Notes outstanding. The CITGO Senior Secured Notes bear interest at a fixed rate of 6.25% per annum. Interest is payable semi-annually on February 15 and August 15 of each year. The CITGO Senior Secured Notes are secured on an equitable basis by the same collateral that secures the CITGO Senior Secured Credit Facility, except that lenders under CITGO’s secured revolving credit facility will have priority to proceeds of certain inventory comprising the collateral. The CITGO Senior Secured Notes may be redeemed by CITGO (i) prior to August 15, 2017, at a redemption price equal to 100% of the aggregate principal amount plus the applicable premium and accrued interest; (ii) during the twelve-month period beginning on August 15, 2017, at a redemption price equal to 104.688% of the aggregate principal amount plus accrued interest; (iii) during the twelve-month period beginning on August 15, 2018, at a redemption price equal to 103.125% of the aggregate principal amount plus accrued interest; (iv) during

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the twelve-month period beginning on August 15, 2019, at a redemption price equal to 101.563% of the aggregate principal amount plus accrued interest; and (v) on or after August 15, 2020, at a redemption price equal to 100% of the aggregate principal amount plus accrued interest. In addition, prior to August 15, 2017, CITGO may redeem up to 40% of the CITGO Senior Secured Notes with the net proceeds from certain equity offerings at a redemption price equal to 106.25% of the aggregate principal amount plus accrued interest, so long as certain conditions are met. Under the terms and conditions of the CITGO Senior Secured Notes, CITGO is subject to certain covenants, such as certain restrictions on the ability to incur, assume or permit to exist additional indebtedness; guaranty obligations or hedging arrangements; incur liens or agree to negative pledges in other agreements; make loans and investments; declare dividends, make payments on or redeem or repurchase capital stock; limit the ability of CITGO’s subsidiaries to enter into agreements restricting dividends and distributions; engage in mergers, acquisitions and other business combinations; prepay, redeem or purchase CITGO’s indebtedness; sell assets; and enter into transactions with affiliates. CITGO Holding Senior Secured Term Loan B. On February 12, 2015, CITGO Holding entered into a three-year U.S.$1.3 billion senior secured term loan B (the “CITGO Holding Senior Secured Term Loan B”). The proceeds from the CITGO Holding Senior Secured Term Loan B (after factoring in the original issue discount and debt issuance costs), together with the proceeds from the CITGO Holding Senior Secured Notes, were used to (i) establish debt service reserve accounts, (ii) fund a U.S.$100 million working capital and general corporate purposes reserve for CITGO Holding and (iii) pay a one-time cash dividend of U.S.$2.2 billion from additional capital to CITGO Holding’s shareholder. The interest rate on December 31, 2015 was the 1.00% LIBOR floor plus 8.50%, or 9.50%. Initially, the CITGO Holding Senior Secured Term Loan B amortized in amounts equal to 1.00% of its initial principal amount annually, payable in equal quarterly installments. The CITGO Holding Senior Secured Term Loan B is secured by 100% of CITGO’s capital stock and 100% of the limited liability company interests in CITGO Holding’s other direct subsidiaries, CITGO Holding Terminals, Southwest Pipeline Holding and Midwest Pipeline Holding, as well as by minority pipeline interests and terminals owned by these other subsidiaries, and is guaranteed by CITGO Holding’s direct subsidiaries other than CITGO. The CITGO Holding Senior Secured Term Loan B also requires certain mandatory prepayment offers, based on specified percentages of excess cash flow and asset sale proceeds of certain asset sales. CITGO Holding made mandatory excess cash flow prepayment offers and the lenders partially accepted the offers resulting in prepayments of U.S.$527 million in 2015. CITGO Holding may also make optional prepayments on the CITGO Holding Senior Secured Term Loan B, which prepayments shall require (i) during the twelve-month period beginning on February 12, 2016, a premium of 2.00% of the principal amount prepaid; and (ii) during the twelvemonth period beginning on February 12, 2017, a premium of 1.00% of the principal amount prepaid. The outstanding amount under this facility as of December 31, 2015 is U.S.$762 million. Under the terms and conditions of the CITGO Holding Senior Secured Term Loan B, CITGO Holding is subject to certain covenants, such as restrictions on the ability to declare or pay dividends (except if CITGO Holding meets certain conditions). In addition, CITGO may not incur indebtedness unless it meets certain financial ratios, and it may not dispose of certain assets. Material covenant provisions under the CITGO Holding Senior Secured Term Loan B are substantially similar to those contained in CITGO’s Senior Secured Credit Facility, with certain variances, including the following:  Certain restrictions are more flexible with respect to CITGO and its subsidiaries, including (i) CITGO’s debt to capitalization ratio must not be more than 0.75 to 1.0 at the end of each quarter (rather than 0.60 to 1.0), and (ii) CITGO is not restricted from paying dividends to CITGO Holding;  Generally the covenants contain more restrictive terms with respect to CITGO Holding and the CITGO Holding guarantors;

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 CITGO Holding must maintain a debt service reserve account with funds sufficient to cover twelve or eighteen months of interest and required amortization of principal payments on the senior secured term loan; and  In addition to the one-time dividend of U.S.$2.2 billion, CITGO Holding may declare and pay dividends from excess cash flow and proceeds of certain asset sales not required to be applied to prepay indebtedness and from amounts released from its debt service reserve accounts, provided that the debt service reserve account is funded sufficiently to cover eighteen months of interest and required amortization of principal payments on the CITGO Holding Senior Secured Term Loan B following the date of such restricted payment and (iii) CITGO Holding’s leverage ratio must not be more than 2.0 to 1.0, in each case after giving effect to the dividends. CITGO Holding Senior Secured Notes. Also on February 12, 2015, CITGO Holding closed on a private placement of a U.S.$1.5 billion aggregate principal amount of 10.75% senior secured notes due February 15, 2020 (the “CITGO Holding Senior Secured Notes”). At December 31, 2015, CITGO Holding had U.S.$1.5 billion CITGO Holding Senior Secured Notes outstanding. Interest is payable semi-annually on March 31 and September 30 of each year. The CITGO Holding Senior Secured Notes are secured on a ratable basis by the same collateral that secures the CITGO Holding Senior Secured Term Loan B, and are guaranteed by CITGO Holding’s subsidiaries other than CITGO. The indenture governing the CITGO Holding Senior Secured Notes requires that CITGO Holding make offers to purchase the notes based on triggers similar to the mandatory prepayment for the CITGO Holding Senior Secured Credit Facility, following the repayment of the CITGO Holding Senior Secured Credit Facility. Prior to February 15, 2017, CITGO Holding may redeem up to 40% of the CITGO Holding Senior Secured Notes with the net proceeds from certain equity offerings at a redemption price equal to 110.75% of the aggregate principal amount plus accrued interest, so long as certain conditions are met. In addition, at any time the CITGO Holding Senior Secured Notes may be redeemed by CITGO Holding at a redemption price equal to 100% plus the applicable premium and accrued interest. Under the terms and conditions of the CITGO Holding Senior Secured Notes, CITGO Holding is subject to certain covenants, such as restrictions on the ability to incur, assume or permit to exist additional indebtedness; guaranty obligations or hedging arrangements; incur liens or agree to negative pledges in other agreements; make loans and investments; declare dividends, make payments on or redeem or repurchase capital stock; limit the ability of CITGO Holding’s subsidiaries to enter into agreements restricting dividends and distributions; engage in mergers, acquisitions and other business combinations; prepay, redeem or purchase CITGO Holding’s indebtedness; sell assets; enter into transactions with affiliates; and maintain a debt service reserve account with funds sufficient to cover two or three semi-annual interest payments. CITGO Holding used a portion of the total net proceeds received from the CITGO Holding Senior Secured Term Loan B and the CITGO Holding Senior Secured Notes to establish a debt service reserve account. Accounts Receivable Securitization Facility. CITGO owns a limited purpose consolidated subsidiary, CITGO AR2008 Funding Company, LLC (“AR Funding”). AR Funding established a non-recourse facility in June 2008 to transfer an undivided interest in specified trade receivables (the “pool”) to independent third parties, which is referenced to herein as the Secured Financing Arrangement. The interest that may be held by third parties at any one time under the Secured Financing Arrangement cannot exceed U.S.$450 million. The Secured Financing Arrangement has been renewed on multiple occasions, with a current maturity date of June 2, 2017. Under the terms of the Secured Financing Arrangement, new receivables are added to the pool as previously transferred receivables are collected (administered by CITGO). As of December 31, 2015 and 2014, U.S.$551 million and U.S.$805 million, respectively, of CITGO’s accounts receivable comprised the designated pool of trade receivables owned by AR Funding. As of December 31, 2015 and 2014, U.S.$165 million and U.S.$250 million, respectively, of receivables in the designated pool that were held by third parties were included in accounts receivable, net and in the Secured Financing Arrangement on the consolidated balance sheets. As of December 31, 2015, CITGO had U.S.$67 million of available capacity under the Secured Financing Arrangement.

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Other Short-Term Liabilities In December 2013, notes for a total amount of U.S.$21,524 million (equivalent to Bs. 135,600 million) were offset against accounts receivable as a method of payment for the sale to BCV of 40% of PDVSA’s shares in Empresa Nacional Aurífera, S.A. During 2013, PDVSA recognized a decrease in liabilities for promissory notes denominated in Bolívares in the amount of U.S.$6,770 million as a result of the changes in the exchange rate. In addition, PDVSA issued promissory notes in the amount of U.S.$36,064 million for general corporate purposes, with annual interest rates ranging from 0.50% to 1.5% and maturing between 2015 to 2022. PDVSA also refinanced U.S.$15,579 million in promissory notes and paid promissory notes in the amount of U.S.$6,459 million. At December 31, 2015, accounts payable to related parties were U.S.$6,650 million, corresponding to promissory notes issued in favor of the BCV. At December 31, 2015, we had outstanding short-term liabilities with related entities amounting to U.S.$2,691 million, which consists mainly of taxes and contributions payable by U.S.$6,650 million and promissory notes in favor of the ONT having an aggregate principal amount of U.S.$11,145 million.

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BUSINESS Overview We are a corporation (sociedad anónima) organized under the laws of Venezuela, formed in 1975 by the Venezuelan government to coordinate, monitor and control all operations relating to hydrocarbons. We are wholly owned by Venezuela and are the holding company for a group of oil and gas companies. We are the fifth largest vertically integrated oil company in the world with daily crude oil production of 2,746 thousand barrels per day as of December 31, 2015, or mbpd, as measured by a combination of operational data, including volume of reserves, production, refining and sales, based on information published in Petroleum Intelligence Weekly on November 16, 2015, a trade publication. We carry out our exploration, development and production (“upstream”) operations in Venezuela and our sales, marketing, refining, transportation, infrastructure, storage and shipping (“downstream”) operations in Venezuela, the Caribbean, North America, South America, Europe and Asia. Through PDV Holding, a wholly-owned subsidiary, we indirectly own 100% of CITGO, a refiner and marketer of transportation fuels, petrochemicals and other industrial oil-based products in the United States. We plan to invest in upstream and downstream projects in Venezuela and abroad in order to satisfy the current and expected global increase in energy demands. Our Business Plan outlines the development of production and refining projects totaling U.S.$132 billion in Venezuela, the Caribbean, Latin America and Asia during its initial stage between 2016 and 2025. Such expenditures are subject to the availability of cash from our operations, obtaining financing on reasonable terms and the favorable pricing of crude oil and gas. During the three-year period ended December 31, 2015, we invested U.S.$66,687 million in development projects in such regions. During the year ended December 31, 2015, we invested U.S.$18,106 million in such projects. All hydrocarbon reserves in Venezuela are owned by Venezuela and not by us. Under the Organic Hydrocarbons Law, as amended, every activity relating to the exploration and exploitation of hydrocarbons and their derivatives is reserved to the government of Venezuela, which may undertake such activities directly or through entities controlled by Venezuela through an equity participation of more than 50%. At the current production rate of crude oil and gas, Venezuela has proved hydrocarbon reserves of crude oil for the next 301 years for oil and 73 years for gas. We mainly sell crude oil to the United States, Canada, the Caribbean, Africa, Europe, South America and Asia. In addition, we refine crude oil, with a refining capacity of approximately 2.7 mmbpd and other feedstock in Venezuela and abroad into a number of products, including gasoline, diesel, fuel oil and jet fuel, petrochemicals and industrial products, lubricants and waxes, and asphalt. We are also engaged in the exploration and production of gas with a production of 913 boe per day as of December 31, 2015. Our registered office is located at Avenida Libertador, La Campiña, Apartado 169, Caracas 1050-A, Venezuela, and our telephone number is 011-58-212-708-4111. Our website is: www.pdvsa.com. Information contained on our website is not part of this offering circular. Social Development Pursuant to the Venezuelan Constitution, the Organic Hydrocarbons Law and social policy, we are required to foster Venezuela’s socio-economic development and the welfare of its citizens. To that effect, we make and are expected to continue to make significant financial contributions to social programs, including transfers to FONDEN (Fondo de Desarrollo Nacional) and other programs, which are included in our annual budget together with other expenses aimed to fund specific social projects, as determined by our Board of Directors, certain of which are recorded as part of our capital expenditures in accordance with applicable accounting rules. We promoted and participated in Venezuela’s social and economic development by contributing significant funding to agricultural developments, development of infrastructure and roads, programs related to the provision of food, health and education to the poor, as well as several other programs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Social Development Expenses.”

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We contributed a total of U.S.$30,079 million in 2011, a total of U.S.$17,336 million in 2012, and a total of U.S.$13,023 million in 2013 to social development, which are reflected as social development expenses in our consolidated statements of income included elsewhere in this offering circular. These contributions are in addition to taxes and dividends we pay annually to Venezuela, as well as the social projects we have funded, which are recorded as part of our capital expenditures because they relate to one of our oil and gas production projects. Organizational Structure We conduct our operations through our Venezuelan and international subsidiaries. Through December 31, 1997, we conducted our operations in Venezuela through three main operating subsidiaries, Corpoven, S.A., Lagoven, S.A. and Maraven, S.A. In 1997, we established a new operating structure based on business units. Since then, we have been involved in a process of changing our organizational structure with the aim of improving our productivity, modernizing our administrative processes and enhancing the return on capital. The transformation process involved the merger of Lagoven, S.A. and Maraven, S.A. into Corpoven S.A., effective January 1, 1998, and the renaming of the combined entity PDVSA P&G. In May 2001, PDVSA P&G was renamed “PDVSA Petróleo, S.A.” and, by the end of 2002, certain non-associated gas assets were transferred to PDVSA Gas. In accordance with instructions from the Venezuelan government and the guidelines of the Ministry of Petroleum, in 2006 and 2007, we finalized the conversion of operating service agreements into majority owned joint ventures and transferred association agreements to majority owned joint ventures, including the projects processing extra heavy crude oil in the Orinoco Oil Belt, as well as profit and risk exploration agreements. Additionally, we have made several adjustments within our organization in order to enhance internal controls to improve our corporate governance and to align our operating structure with the long-term strategies of Venezuela by the adopting a new framework of operating structure that increases the involvement of our Board of Directors in our activities, and, at the same time, enhances our operational flexibility. The following is a list of our material wholly-owned subsidiaries: 

PDVSA Petróleo, S.A.

Corporación Venezolana del Petróleo, S.A.

PDVSA Gas, S.A.

PDVSA Servicios, S.A.

PDV Marina, S.A.

Bariven, S.A.

PDV Holding, Inc.(1)

PDVSA Industrial, S.A.

PDVSA América, S.A.

(1)

PDV Holding’s main subsidiary is CITGO Holding. PDVSA’s operations in the United States occur mainly through CITGO Holding’s subsidiaries, including CITGO and its subsidiaries.

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Business Overview We engage in the following activities in the oil and gas industries through our subsidiaries: 

Upstream operations;

Downstream operations; and

Exploration and production of natural gas from offshore sources.

According to a comparative study published on November 16, 2015 by Petroleum Intelligence Weekly, a trade publication, we are the world’s fifth largest vertically integrated oil and gas company. Additionally, we ranked first in proved reserves of crude oil, according to the 2015 OPEC Annual Statistical Bulletin, and seventh in the world in crude oil production, seventh in refining capacity, sixth in proved gas reserves, fifteenth in gas production, and thirteenth in product sales, according to Petroleum Intelligence Weekly. Venezuela’s crude oil and natural gas reserves and our upstream operations are located in Venezuela, while our downstream operations are located in Venezuela, the Caribbean, North America, South America, and Europe. Our upstream and downstream operations include: 

Operating exploration, development and production of crude oil and gas and the development and operation of associated crude oil and gas production facilities;

Operating refineries and marketing of crude oil and refined petroleum products in Venezuela under the PDV brand name and operating refineries and marketing of refined products for the international markets, including eastern and Midwestern regions of the United States under the CITGO brand name;

Operating businesses in the Caribbean through the Isla refinery (a refinery and storage terminal which we lease in Curaçao), Camilo Cienfuegos refinery in Cuba, the Refidomsa refinery in the Dominican Republic and Petrojam refinery in Jamaica;

Refining business in the United States with six refineries, three of which are owned by CITGO: Lake Charles, Louisiana refinery, Corpus Christi, Texas refinery and Lemont, Illinois refinery; and three in which we have a 50% interest: Hovensa refinery, which was closed in February 2012, and a vacuum oil and coke distilling plant named Merey Sweeny;

Owning equity interests in two refineries (one that is 50%-owned by ExxonMobil and one that is 50%owned by Hess) and in a coker/vacuum crude distillation unit (50%-owned by ConocoPhillips) through joint ventures in the United States;

Refining businesses in Europe, through an affiliate of PDV Europa B.V.;

Maritime transport activities through our subsidiary PDV Marina;

Gas business through PDVSA Gas, a vertically integrated subsidiary in charge of gas extraction and processing for the production of liquefied natural gas, as well as transportation and marketing of gas in the domestic markets and exports of liquefied natural gas;

Operating storage terminals in Bonaire and Curaçao in the Caribbean;

Infrastructure and commercial services for clients for retail fuel and lubricants;

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Owning equity interests in four refineries and the marketing of petroleum products in the United Kingdom and Sweden through a joint venture (that is 50%-owned by Neste Oil AB and 50%-owned by PDV Europa);

Exploration and production services through PDVSA Servicios, S.A.;

Research and development activities through INTEVEP, S.A.; and

Shipping activities.

United States PDV Holding owns 100% of CITGO through CITGO Holding. CITGO is one of the largest refiners of crude oil in the United States. CITGO’s crude oil refining capacity at December 31, 2015 was 749 mbpd across three refineries located in Lake Charles, Louisiana; Corpus Christi, Texas; and Lemont, Illinois. These refineries have refining capacities of 425 mbpd, 157 mbpd and 167 mbpd, respectively. CITGO manufactures or refines and markets transportation fuels as well as petrochemicals, other industrial products and lubricants in the United States. CITGO Holding’s consolidated financial statements also include accounts relating to pipelines and equity interests in pipeline companies and petroleum storage terminals. CITGO’s transportation fuel customers include CITGO branded wholesale marketers and other light oil suppliers located in the United States (mainly east of the Rocky Mountains). Lubricants are sold principally in the United States to independent marketers, mass marketers and industrial customers. Petrochemical feedstock and industrial products are sold to various manufacturers and industrial companies throughout the United States. Petroleum coke is sold primarily in international markets. In 2015, CITGO sold a total of 15.5 million gallons of refined products, compared to 14.8 million gallons sold in both 2014 and 2013. In the United States, we also conduct our crude oil refining operations and refined petroleum product marketing through our wholly-owned subsidiary, PDV Holding, which owns 50% of Merey Sweeny (through PDV Sweeny), a joint venture with ConocoPhillips that owns and operates a coker and vacuum crude distillation unit in Sweeny, Texas. Prior to the sale of our interest to a third party on October 31, 2015, we also owned a 50% interest in the Chalmette Refinery, located in Chalmette, Louisiana, which was jointly owned with ExxonMobil. See “Business—Legal Proceedings— PDV Sweeny and ConocoPhillips Company.” Europe Within Europe, we conduct our crude oil refining and refined petroleum product activities through our wholly-owned subsidiary, PDV Europa, which owns 50% interest in A.B. Nynäs Petroleum (“Nynäs”), a company with operations in Sweden and the United Kingdom and jointly owned with Neste Oil. Through Nynäs, we refine crude oil and market and transport asphalt, specialty products, lubricants, and other refined petroleum products. Latin America and Caribbean In recent years we have expanded our operations in Latin America and the Caribbean, including by making investments in refineries and entering into supply agreements. In the Caribbean, we operate the Isla refinery in Curaçao, which is leased on a long-term basis from the Netherlands-Antilles government through 2019. The Isla refinery has a nominal refining capacity of 335 mbpd. During 2012, the Isla Refinery was shut down periodically for maintenance and improvement, pursuant to an agreement with the government of Curaçao. As a result of such maintenance, the refinery’s production was limited to 180 mbpd in 2013. During 2014, the production at the Isla Refinery was 192 mbpd and during 2015, production at the Isla Refinery was 183 mbpd. Certain refinery projects which were included in prior business plans, such as: Refinería Abreu e Lima, in Pernambuco, Brazil and the “Eloy Alfaro Delgado” Pacific Refinery Complex in Ecuador were cancelled due to the decline in oil revenues.

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In Cuba, Jamaica and the Dominican Republic we own a 49% interest in the Cienfuegos, Kingston and Refidomsa refineries. The Cienfuegos refinery has a refining capacity of approximately 65 mbpd, while the Kingston refinery has an installed capacity of 35 mbpd. The Refidomsa refinery has a refining capacity of approximately 34 mbpd and supplies approximately 70% of the fuel oil market in the Dominican Republic. In July 2016, the partial shutdown of the Cienfuegos refinery due to maintenance was announced. Energy Cooperation Agreements (Convenios de Cooperación Energética) The Venezuelan government entered into the following agreements together with the governments of other countries, mainly from Latin America and the Caribbean: Caracas Energy Cooperation Agreement (CECA), Integral Agreement of Cooperation (IAC) and the Petrocaribe Energy Cooperation Agreement (PETROCARIBE) (collectively, the “Energy Cooperation Agreements”). These agreements establish, among others, that PDVSA will supply crude oil and products to the state oil companies of the participating countries. See note 7 to our annual audited consolidated financial statements for the year ended December 31, 2015. In furtherance of the provisions set forth in the CECA, the IAC and the PETROCARIBE agreements, we entered into supply agreements with the national oil company of each of the countries participating in said agreements for the supply of 357 mbpd, 357 mbpd and 377 mbpd for the years ended December 31, 2015, 2014 and 2013, respectively. Most of these agreements provide for a sale price equal to the market value, payment terms between 30 and 90 days for a significant portion of every shipment, and long-term financing for the remaining portion (between 15 and 25 years) and they are effective for one year and may be extended by agreement of the parties involved. See note 8 to our annual audited consolidated financial statements. A significant portion of a shipment varies depending on the current oil price; the higher the price, the lower the portion to pay and the higher the financing portion. In 2000, the Venezuelan government entered into a cooperation agreement with the governments of Cuba, the Dominican Republic, Paraguay, Bolivia, Jamaica, and Uruguay that provides that we will enter into a supply agreement with the national oil company of each country for the supply of crude oil and refined products based on the number of barrels agreed by the Venezuelan government or provided under the CECA. Pursuant to the IAC, we entered into an agreement with the national oil company of Cuba in 2000 for the supply of 53 mbpd of crude oil. The agreement was subsequently amended to provide for the supply of up to 98 mbpd of crude oil. Trade Related Term Loan Facility PDVSA supplies crude oil on behalf of the Bolivarian Republic of Venezuela in connection with three trade agreements between the Bolivarian Republic of Venezuela and the People’s Republic of China: Fondo Pesado I, Fondo Pesado II and Gran Volumen. Pursuant to these agreements, PDVSA has supplied an aggregate amount of 627 mbpd, 477 mbpd and 485 mbpd during 2015, 2014 and 2013, respectively. Selected Supply Agreements In November 2013, PDVSA entered into an oil-backed prepayment agreement with Gazprombank, in an aggregate amount of U.S.$1 billion. The proceeds of the prepayment will be applied towards expanding infrastructure and increasing production at the Petrozamora project, a joint oil exploration venture. As a result of the agreement, production at the project is expected to increase from 63,000 barrels per day to 104,000 barrels per day. The sale of oil produced by Petrozamora will support repayment under this agreement. In December 2013, PDVSA Petróleo, S.A. and Petrozamora, S.A. (Petrozamora), a joint venture in which we have a majority interest, entered into a prepayment and reimbursement agreement with GPB Energy Services B.V., in an aggregate principal amount of U.S.$1,000 million. The proceeds of the prepayment will be used by Petrozamora to finance projects for purposes of increasing Petrozamora’s hydrocarbon production. The prepayments are divided into two components: (i) an initial prepayment (on a revolving basis) for U.S.$250 million

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and (ii) subsequent prepayments up to an amount of U.S.$750 million. As of December 31, 2015, the outstanding amount under this agreement is U.S.$73 million. Natural Gas Exploration and Production Our natural gas exploration and production business is conducted by our vertically integrated whollyowned subsidiary, PDVSA Gas. This subsidiary engages in onshore natural gas exploration and production activity and the processing of gas for NGL production, as well as transportation and marketing gas in the domestic market. Additionally, PDVSA Gas processes gas produced by our eastern and western exploration and production divisions, receiving all the remaining gas after consumption for our operations, for transport and marketing in the domestic market. Our wholly-owned subsidiary CVP manages offshore natural gas projects. Our wholly-owned subsidiary PDVSA Petróleo manages the offshore natural gas Mariscal Sucre Project, and CVP manages all other offshore natural gas projects with third parties. Research and Development We manage our research and development activities through our wholly-owned subsidiary INTEVEP. Business Strategy Our Business Plan takes into account the impact of the global economic conditions on the demand for oil and the expectations for global economic growth, as well as the projected supply of oil worldwide, the capabilities and challenges related to oil and gas production in Venezuela, and the consolidation of PDVSA’s non-oil businesses. Our Business Plan is based on the following key initiatives approved by the government of Venezuela: 

Exploration of Condensate and Light and Medium Crude Oil. We intend to focus primarily on areas that have been already explored and that are currently producing crude oil. All other exploration areas, both onshore and offshore, are open to third-party participation in partnership with us, under the framework of the Organic Hydrocarbons Law and the Venezuelan Constitution.

Development of the Hugo Chávez Orinoco Oil Belt Magna Reserves. The Hugo Chávez Orinoco Oil Belt (“Orinoco Oil Belt”) area (55,314 km2) has been divided into 36 blocks for reserves quantification and certification of original oil on site purposes. There are approximately 1,469,011 million barrels of Original Oil in Place (“OOIP”) in the Orinoco Oil Belt. Of such amount, approximately 287,096 million barrels have been certified as recoverable reserves, based on a total recovery factor of 20%. See “Risk Factors – Venezuelan proved crude oil and gas reserve estimates involve some degree of uncertainty and may prove to be incorrect over time, which could adversely affect our ability to generate income.” We intend to participate actively in the development of these reserves.

Production Growth in Mature Areas. We are investing in mature areas with a view to achieve a crude oil production capacity in these areas of 1,221 mbpd by 2025. The projected production in mature areas for the period leading up to 2025 includes the following: 767 mbpd from areas where we are the sole operator and 454 mbpd from joint ventures producing light, medium and heavy oil.

Expansion of Orinoco Oil Belt Production. We intend to obtain 1,949 mbpd from the expansion of our existing and future operations in the Orinoco Oil Belt. This growth represents an increase of 629 mbpd from 1,320 mbpd in 2015 to 1,949 mbpd in 2025 (including 112 mbpd in mature areas of the Orinoco Oil Belt), which we plan to implement by developing our extra-heavy crude oil reserves, including a new upgrading facility and pipelines. The expected investment for the years 2016 through 2025 is U.S.$71,567 million. The expected total oil production capacity for 2025, including existing production and the expansion of the Orinoco Oil Belt, offshore crudes, NGL and the mature areas, is 3,180 mbpd. The growth of oil production capacity is expected to occur through joint ventures in which we typically have a 60% stake and international oil companies have the remaining 40% stake.

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Development of Major Projects in Refineries. We intend to expand our refinery capacity from approximately 2.5 mmbpd in 2015 (1.3/1.2 mmbpd Venezuela/overseas capacity) to 2.7 mmbpd by 2025 (1.3/1.4 mmbpd Venezuela/overseas capacity). We expect that the implementation of this initiative will allow us to increase our production of refined petroleum products and upgrade our product slate towards higher-margin products, as well as to improve the efficiency of our existing refining capacity. The focus of our refining capacity expansion will be the incorporation of heavier crude oil from the Orinoco Oil Belt expansion into the national refinery system. We currently have in process a major upgrade project to increase the refining capacity of the Puerto La Cruz Refinery. Certain major projects which were part of prior business plans, such as Paraguaná and El Palito, have been postponed due to the decline in oil revenues. In addition, we intend to expand our refining capacity and develop a new refinery in Asia.

Development of the Gas Sector. We have plans to continue developing our onshore and offshore gas reserves with third-party participation under the framework of the Venezuelan Organic Law of Gaseous Hydrocarbons. We intend to maintain our natural gas production from 7,756 mmcfd in 2015 to 7,699 mmcfd by 2025 (equivalent to 1.33 mbpd). In particular, we intend to focus on the development of the Delta Caribe, an initiative consisting of the Northeast Delta Caribbean Project and the Rafael Urdaneta Project in western offshore Venezuela. These projects involve the development of gas reserves located north of Paria (the Mariscal Sucre Project) and Gulf of Venezuela (Cardón IV/Rafael Urdaneta Project). With respect to northeast developments, we intend to link all blocks by a gas pipeline network to the future Güiria Hub, where an industrial complex, Gran Mariscal de Ayacucho, or CIGMA, is expected to be developed. For Gulf of Venezuela natural gas developments, we plan to connect the gas production blocks in the Península de Paraguaná with the domestic gas transportation system.

Development of Infrastructure. We plan to implement an infrastructure program focused on multiple projects with the aim of securing the development of crude oil and gas reserves, particularly in the Orinoco Oil Belt. This program includes the building of about 8.0 million barrels of oil storage capacity, one liquid terminal in Punta Cuchillo (Orinoco River), the expansion of the existing liquid terminal in Jose, approximately 640 km in oil pipelines, the expansion of existing gas pipelines, and 1,924 km in new gas pipelines.

Marketing of Crude and Products. We intend to continue supplying the local market and exporting crude oil, refined products and natural gas, including refineries and wholesalers in order to improve our margins, and maintaining our markets in Asia, Europe and North America related to the transport logistics. We expect to renew and expand our tanker fleet and increase our maritime transporting capacity from its current controlled fleet of 2,642 tdwt to 9,122 twdt by 2025, as well as increase the number of vessels we own from 26 vessels to 75. In addition, we are expanding and diversifying our marketing efforts in Latin America, the Caribbean and Asia, including China, India and Russia, with the goal of reaching total crude oil exports of 2.6 mbpd by 2025.

Auto Gas Project. Since 2006, we have been developing a project aimed at reducing the domestic gasoline demand by creating natural gas dispatch facilities for vehicles and converting vehicles to dual fuel engines on a national scale. The project’s goals include the construction of 473 new compressed natural gas (“CNG”) stations, as well as the construction and outsourcing of more than 200 vehicle conversion centers and the reactivation of 141 existing CNG stations. As of December 31, 2015, we had 342 CNG stations and 39 vehicle conversion centers. Our total estimated investment in this project for the period beginning 2016 through 2025 is expected to be U.S.$2,189 million.

Production Strategy with Naphtha Stripper for the Orinoco Oil Belt. We have implemented a production strategy in the Orinoco Oil Belt in order to start production before upgraders are built and operational. This strategy consists of the construction of one naphtha stripper that will allow transportation of extra-heavy crude oil diluted with naphtha from the production fields to the port terminals and/or storage tanks where the stripper is to be located. The stripper will remove naphtha from the blend of extra-heavy crude oil with naphtha to send it back to the production field for re-use as a transport diluting agent and to allow the extraheavy crude oil to be blended with other light crudes in order to obtain a commercially viable crude product. The naphtha stripper will have a total capacity of 260 mbpd and will require an investment of 90

U.S.$725 million. The basic engineering for the naphtha stripper is being completed and its construction is expected to be finalized by 2022. 

Exploration Projects. Our prior exploration strategy, known as Integral Exploration Projects (PIEX), included eight exploration projects covering the entire national territorial area with the aim of adding an estimated 8,045 million barrels of crude oil and 40.0 trillion cubic feet of gas. Currently, we are focused on an exploration strategy focused on: (i) concentrating the exploration efforts in new and traditional areas that lead to the incorporation of new light and medium crude oil and non-associated gas; (ii) executing an exploration plan for the incorporation of reserves associated to the Cretaceous in the Orinoco Oil Belt and the Lake Maracaibo; (iii) increasing the proved reserves of light and medium crude oil and non-associated gas from the conversion of the probable reserves with the execution of re-exploration and outline projects; (iv) accelerating the integrated characterization of fields with the purpose of establishing the exploitation plans and strategies that enhance the volumetric growth in Venezuela; and (v) executing a Specific Exploration Plan in border areas in Venezuela to strengthen Venezuela. The Exploration Plan includes the acquisition of 7,258 km2 of seismic 2D and 4,065 km2 of seismic 3D in the period 2016 – 2025, 131 exploratory wells, and includes the addition of 1,047 mbpd of oil and 2.3 bcf of new natural gas reserves. The total estimated investment in these projects from 2016 through 2025 is U.S.$2,386 million. As of December 31, 2015, total disbursements in the projects since 2011 have amounted to U.S.$1,454 million.

Our Business Plan outlines the development of production and refining projects totaling U.S.$302 billion in Venezuela, the Caribbean, Latin America and Asia during its initial stage between 2014 and 2019. Such expenditures are subject to the availability of cash from our operations, obtaining financing on reasonable terms and the evolution of the price of crude oil and gas. We expect that 81% of these expenditures will come from us and 19% from our partners in the applicable projects. During the three-year period ended December 31, 2015, we invested U.S.$66,687 million in development projects in such regions. During the year ended December 31, 2015, we invested U.S.$18,106 million in such projects. The implementation of our business strategy includes the following initiatives: Exploration, production and upgrading. Our exploration and production strategy focuses on increasing our efforts to search for new light crude oil and medium crude oil reserves as well as the systematic replacement of such reserves in mature areas. We are developing new production areas and adjusting our production activities to cater toward market demands and agreements reached among OPEC members and other oil-producing countries. During 2015, PDVSA’s exploration projects were completed in accordance with strategic guidelines included in the Plan de la Patria, Segundo Plan Socialista de Desarrollo Económico y Social de la Nación, 20132019 (National Plan for Social and Economic Development) and the Business Plan. As a result of steps taken in 2015, PDVSA incorporated new proven and probable reserves through the drilling, evaluation of eleven exploratory wells. At December 31, 2015, we had concluded three additional projects in Venezuela, some of which include: (i) Proyecto Flanco Norandino Este (PGO), (ii) Reexploración Bachaquero Lago, and (iii) Proyecto Barinas Este (PGP). Refining. Our refining strategy focuses on expanding and improving the efficiency of our downstream operations. We are in the process of adding deep conversion capacity to the Puerto La Cruz Refinery in order to increase the efficiency of heavy crude oil processing, while maintaining our environmental compliance standards. In our refineries in the United States, Europe and the Caribbean, we intend to continue to invest in order to comply with quality standards required by those markets. In addition, we intend to invest in the Nanhai (Jie Yang) – China refinery. Certain refinery projects which were included in prior business plans, such as: Batalla Santa Ines and Petrobicentenario were cancelled due to the decline in oil revenues. International marketing. We plan to continue expanding our international marketing operations to ensure the growth of our market share for our crude oil and refined petroleum products and to increase brand recognition for our products. We seek to diversify our customer portfolio by increasing and strengthening our commercial strategies in markets such as China, India, Japan, Russia and Southeast Asia. We also intend to expand our operations in the Caribbean and South America and aim to maintain our market position in the United States and some other European countries through a more efficient distribution system of CITGO’s refined petroleum products. 91

In order to improve our logistic and maritime transportation capabilities, we intend to buy a set of 49 tankers (most of them VLCCs). These tankers are expected to increase the number of ships owned from 26 vessels to 75 by the end of 2025. Domestic marketing. In Venezuela, we plan to continue to supply our products and promote the use of unleaded gasoline and to improve the competitive position of our network of service stations, lubrication centers and macro-stores. We also to intend to continue the development of our commercial network through business relationships and other associations and to increase our product supply to high-traffic airports. Natural Gas. The development of the gas exploration and production business is one of our major goals. We intend to focus our activities on meeting the growing gas demand to foster national development and a higher standard of living. We plan to focus on creating attractive investment opportunities for the private sector in nonassociated gas production. We intend to expand our transportation and distribution systems, processing and fractionation capacity, and develop new gas export ventures. We intend to continue to explore and develop nonassociated gas reserves with the support of private investors. We are engaged in the development of a large gas distribution network in different cities to provide gas for residential, commercial and industrial purposes. We intend to promote an increased and more diverse use of gas in Venezuela. Private Sector Participation in Natural Gas. In 2001, the Ministry of Petroleum completed a round of onshore non-associated gas licensing bids for exploration and production activities in 11 new onshore areas. Six areas were awarded to foreign and domestic investors: Yucal-Placer Norte, Yucal-Placer Sur, Barrancas, Tinaco, Tiznado and Barbacoas. During the first quarter of 2003, the Venezuelan government assigned two blocks within the Deltana Platform area (eastern Venezuela and on the maritime border with Trinidad & Tobago) to Statoil, Chevron and ConocoPhillips. In addition, the Ministry of Petroleum has plans for a new bidding round to explore and develop offshore resources in the west and northeast of Venezuela. These developments are likely to include projects for the production of LNG once demand in Venezuela has been met. The Ministry of Petroleum has defined an offshore gas project called Rafael Urdaneta located in the Venezuelan Gulf and northeast of Falcon State with an area of 30,000 km2 divided into 29 blocks to be offered in three phases. Phase one began during the second quarter of 2005, when the Venezuelan government offered the first six blocks to 37 national and foreign oil companies. During this phase, three blocks were awarded. During the third quarter, phase two began with the offering of 5 blocks (4 new and 1 from the 1st phase), 2 of which were awarded. Blocks Urumaco I and II were awarded to the Russian company Gazprom, block Cardón III was awarded to Chevron, block Cardón IV was awarded to Repsol-ENI and block Moruy II was awarded to Petrobras-Teikoku. The third phase is to be defined in the future. In April 2014, block Urumaco I was returned to the Republic of Venezuela pursuant to Resolution No. 031, dated April 21, 2014. A discovery of approximately 9,500 billion cubic feet was made in 2010 in La Perla field (9.5 TCF), located within the Cardón IV Area. This field is being developed by ENI and Repsol pursuant to a license agreement. In 2012, the Ministry of Petroleum approved the commercial status of this field, and a contract for the sale of gas was entered into between the parties and PDVSA Gas, which guarantees the off-take and gas price for the project. Productions from this project started in July 2015 and by December 31, 2015, production levels reached 466 mmscfd. Regulatory Framework in Venezuela The hydrocarbons industry in Venezuela is regulated pursuant to the Organic Hydrocarbons Law, effective as of 2001, as amended, and the Organic Law of Gaseous Hydrocarbons, enacted in 1999. The Organic Hydrocarbons Law reserves oil-related activities to Venezuela. Under the Organic Hydrocarbons Law, private participation in hydrocarbon upstream activities, as well as gathering and initial transportation and storage, is allowed only through (Empresas Mixtas), or joint ventures, in which the Venezuelan government has more than 50% equity ownership. The Organic Law of Gaseous Hydrocarbons, which governs gas-related activities, provides for a non-reserved legal regime. Under the Organic Law of Gaseous Hydrocarbons, gas-related activities may be carried out by government entities or national and foreign private companies with no minimum government participation.

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Exploration, Production and Upgrading During 2015, our production was 1,001 million barrels of oil, which has allowed us to reach an aggregate production of 70,166 million barrels of oil from January 1, 1914 through December 31, 2015. Venezuela’s commercial oil production is concentrated in the Maracaibo-Falcón Basin (previously known as the Western-Zulia Basin), which covers the states of Zulia and Falcón; the Barinas-Apure Basin (previously known as West Central Barinas and Apure Basin), which covers the Apure and Barinas states; the Eastern Basin which covers the states of Guárico, Anzoátegui, Monagas and Sucre; and the Carúpano Basin, incorporated since 2006, which covers the northern part of the state of Sucre, the state of Nueva Esparta as well as the territorial waters located offshore eastern Venezuela. The following table presents our proved reserves, proved and developed reserves, production volume for 2013 and the ratio of proved reserves to annual production in Venezuela as of December 31, 2015. For the year ended December 31, 2015 Proved(1) (mmb)

Proved developed (mbpd)

Production (mbpd)

Ratio Reserves/ Production

Crude Oil: Condensed........................................................................................ Light(2) .............................................................................................. Medium............................................................................................ Heavy and Extra-Heavy ................................................................ Total Crude Oil ................................................................

2,344 10,609 9,716 278,209 300,878

544 1,693 1,862 8,832 12,931

89 374 682 1,597 2,742

72 78 39 477 301

Gas in boe(3) ..................................................................................... Total Natural Hydrocarbon in boe(4) ................................

34,715 335,593

6,784 19,715

1,300 4,042

73 227

(1) (2) (3) (4)

Developed and undeveloped. Production obtained from the top of wells, including condensates. Net natural gas production (gross production less natural gas reinjected). Does not include NGL.

The following table presents the location, production volume for 2015, discovery year, proved reserves and the ratio of proved reserves to annual production for each of our largest oil fields in Venezuela as of December 31, 2015. Name of Field Zuata Principal ..................................... Cerro Negro ......................................... Cerro Negro ......................................... Zuata Norte ......................................... Uverito ................................................ Huyapari .............................................. Bare ..................................................... Dobokubi ............................................. Jobo ..................................................... Melones ............................................... Tia Juana Lago .................................... Bloque VII: Ceuta ............................... Bachaquero Lago ................................ Urd. Oeste Lago .................................. Boscan ................................................. Lagunillas Lago ................................... Tia Juana Tierra ................................... Lagunillas Tierra ................................ Urd. Este Lago .................................... Bloque III: Centro ............................... Santa Bárbara ...................................... Mulata ................................................. El Furrial .............................................

Location (state of) Anzoátegui Anzoátegui Monagas Anzoátegui Monagas Anzoátegui Anzoátegui Anzoátegui Monagas Anzoátegui Zulia Zulia Zulia Zulia Zulia Zulia Zulia Zulia Zulia Zulia Monagas Monagas Monagas

Year of Discovery (year) 1985 1979 1979 1981 1979 1979 1950 1981 1953 1955 1925 1956 1930 1955 1945 1913 1925 1913 1955 1957 1993 1941 1986

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2015 Production (mbpd) 278 199 299 27 13 151 62 63 8 23 74 68 42 55 104 39 23 41 4 4 165 166 198

Proved Reserves (mmb) 53.946 32.491 23505 9.610 9.469 4.561 1.833 2.137 1.303 1.094 2.798 2.076 1.576 1.342 1.466 1.138 1.131 925 530 504 1.362 1.148 907

Ratio Reserves/ Production (years) 532 448 215 991 1.942 83 81 93 437 128 103 67 39 80 132 61 132 61 374 311 23 19 13

Orocual ................................................ Travi .................................................... El Carito .............................................. Boquerón ............................................. Jusepín ................................................ Corocoro .............................................

Monagas Monagas Monagas Monagas Monagas Sucre

1958 2004 1988 1989 1944 1998

14 1 51 5 18 33

616 447 238 199 186 145

125 838 13 107 28 12

Reserves All oil and gas reserves located in Venezuela belong to Venezuela. We calculate oil and gas reserves and they are validated by the Ministry of Petroleum pursuant to Ministry of Petroleum’s hydrocarbon reserve manual definitions and rules. The Ministry of Petroleum’s rules include specific processes to calculate reserves, as well as to control data required by Venezuela, which enables a comparison among Venezuela’s and other countries’ reserves because these rules are similar to those used worldwide. Proved reserves are volumes of hydrocarbons that are estimated with reasonable certainty. They are recoverable from known reservoirs in accordance with available geological and engineering data. Given the inherent uncertainty and limited nature of the reservoir data, the estimates of proved oil and gas reserves are subject to modifications overtime, as additional information becomes available. In accordance with our production facilities, proved reserves are classified as developed and not developed. Proved developed reserves are identified by the volume of hydrocarbons that is commercially recoverable from reservoirs from available wells. Proved reserves that are not developed are identified as those with significant hydrocarbons which will be obtained through investments in drilling new wells in areas not drained or the completion of existing wells. The estimates of reserves are not precise and are subject to revision. We review these crude oil and gas reserves annually to take into account, among other things, production levels, field reviews, the addition of new reserves from discoveries, year-end prices, and economic and other factors. Proved reserve estimates may be materially different from the quantities of crude oil and gas that are ultimately recovered. Proved developed reserves of crude oil and gas represented approximately 90% and 10%, respectively, of Venezuela’s total estimated proved crude oil and gas reserves on an oil equivalent basis at December 31, 2015. Crude Oil. Venezuela had estimated proved crude oil reserves at December 31, 2015 totaling approximately 300,878 billion barrels. Based on production levels for 2015, estimated proved reserves of crude oil, including heavy and extra-heavy crude oil reserves that will require significant future development costs to produce and refine, have a remaining life of approximately 301 years. Natural Gas. Venezuela had estimated proved reserves of gas totaling approximately 201,349 bcf (including an estimated 36,452 bcf associated with extra-heavy crude oil in the Eastern and Barinas-Apure Basin) as of December 31, 2015 compared to 35,265 bcf (or 6,080 mmb or boe) as of December 31, 2014. Venezuela’s gas reserves are comprised of associated gas that is developed incidental to the development of our crude oil reserves. A large proportion of our Venezuelan gas reserves are developed. During 2015, approximately 33% of the gas that we produced was reinjected for well pressure maintenance purposes. The following table presents Venezuela’s proved reserves of crude oil and gas, which include both developed and undeveloped reserves. All of these reserves are located in Venezuela. For the year ended December 31, 2014 2013 2012 (in millions of barrels, unless otherwise indicated)

2015

Proved reserves: Condensate......................................................................... Light................................................................................... Medium.............................................................................. Heavy ................................................................................. Extra-heavy(1) ..................................................................... Total crude oil................................................................... Ratio Reserves/Production (years) ..................................

2,344 10,609 9,716 18,688 259,521 300,878 301

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2,357 10,493 9,672 18,692 258,739 299,953 296

2,384 10,331 9,742 17,597 258,299 298,353 282

2,618 10,390 9,786 17,805 257,136 297,735 279

2011

2,647 10,157 9,650 17,733 257,384 297,571 273

For the year ended December 31, 2014 2013 2012 (in millions of barrels, unless otherwise indicated)

2015

2011

Natural gas in bcf ............................................................... Natural gas in boe............................................................... Total hydrocarbons in boe...............................................

201,349 34,715 335,593

198,368 34,201 334,154

197,089 33,981 332,334

196,409 33,864 331,599

195,234 33,661 331,232

Proved developed reserves: Condensate......................................................................... Light................................................................................... Medium.............................................................................. Heavy ................................................................................. Extra-heavy ........................................................................ Total crude oil...................................................................

544 1,693 1,862 4,574 4,258 12,931

565 1,786 1,725 4,524 4,326 12,926

615 1,829 1,911 4,621 3,984 12,960

639 1,891 2,071 4,321 4,053 12,975

674 1,932 2,237 4,464 4,345 13,652

Natural gas in bcf ............................................................... Natural gas in boe............................................................... Total hydrocarbons in boe...............................................

39,350 6,784 19,715

37,731 6,505 19,431

39,135 6,747 19,707

39,252 6,768 19,759

37,217 6,417 20,069

Percent of proved developed to total reserves: Crude Oil............................................................................ Natural gas .........................................................................

4% 20%

4% 19%

4% 20%

4% 20%

5% 19%

(1) Proved reserves of extra-heavy crude oil located in the Orinoco Oil Belt have a low development grade, and for December 31, 2015, included approximately 259,515 mmb.

Operations During 2012, our exploration projects were completed in accordance with strategic guidelines included in the Plan de Desarrollo Económico y Social de la Nación 2007-2013 (National Plan for Social and Economic Development) and the Business Plan. We incorporated new proved and probable reserves through the drilling, evaluation and completion of three exploratory wells. In 2015, we continued our geophysical operations and completed the processing of seismic data in the project Barinas Este 07G 3D, in the Boyacá region. We also acquired a total amount of 1,833 km2 of 3D seismic lines and 1,012 km2 of 2D seismic lines. The following table summarizes our drilling activities for the periods indicated. For the year ended December 31, 2014 2013 2012 (Number of wells)

2015 Exploration wells: Completed .......................................................................... Suspended .......................................................................... Under evaluation ................................................................ In progress..........................................................................

2011

Dry or abandoned............................................................... Total .................................................................................. Of which are carry-overs ....................................................

2 1 8 -

6 1 4 -

4 3 2

2 1 5 1

11 2

11 3

9 6

9 4

6 1

Development wells drilled(1) .............................................

375

496

454

469

402

(1)

2 1 3

Includes wells in progress, even if they were wells drilled in previous years, and injector wells. The breakdown of the 454 wells for the year ended December 31, 2015 is as follows: 338 corresponds to PDVSA Petróleo and 37 corresponds to PDVSA Gas. This does not include 329 wells from the Liviano-Mediano joint venture and 196 wells from the Orinoco Oil Belt joint venture, for a total of 525 wells.

In 2015, Venezuela’s crude oil production capacity was 3,184 mbpd, of which 1,798 mbpd corresponds to PDVSA’s own production (568 mbpd in the eastern region, 634 mbpd in the western region and 577 mbpd in the Orinoco Oil Belt and 19 mbpd corresponds to PDVSA Gas) and 1,386 mbpd corresponds to joint ventures.

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Our average oil production (which includes crude oil and natural gas liquids) for 2015 reached 2,863 mbpd, of which 1,655 mbpd corresponds to PDVSA’s own production (767 mbpd in the eastern region, 365 mbpd in the western region and 503 in the Orinoco Oil Belt and 20 mbpd corresponds to PDVSA Gas) and 1,208 mbpd corresponds to joint ventures. The increase in Orinoco Oil Belt production is due to an increase in the volume of activity in oil wells during the last year. During 2015, our average production cost of crude oil was of approximately U.S.$10.68 per barrel, including joint ventures. During 2015, our natural gas production amounted to 7,756 mmcfd, out of which 2,460 mmcfd was re-injected with the purpose of maintaining existing reservoir pressure. Net natural gas production reached 913 boe. The following table summarizes our historical average net daily crude oil and natural gas production by type and by basin and the average sales price and production cost for the periods specified.

2015

For the year ended December 31, 2014 2013 2012 (in thousand barrels per day, unless otherwise indicated)

2011

Production Crude oil: Condensate......................................................................... Light................................................................................... Medium.............................................................................. Heavy/Extra-heavy............................................................. Total crude oil................................................................... Natural gas liquids.............................................................. Total crude oil and NGL..................................................

93 374 682 1,597 2,746 117 2,863

110 416 619 1,640 2,785 114 2,889

116 469 637 1,677 2,899 116 3,015

107 487 875 1,441 2,910 124 3,034

104 511 917 1,459 2,991 138 3,129

Natural gas (mmcfd): Gross production ................................................................ Less: Reinjected ................................................................ Net natural gas (mmcfd) .................................................. Net natural gas (in mbpd boe) .........................................

7,756 2,460 5,296 913

7,422 2,604 4,818 831

7,395 2,779 4,616 796

7,327 2,871 4,456 768

7,125 2,884 4,241 731

PDVSA’s crude oil production by basin: Maracaibo-Falcón .............................................................. Barinas-Apure .................................................................... Eastern ............................................................................... Total crude oil...................................................................

706 32 2,008 2,746

750 38 1,997 2,785

776 41 2,082 2,899

796 46 2,068 2,910

806 55 2,130 2,991

Natural gas production by basin (mmcfd): Maracaibo-Falcón .............................................................. Barinas-Apure .................................................................... Eastern ............................................................................... Total natural gas ..............................................................

718 31 7,007 7,756

718 36 6,668 7,422

771 34 6,590 7,395

796 7 6,524 7,327

787 35 6,303 7,125

Average export price ($/Bl) Crude oil ($ per barrel)....................................................... Gas ($ per MPC) ................................................................

44.65 0.93

88.42 2.51

98.08 0.66

103.42 0.95

100.11 0.88

10.68

18.05 11.40

11.09

7.53

3.93

15.10 10.63

10.86

7.23

Average production cost ($/boe)(1) Including operating service agreements (Empresas Mixtas) ............................................................................... Excluding operating service agreements (Empresas Mixtas) ............................................................................... (1)

The average production cost per barrel is calculated by dividing the sum of direct and indirect costs of production (excludes depreciation and amortization) divided by the total volumes of production of crude oil, natural gas and liquid natural gas.

Venezuelan Crude Oil Production and Liquid Natural Gas Production Subject to Royalties In 2015, Venezuela’s total crude oil production subject to royalties amounted to approximately 2,863 mbpd, of which 1,655 mbpd corresponds to PDVSA’s own production (767 mbpd in the eastern region, 365 mbpd in the western region and 503 in the Orinoco Oil Belt and 20 mbpd corresponds to PDVSA Gas), 1,208 mbpd 96

corresponds to joint ventures. Initiatives Involving Private Sector Participation In the 1990s, we encouraged private initiatives and investment in the oil industry with the approval of the Venezuelan National Assembly, and we were permitted to enter into operating and association agreements with private entities. Pursuant to the guidelines of the Ministry of Petroleum, beginning in 2005, agreements and ventures with private parties were converted into joint ventures -Empresas Mixtas- where we held and continue to hold through CVP, one of our subsidiaries, a majority of the shares in each joint venture, as provided in the Organic Hydrocarbons Law. Conversion of Operating Service Agreements to Empresas Mixtas During 2006, 19 joint-operating agreements were converted into joint ventures, in which CVP has an equity holding between 60% and 80%. Joint Venture

PDVSA’s interest (through CVP)

Kaki Cabimas

Petrolera Kaki, S.A. Petrocabimas, S.A.

60% 60%

Onado Guárico Oriental Mene Grande Quiriquire

Petronado, S.A. Petroguárico, C.A. Petroquiriquire, C.A. Petroquiriquire, C.A.

60% 70% 60% 60%

Petroboscán, C.A. Petroindependiente, C.A. Petrocumarebo, S.A. Petrocumarebo, .S.A. Petrocuragua, S.A.

60% 74.80% 60% 60% 60%

Baripetrol, S.A. Petroregional del Lago, S.A.

60% 60%

Petroven-Bras, S.A.

60%

La Concepción

Petrowayu, S.A.

60%

Mata

Petrokariña, S.A.

60%

Oritupano-Leona Pedernales Ambrosio

Petroritupano, S.A. Petrowarao, S.A. Petrowarao, .S.A

60% 60% 60%

B2X 70/80 Monagas Sur Caracoles Intercampo Norte DZO

Lagopetrol, S.A. Petrodelta, S.A. Petrolera Sino-Venezolana, S.A. Petrolera Sino-Venezolana, S.A. Petroperijá, S.A.

69% 60% 75% 75% 60%

Boquerón, S.A.

60%

Field

Boscán LL-652 Falcón Este Falcón Oeste Casma Anaco Colón Urdaneta Oeste Acema

Boquerón

Private shareholder’s interest Inemaka 22.67% / Inversiones Polar S.A. 17.33% Sepca 40% CGC 26%/ BPE 8.36%/ KNOC 5.64% Teikoku 30% Repsol 40% Repsol 40% Chevron 39.20%/ INEMAKA 0.80% Chevron 25.20% PFC 40% PFC 40% CIP 28%/ Open 12% Suizum 17.50%/ PERENCO 17.50/ PFC 5% Shell 40% Petrobras 29.20%/ COROIL 10.80% Petrobras 36%/ Williams International Oil & Gas 4% Petrobras 29.20%/ Inversora Mata 10.80% Petrobras 22%/ Venezuela US 18% Perenco 40% Perenco 40% Integra Oil and Gas SAS 26.35%/ Ehcopek 3.10%/ CIP 1.55% HRN 40% CNPC 25% CNPC 25% DZO 40% Boqueron Holdings 26.67%/ PEI 13.33%

Exploration and Production in New Areas under Former Profit-sharing Agreements. In July 1995, the Venezuelan Congress approved profit-sharing arrangements pursuant to which private sector oil companies were offered the right to explore, drill and develop light and medium crude oil in ten designated blocks with a total area of approximately 13,774 km2, pursuant to the terms of the profit-sharing agreements entered into by such companies and CVP, our subsidiary appointed to coordinate, control and supervise these agreements. Under the profit-sharing agreements, CVP had the right to participate, at its option, with an ownership interest of between 1% and 35% in the development of any recoverable reserves with commercial potential. Eight oil fields were awarded to 14 companies in 1996. The awards were based on the percentage of pretax earnings that the bidders were willing to share with the

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Venezuelan government. The profit-sharing agreements provided for the creation of a control committee, as the authority with oversight power with respect to these agreements. Originally, CVP was entitled to hold shares representing a maximum of 35% participation in the joint ventures that could be formed pursuant to profit-sharing agreements in the following oil fields. Field Western Paria Gulf Eastern Paria Gulf La Ceiba (1)

CVP Partners Conoco Venezuela, C.A. — ENI — OPIC (1) Ineparia — Conoco Venezuela, C.A. – ENI – OPIC ExxonMobil – PetroCanada

Joint Venture Compañía Agua Plana, S.A. Administradora del Golfo de Paria Este, S.A. Administradora Petrolera La Ceiba, C.A.

Profit-sharing agreements under Phase I (development).

On February 26, 2007, President Chávez issued Decree-Law No. 5,200 establishing the timeline and general guidelines for the transfer of the association agreements to joint ventures. As a result, our ownership interest increased to at least 60%. The subsequent transition decrees were published in the Official Gazette, completing the incorporation process of the referred joint ventures. The following are the joint ventures operating the projects:  Petrolera Paria, S.A.: operating the Golfo de Paria Este project formed between our subsidiary CVP holding 60% of the shares, Sinopec International Petroleum Exploration and Production Corporation holding 32% of the shares and INE Oil & Gas Inc. holding 8% of the shares.  Petrosucre, S.A.: operating the Golfo de Paria Oeste project formed between our subsidiary CVP holding 74% of the shares and Eni Venezuela B.V. holding 26% of the shares.  Petrolera Güiria, S.A.: operating the Golfo de Paria Central project formed between our subsidiary CVP holding 64.25% of the shares, INE Oil & Gas Inc. holding 16.25% of the shares and Eni Venezuela B.V. holding 19.50% of the shares. Additionally, La Ceiba field is currently directly operated by our subsidiary PDVSA Petróleo. Orinoco Oil Belt Extra-heavy Crude Oil Projects. Between 1993 and 1997, the Venezuelan National Assembly approved the creation of four vertically integrated joint venture projects in the Orinoco Oil Belt for the exploitation and upgrading of extra-heavy crude oil of average API gravity of 9° and marketing of the upgraded crude oil with API gravities ranging from 16° to 32°. These joint venture projects were implemented through association agreements between various foreign participating entities and us. On February 26, 2007, President Chávez issued Decree-Law No. 5,200 establishing the timeline and general guidelines for the transfer of the association agreements to joint ventures. As a result, our ownership interest increased to at least 60%. The subsequent transition decrees were published in the Official Gazette, completing the incorporation process of the referred joint ventures. Under this decree, the associations of Hamaca, Sincor and Cerro Negro became joint ventures as described below. The fourth association, Petrozuata, is wholly owned by PDVSA Petróleo and was not transformed into a joint venture. The current joint ventures operating in Orinoco Oil Belt are as follows:  Petropiar, S.A. joint venture, operating the Hamaca project between our subsidiaries CVP holding 66% of the shares, Chevron Orinoco Holdings B.V. holding 30% of the shares and PDVSA Social, S.A. holding 4% of the shares.  Petrocedeño, S.A. joint venture, operating the Sincor Project between our subsidiary CVP holding 56% of the shares, Total Venezuela, S.A. holding 30.32% of the shares, Sincor Netherlands B.V. (Statoil) holding 9.68% of the shares and PDVSA Social, S.A. holding 4% of the shares.

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 Petromonagas, S.A. joint venture, operating the Cerro Negro Project by our subsidiary CVP holding 79.33% of the shares, Rosneft Energy GMBH holding 16.67% of the shares and PDVSA Social, S.A. holding 4% of the shares.  Petrolera Sinovensa, S.A. (or Petrosinovensa) joint venture, operating in the Carabobo area between our subsidiary CVP holding 60% of the shares and CNPC Venezuela B.V. holding 40% of the shares.  Petrolera Vencupet, S.A. is a joint venture formed by CVP holding 60% of the shares and CUPET holding 40% of the shares. For the year ended December 31, 2015, total investments in the Petropiar, Petrocedeño, Petromonagas and Petrosinovensa projects were U.S.$1,715 million. Oilfield Service Sector Entities On May 7, 2009, the Venezuelan government enacted the Organic Law that Reserves to Venezuela the Assets and Services Related to Primary Hydrocarbons Activities (the “Reserve Law”), which provides for the reservation, in favor of Venezuela, of those assets and services related to the performance of the “primary activities” as set forth in the Organic Hydrocarbons Law (essentially, the activities of exploration, extraction in natural stage, gathering, transport, and initial storage of liquid hydrocarbons and associated gas). Those assets and services were previously provided by private oil service providers. It further provides that the reserved activities must be directly carried out by us or any of our affiliates designated for such purposes, or through joint venture companies under our control or the control of any of our affiliates. In accordance with the provisions of the Reserve Law, the assets and services related to the primary activities that are subject to reserve are the following: 

Injection of water, steam or gas to increase a reservoir’s energy and improvement of the recovery

Compression of gas; and

factor;

 Those associated with activities in Lake Maracaibo: ships for the transportation of personnel, divers and maintenance; crane barges for the transportation of materials, diesel, industrial water and other inputs; tugs; flat barges, light vessels, cranes, cutting barges, pipeline and sub-aquatic cable laying or replacing barges; ship maintenance in workshops, docks and any type of dykes. The Reserve Law explicitly provides that the reserved activities must be performed by Venezuela, by us or our affiliates, or through joint ventures under our control or the control of our affiliates. The Reserve Law provides that the Ministry of Petroleum will set out, by means of resolutions, those assets and services of companies or business sectors that are included within the scope of the Reserve Law. As of the date of this offering circular, the assets and activities of about 70 domestic and foreign companies have been named in a special resolution issued by such Ministry. Following the mandate of the Reserve Law, during 2009 we were instructed by the Venezuelan government to take control of assets associated with the services activities subject to reserve pursuant to the Reserve Law. As of December 31, 2015, we were negotiating, on behalf of Venezuela, the applicable compensation to be paid, and as of today we have reached agreements with several of these entities.

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Other Joint Ventures for exploration and production of light-medium crude During 2007 and 2008, transfer decrees for the following joint ventures were completed:  Petrozumano, S.A. is a joint venture formed by our subsidiary CVP (which holds 60% of the shares) and CNPC Venezuela B.V. (holding the remaining 40%) to conduct exploration and production activities of light-medium crude in the Freites and Aguasay municipalities of Anzoátegui and Monagas State, respectively;  Petrolera Bielovenezolana, S.A. is a joint venture formed by our subsidiary CVP (which holds 60% of the shares) and Belorusneft (holding the remaining 40%) that was incorporated to conduct exploration and production activities of light-medium crude in the Freites municipality, Oritupano Norte and Ostra in Anzoategui State and in Lake Maracaibo; and  Petrolera Indovenezolana, S.A is a joint venture that was formed by our subsidiary CVP (holding 60%) and ONGC Nile Ganga B.V. (holding 40%) to conduct exploration and production activities of light-medium crude in the San Cristóbal area of Anzoátegui and Guárico State. During 2012, transfer decrees for the following joint ventures were completed:  Petrozamora, S.A. is a joint venture formed by CVP (holding 60% of the shares) and Gazprombank Latin America Ventures B.V. (holding the remaining 40%) to conduct exploration and development in Lagunillas Tierra – Bachaquero Tierra;  Petrourdaneta, S.A. is a joint venture formed by CVP (holding 60% of the shares) and Odebrecht E&P España (holding the remaining 40% of the shares) to conduct exploration and development in Mara Este, Mara Oeste and la Paz, Zulia state; and  Petrolera Venangocupet, S.A. is a joint venture formed by CVP (holding 60% of the shares) and Commercial Cupet, S.A. (holding 20% of the shares) and Sonanlgol Pesquisa & Producao, S.A. (holding 20% of the shares) to operate in Miga y Melones, Anzoategui state. National Industrial Conglomerate. The National Industrial Conglomerate, of which PDVSA is a member, is comprised of a group of Venezuelan companies and other enterprises that are producers of goods and services in the oil, gas and petrochemical industry seeking to jointly address the demand for goods, infrastructure and services of the oil, gas and petrochemical industry. The National Industrial Conglomerate provides benefits such as special contracting conditions with PDVSA, access to special financing through the state bank system and integration opportunities with joint investment funds, among others. Overview of Main Projects with Private Sector Participation We plan to invest in upstream and downstream projects. We have 220 projects planned between 2016 and 2025 in four strategic sectors. These projects include the construction of oil wells and production infrastructure, oil and gas pipelines, oil storage capacity, refineries and upgraders and loading docks and distribution facilities that will contribute to the development of Venezuela, while diversifying our markets, and strengthening energy integration.

100

The following table sets forth a distribution of our main projects by sector: Sector Oil & Natural Gas Production

Number of Projects 176

PDVSA Gas

29

Domestic Operative Refineries

4

New Refineries, Upgraders and Terminals

5

Trade and Supply

6

Total

220

Orinoco Oil Belt Development Project The Business Plan provides for the production of 1,949 mbpd of extra-heavy oil in the Orinoco Oil Belt by 2025, and the development of one upgrader, with a 400 mbpd capacity. In addition, the total estimated capital investment in the region for the period of 2016 through 2025 will be approximately U.S.$71,567 million. During 2009, the Ministry of Petroleum initiated the Carabobo project, which provides for the construction of three integrated extra-heavy crude oil production projects through joint ventures with private sector participation of up to 40% of the shares in these companies. As of December 31, 2015 there were two joint ventures in operation with respect to the Carabobo project: (i) Petrocarabobo, where we hold 60% of the shares, and Repsol Exploración S.A., Petrocarabobo Ganga, B.V., PC Venezuela LTD and Indoil Netherlands B.V. holding 11%, 11%, 11% and 7% of the remaining shares, respectively. The expected production of Petrocarabobo is 400 mbpd when fully operative and 205 mbpd by 2025, and its purpose is to develop the primary activities in Blocks Carabobo Center and Carabobo North of the Carabobo Area; and (ii) Petroindependencia, where we hold 60% of the shares, while Chevron Carabobo Holdings APS, Mitsubishi Corp (together with Inpex Corp.) forming Japan Carabobo UK Ltd., and Suelopetrol, hold 34.0%, 5.0% and 1.0% of the remaining shares, respectively. The expected production of Petroindependencia is 400 mbpd when fully operative and 212 mbpd by 2025, and its purpose is to develop primary activities in Blocks Carabobo 2 South, Carabobo 3 North and Carabobo 5 of the Carabobo Area. In 2012, a new joint venture, Petrovictoria, was entered into in the Carabobo project. We hold 60% of the shares and Rosneft holds the remaining 40% of the shares. The expected production of Petrovictoria is 400 mbpd when fully operative and 163 mbpd by 2025. The following table outlines each party’s percentage interest in each of the joint ventures relating to the Carabobo project:

101

Percentage Interest 60% 11% 11% 11% 7%

Expected Production (bpd) 205

Project Petrocarabobo

Company PDVSA REPSOL PC Venezuela Petrocarabobo Ganga Indoil Netherlands B.V.

Petroindependencia

PDVSA Chevron JCU Suelopetrol

60% 34% 5% 1%

212

Petrovictoria

PDVSA Rosneft

60% 40%

163

We have entered into four currently operational joint venture agreements with respect to the Junín project: Petromacareo (Junín 2), Petrourica (Junín 4), Petrojunin (Junín 5) and Petromiranda (Junín 6). Each joint venture agreement corresponding to the Junín projects grants PDVSA a 60% ownership of the entity’s outstanding shares. Petrovietnam Exploration Production Corporation, Ltd. holds the remaining 40% of outstanding shares in Junín 2. CNPC holds the remaining 40% of outstanding shares in Junín 4. ENI holds the remaining 40% of outstanding shares in Junín 5. A consortium comprised of Gazprom Neft and Rosneft OJSC holds 40% of the remaining shares in Junín 6. By 2025, the expected production levels for Junín 2, Junín 4, Junín 5 and Junín 6 are 0 bpd (development plan being reviewed), 12 bpd, 123 bpd and 116 bpd, respectively. The following table outlines each party’s percentage interest in each of the joint ventures relating to the Junin project: Percentage Interest 60% 40%

Expected Production (bpd) 116

Project Petromiranda

Company PDVSA Consorcio Nacional Petrolero

Petromacareo

PDVSA Petrovietnam

60% 40%

Petrourica

PDVSA CNPC

60% 40%

12

Petrojunin

PDVSA ENI

60% 40%

123

We expect that the combined production capacity of the Carabobo project and Junín projects will be 832 bpd by 2025. We are also realizing a major investment plan called the “PSO Project” (Orinoco Socialist Project), which consists of designing and constructing all the required facilities for the provision of industrial services relating to the construction and operation of different upgraders, production facilities, pipelines (water, oil, gas and diluent), roads, trains and urban development works. The PSO Project will contribute to the social development of different regions impacted by the projects being executed in the northern region of Venezuela’s Orinoco river area, Bolívar and Sucre state area. Mariscal Sucre Project The Mariscal Sucre project focuses on the development of non-associated gas located offshore Venezuela in the Dragón, Patao, Mejillones and Rio Caribe fields, in the Northeast region of Venezuela. The main objective of the project is to develop new non-associated gas reserves to meet domestic market demand as well as for exploration of new reserves. This project includes the execution of 14 projects that will consist of drilling activities and the construction of production facilities and subsea gas pipelines. The estimated capital investment for the Mariscal

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Sucre project is U.S.$10,302 million and Bs. 12,943 million, of which U.S.$9,024 million has been invested as of December 31, 2015. The Mariscal Sucre project is expected to start production in 2017 at 280 mmpcd, achieving a production plateau of 1,215 mmcfd in 2023 upon completion of the project. Jusepín 200 Project The Jusepín 200 Project focuses on reducing gas emissions from the Jusepín complex through the installation of four motor-compressors with a capacity of 50 mmscfd. The total investment for this project is expected to be U.S.$106 million and Bs. 1,605 million. Start-up operations for this project are expected for September 2016. Perla Field Project In August 2013, PDVSA entered into an agreement with Italian energy company ENI SpA (ENI) to create a joint venture to exploit offshore condensate gas reserves in the Perla oil field, which is located off of the coast of the northern state of Falcon. PDVSA granted ENI and REPSOL a 924 km2 license for the exploration of natural gas in the offshore block of Cardón IV. In 2010, approximately 9,500 billion cubic feet of gas reserves was discovered in La Perla Field (9.5 TCF). Production for this project started in July 2015, with production levels reaching 466 mmscfd by December 31, 2015.

Projects with Energy Companies in India In October 2013, PDVSA announced that it has entered into cooperation agreements with a number of major energy companies in India, including ONGC Vindesh Ltd., Oil & Natural Gas Corp., Reliance Industries Ltd. and Essar Group, in order to collaborate on the development of projects related to the exploration and production of hydrocarbon resources for purposes of helping India meet its increasing demand for fuel and to reduce oil imports by expanding its portfolio of overseas oil and gas assets. The agreement between ONGC Videsh Ltd. and PDVSA is for joint exploration and production of hydrocarbon resources in the Faja area. The agreement between Reliance Industries Ltd. and PDVSA is for the development of the Ayacucho Block 8 in the Orinoco Oil Belt. The agreement between Oil & Natural Gas Corp. and PDVSA is aimed at the development of energy infrastructure in Venezuela and the agreement between Essar Group and PDVSA is for the transportation of hydrocarbons and also includes studies for the construction of a thermoelectric power plant. Complejo Industrial Gran Mariscal de Ayacucho: CIGMA Project We expect to process the natural gas produced offshore Venezuela in a new industrial complex to be located near the city of Güiria, in the state of Sucre, in the Northeast region of Venezuela. This project, which is part of the Mariscal Sucre Natural Gas project, consists of the site preparation of the necessary infrastructure to incorporate the offshore gas production to the domestic market, including the construction of sea pipelines, roads, dock and services, gas processing plants, power generation, transmission and distribution lines and other infrastructure. During 2009, the first delivery of equipment and materials was made for the construction of the Planta de Acondicionamiento de Gas al Mercado Interno in the Complejo Industrial Gran Mariscal de Ayacucho. The complex will include a power generation facility of 350 MW at 400/230 KV, one electrical substation, a power distribution system of 230/115/34.5 KV and a service dock and telecommunication facility. The remaining budget for the CIGMA project is U.S.$115 million and Bs. 3,649 million, and as of December 31, 2015, U.S.$804 million has been invested. The CIGMA project is scheduled to be completed in 2018.

103

Rafael Urdaneta Project This is an offshore natural gas project located in Western Venezuela. The objective of the project is to develop exploration activities in the Gulf of Venezuela, mainly in the Róbalo, Merluza, Liza and Sierra camps. Areas of this project have been granted to different consortiums. The following list divides the project by areas and the licenses to which each area was granted. 

Cardon block I - Gazprom.

Cardon block III - Chevron.

Cardon block IV - Repsol – ENI.

Moruy block II - Petrobras- Teikoku.

Castillete block II – Vinccler.

Urumaco block II – Gazprom.

A discovery of approximately 9.5 trillion cubic feet of In-Site Original Gas was made in 2010 in La Perla field, located within the Cardón IV Area. The first phase of this development started in July 2015. We expect that this development will produce 1,200 mmcfd by 2021. The project also focuses in the development of infrastructure to produce offshore gas, pipelines for the transport of gas, a gas processing plant to extract liquids, and storage and loading docks for modern ships. Bachaquero Tierra – Lagunilla Tierra On February 10, 2012, the Ministry of Petroleum announced the selection of Gazprombank Latin America Ventures B.V. (“Gazprombank”) as a participant in a joint venture with CVP for the exploration and production of crude oil and natural gas in the Bachaquero Tierra – Lagunilla Tierra field in the state of Zulia. In March 2012, CVP and Gazprom entered into a joint venture agreement to create Petrozamora, S.A., whereby CVP and Gazprombank have a 60% and 40% participation in the venture, respectively. Oil Production Growth We are currently investing in mature areas in order to meet our projected total oil production capacity of 3,180 bpd by 2025. Our Business Plan also provides for the development of 176 E&P projects and a total capital investment of U.S.$97 billion, which we partially plan to execute in association with international enterprises. The existing production facilities/area covers 80,364 km2, 16,868 km of pipelines, 24 tank farms, 18,595 active oil wells and 305 drilling and work-over rigs/year.

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Development of Major Projects in Refineries We plan to develop new refining centers in Venezuela to expand our refining capacity from approximately 2.5 mmbpd to 2.7 mmbpd by 2025. There is currently one refining project in Venezuela. Four additional refinery projects which were included in prior business plans have been postponed due to the decline in oil revenues. Our main domestic refining project is Puerto la Cruz refinery - Residual Conversion into Distillates, based on a projected refining capacity of 210 mpbd. The Puerto La Cruz refinery is currently undergoing a deep conversion project focusing on the processing of extra-heavy crude through an expansion project, which started in 2015. This project will also include, among other things, the following: the improvement of distillation equipment to maximize its capacity from 187 mbpd to 210 mbpd; the development of an HDHPLUS conversion unit; the development of a hydroprocessing unit; and the construction of storage tanks. The estimated completion date for this project is 2018. Our main foreign refining project is Nanhai refinery, based on a projected refining capacity of 400 mpbd. This project involves the construction of a new refinery seeking to maximize the performance of high-value products, mainly diesel, gasoline and petrochemical bases, to satisfy primarily the Chinese fuels market. This Deep Conversion Refinery will use technologies of proven, reliable and environmentally safe processes (Delayed Coker, hydrocracker, FCC, HDT, Naphtha Reforming Gasifier/BTX). The refinery will be located in Huilai County in the city of Jeyang in the South of China. The estimated completion date for this project is 2025. Onshore Gas Sector Development We intend to expand our natural gas production capacity through the development of 29 gas projects. The estimated capital investment in these projects is U.S.$7,798 million from 2016 through 2025. The following table includes a description of certain of our most important onshore projects based on projected capacity: Project

Capacity/size

Gas pipeline Norte Llanero (Phase I)

250 kms. 26” & 30”

Gas Anaco Project: gas field development project

180 mmscfd

Ulé- Amuay gas pipeline expansion

230 km. 30”

Orinoco- Apure gas pipeline

435 km. 36”

Pirital I NGL Extraction Plant

42 bpd

Carito-Pirital Gas Compression Plant

2,000/720 mmscfd 450/60 psig

Soto I Extraction Plant

15 bpd

Crude and Products Tanker Fleet Project We expect to increase the number of tankers and transport capacity in order to accomplish the expected increase in production and enhanced distribution of crude oil and refined petroleum products. The tankers will be purchased from countries such as Brazil, Korea and Japan. The estimated total investment involved in this project is U.S.$11,300 million. This project is expected to increase our crude and product shipping capability through the construction of the following tankers: Tanker Type Handymax Panamax Aframax Suezmax VLCC

Quantity 15 8 8 4 40

tdwt 47 70 113 157 180

105

Capacity (Tons) 282 560 452 628 7,200

Total

75

567

9,122

Shipyard Construction, Rehabilitation and Expansion PDVSA Naval, a subsidiary, has undertaken to rehabilitate and expand the following shipyards: (i) Astillero del Alba (Astialba), (ii) Astilleros Navales Venezolanos (Astinave), (iii) Astillero de Diques y Astilleros Nacionales, C.A. (Dianca), and (iv) Albanave, S.A. (Albanave). The estimated total investment in this project is U.S.$2,239 million from 2016 through 2025 Refining and Marketing Refining Our downstream strategy is focused on the expansion and upgrade of our refining operations in Venezuela and Asia to allow us to increase our production of refined petroleum products of high commercial value. We have invested in our National and International Refining Systems (Sistema de Refinación Nacional e Internacional) in order to increase refining capacity and complexity, as well as improve its installations, to satisfy global quality standards. Deep conversion capabilities in our Venezuelan refineries have enabled us to improve yields by allowing a greater percentage of higher value products to be produced. The following table sets forth the refineries in which we hold an interest, the rated crude oil refining capacity and our net interest at December 31, 2015. PDVSA’s Interest (%)

Refining Capacity Total Rated PDVSA’s Crude Oil Net Interest (mbpd) (mbpd)

Location

Owner

Venezuela: CRP, Falcón ................................................................................. Puerto La Cruz, Anzoátegui ......................................................... El Palito, Carabobo ...................................................................... Bajo Grande, Zulia ....................................................................... San Roque, Anzoátegui ................................................................ Total Venezuela ..........................................................................

PDVSA PDVSA PDVSA PDVSA PDVSA

100 100 100 100 100

955 187 140 16 5 1,303

955 187 140 16 5 1,303

PDVSA Cuvenpetrol (2) Petrojam (3) Refidomsa PDVSA (4)

100 49 49

335 65 35

335 32 17

49

34 469

17 401

CITGO CITGO CITGO Chalmette (5) Hovensa (6) PDV Sweeny(7)

100 100 100 50 50 50

425 157 167 153 495 110/58* 1,397

425 157 167 77 248 55/29* 1,074

Nynäs (8) Nynäs (8) Nynäs (8) Nynäs (8)

50 50 50 25

29 11 9 18 67 3,236

15 5 4 5 29 2,807

Caribbean: Isla (1) .......................................................................................... Camilo Cienfuegos....................................................................... Jamaica......................................................................................... Haina, Dominican Republic ........................................................ Total Caribbean ......................................................................... United States: Lake Charles, Louisiana ............................................................... Corpus Christi, Texas ................................................................... Lemont, Illinois ............................................................................ Chalmette, Lousiana..................................................................... Saint Croix, U.S. Virgin Islands ................................................... Sweeny, Texas ............................................................................. Total United States ..................................................................... Europe: Nynäshamn, Sweden .................................................................... Gothenburg, Sweden .................................................................... Dundee, Scotland ......................................................................... Eastham, England......................................................................... Total Europe............................................................................... Worldwide Total (9) ...................................................................

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(1) (2) (3) (4) (5) (6) (7) (8) (9)

*

Leased in 1994. The lease expires in 2019. A joint venture with Commercial Cupet S.A. A joint venture with Petroleum Corporation of Jamaica (PCJ). A joint venture with Refidomsa. A joint venture with ExxonMobil Co. A joint venture with Hess Co. A joint venture with Conoco Phillips. A joint venture with Neste Oil AB. The aggregate refining capacity amount reflects Chalmette Refinery operations prior to its sale in October 2015. As of December 31, 2015, the nominal capacity and the net capacity of PDVSA was 3,083 mbpd and 2,730 mbpd, respectively. Refining capacity is measured by crude distillation capacity. PDVSA does not have a participation in the Sweeny Refinery units that distill crude (atmospheric distillers); however, PDVSA has a participation in two units within the Sweeny Refinery (a vacuum distillation unit and a delayed coker). As a result, we have included the total capacity and the participation in each unit in the crude oil refining capacity table, without including such amounts in the total refining capacity or the participation of PDVSA.

In order to maintain our competitiveness within international markets, we have an intensive Business Plan, which involves large investments in Venezuela and overseas. These investments are made to improve our refining systems and to adapt them to meet environmental regulations and domestic and international product quality requirements. The business refining plan includes projects aimed at manufacturing gasoline and diesel through deep conversion. All investment efforts will support our commercial strategy of market diversification. Venezuela and the Caribbean. Our refineries in Venezuela are located in Amuay-Cardón (CRP), Puerto La Cruz, El Palito, Bajo Grande and San Roque, with rated crude oil refining capacities of 955 mbpd, 187 mbpd, 140 mbpd, 16 mbpd and 5 mbpd, respectively. We also operate the Isla refinery in Curaçao, which is leased on a long-term basis from the Netherlands-Antilles government through 2019. The Isla refinery has a nominal refining capacity of 335 mbpd. Through these refineries, we produce reformulated gasoline and distillates to meet U.S. and other international regulatory requirements and quality standards. Certain refinery projects which were included in prior business plans, such as: El Palito, Batalla Santa Ines, Petrobicentenario, Cienfuegos refinery enhancement, and construction of Matanzas and Hermanos Diaz refineries, were cancelled due to the decline in oil revenues. The Amuay-Cardón refinery (CRP) is located in the Península de Paraguaná, in the state of Falcon. Approximately 58% of the products obtained in the Amuay-Cardón refinery are supplied to the Venezuelan market, and 42% are exported to the Caribbean, Central and South America, Europe and Africa. It meets the strictest global standards in its production of oil. Additionally, we are improving the Amuay-Cardón refinery to meet the future standards of the European diesel market, as well as diminishing the production of residue. We have implemented the Proyecto de Expansión de la Unidad de Desintegración Catalítica de Cardón to carry out these goals. On August 25, 2012, an accident occurred at the Amuay-Cardon refinery. As a result of the accident, the level of production for that facility during 2012 was reduced to approximately the same capacity as for 2011. The products from the Puerto La Cruz refinery are supplied to Venezuelan markets, while the excess surplus of light crude, jet and diesel are exported abroad. Presently the Puerto La Cruz refinery is undergoing a deep conversion project focusing on processing of extra-heavy crude through an expansion project, which will commence in 2015. This project will also include, among other things, the following advancements: the improvement of distillation equipment to maximize their capacity from 187 mbpd to 210 mbpd; the development of an HDHPLUS conversion unit; the development of a hydroprocessing unit; and the construction of storage tanks. The estimated completion date for this project is 2018. In May 2010, we entered into an agreement with the Dominican Republic for the acquisition of 49% of the shares of the Refinería Dominicana de Petróleo S.A. (REFIDOMSA), which has a 34 mbpd refining capacity and a 130 mbpd storing capacity, for U.S.$135 million. On August 2, 2010, the House of Representatives of the Dominican Republic approved this transaction. Central and South America. Certain refinery projects which were included in prior business plans, such as: “El Supremo Sueño de Bolivar” in Nicaragua, Refinería Abreu e Lima, in Pernambuco, Brazil and the “Eloy Alfaro Delgado” Pacific Refinery Complex in Ecuador were cancelled due to the decline in oil revenues.

107

Asia. One refinery is planned in China, the Nanhai refinery to be completed by 2025 with a processing capacity of 380 mbpd. Certain refinery projects which were included in prior business plans, such as: the Shanghai refinery and the Weihai refinery were cancelled due to the decline in oil revenues. United States. Through our wholly-owned subsidiary, CITGO, we produce light fuels and petrochemicals primarily through our refineries in Lake Charles, Louisiana; Corpus Christi, Texas; and Lemont, Illinois. CITGO is engaged in the refining, marketing and transportation of products such as gasoline, diesel, petrochemicals and lubricants. CITGO’s crude refining capacity is 749 mbpd. Through the Chalmette refinery, a co-controlled joint venture between PDVSA and ExxonMobil, we had a 50% participation in a 184 mbpd capacity refinery located in Louisiana. The Chalmette refinery has capacity to process upgraded crude produced by the Petromonagas mixed company. Through PDV Chalmette, we had the option to purchase up to 50% of the refined products produced by the Chalmette refinery. On October 31, 2015, PDVSA sold its shares in the Chalmette Refinery. Our subsidiary PDV Holding and ConocoPhillips participate in a joint-controlled joint venture, Merey Sweeny, which owns and operates a 58 mbpd coker and 110 mbpd vacuum crude distillation unit in ConocoPhillip’s refinery located in Sweeny, Texas. We have entered into long-term supply agreements with ConocoPhillips to supply the Sweeny refinery with heavy acid crude. This business unit comprises a supply ranging from 175 to 190 mbpd of 16° API Merey Crude from Venezuela. The long term supply agreement has a 20-year term at market prices using the Maya benchmark. Merey Sweeny’s income is derived from the payment of an operating fee by ConocoPhillips, plus any income that is generated from the sale of coker to third parties. Currently, we and ConocoPhillips are in disagreement over the ownership of these assets, and ConocoPhillips has exercised a call option to acquire all of our interests in Merey Sweeny. Through our subsidiary PDVSA V.I., we owned 50% of the shares of the Hovensa refinery, located in the U.S. Virgin Islands. The other 50% of Hovensa’s shares were owned by the Hess Corporation. The Hovensa refinery had a refining capacity of approximately 495 mbpd. We had entered into long-term supply agreements for Mesa/Merey crude with Hovensa. This refinery was strategically located to supply gasoline and lubricants in the markets located in the United States Gulf Coast and the east coast of the United States. Hovensa also received and processed other foreign crude. Given the unfavorable conditions existing in the international refining market, the management of Hovensa closed the refinery as of February 2012. As a result of preparations to close the refinery, Hovensa experienced operating losses, of which U.S.$474 million correspond to PDVSA’s equity interest in the Hovensa refinery. Currently Hovensa operates as a petroleum storage terminal facility. Since 2015, PDVSA does not hold any interest in this refinery. Europe. Through Nynäs, a joint venture owned 50% by PDV Europa and 50% by Neste Oil, we own interests in three specialized refineries: Nynäshamn and Gothenburg in Sweden and Dundee in Scotland. Our net interest in crude oil refining capacity in each of these refineries at December 31, 2015 was 15 mbpd, 5 mbpd and 4 mbpd, respectively. The Nynäs refineries are specially designed to process heavy sour crude oil. Nynäs also owns a 25% interest in a refinery in Eastham, England. The Eastham refinery is a specialized asphalt refinery in which our net interest in crude oil refining capacity at December 31, 2015 was 5 mbpd. The Nynäs refineries in Nynäshamn produce asphalt and naphthenic specialty oils. The Dundee, Gothenberg and Eastham refineries are specialized asphalt refineries. Nynäs purchases crude oil from us and produces asphalt and naphthenic specialty oils, two products for which Venezuelan heavy sour crude oil is particularly well-suited feedstock due to its proportions of naphthenic, paraffinic and aromatic compounds. Asphalt products are used for road construction and various industrial purposes, while naphthenic specialty oils are used mainly in electrical transformers, as mechanical process oils and in the rubber and printing ink industries. The following table sets forth our aggregate refinery capacity, input supplied by us (out of our own production or bought in the open market), utilization rate and product yield for the three-year period ended December 31, 2015.

108

Refining Production

At or for the year ended December 31,

Total Refining Capacity .......................................................................... PDVSA’s net interest in refining capacity .............................................

2015 (mbpd)

2014 (mbpd)

2013 (mbpd)

3,236 2,807

3,267 2,822

3,267 2,822

Refinery input(1) Crude Oil - Sourced by PDVSA Light........................................................................................................ 284 Medium................................................................................................ 596 473 Heavy ................................................................................................ Sub-total................................................................................................ 1,353

13% 27% 21% 61%

332 639 417 1,388

15% 29% 19% 63%

312 649 454 1,415

14% 29% 21% 64%

Crude Oil - Sourced by Others Light.......................................................................................................... 374 Medium................................................................................................ 15 210 Heavy ................................................................................................ Sub-total 599

17% 1% 9% 27%

283 58 209 550

13% 3% 10% 26%

241 96 191 528

11% 4% 9% 24%

Other Feedstock Sourced by PDVSA................................................................................... 155 Sourced by Others ..................................................................................... 147 Total Transfers(5) ..................................................................................... (40)

7% 7% -

155 129 (38)

7% 6% -

185 107 (28)

8% 5% -

Gasoline / Naphtha.................................................................................... (32) Distillate................................................................................................ (8) Lubricants ................................................................................................ Others................................................................................................ Sub-total................................................................................................ 262

12%

(34) (4) 246

11%

(20) (8) 264

12%

68% 34%

1,543 679 (38) 2,184 77%

70% 32% -2% 100%

1,600 635 (28) 2,207 78%

71% 29% 100%

Total Refining Input Sourced by PDVSA(2) ................................................................................1,508 Sourced by Others ..................................................................................... 746 Transfers ................................................................................................ (40) Total refinery input.................................................................................2,214 Crude Utilization(3) .................................................................................... 70%

100%

Product Yield(4) Gasoline / Naphtha.................................................................................... 775 Gasoline / Transferred Naphtha(5) .............................................................. (32) Total Gasoline/Naphtha .......................................................................... 743

34%

794 (34) 760

35%

773 (20) 753

34%

Distillate................................................................................................ 488 Transferred Distillate(5) .............................................................................. (8) 480 Total Distillate

22%

697 (4) 693

32%

704 (8) 696

32%

Low Sulfur Residual.................................................................................. 316 High Sulfur Residual................................................................................. 249 Asphalt / Coke(6) ........................................................................................ 31

14% 111% 1%

104 316 25

5% 14% 1%

107 282 25

5% 13% 1%

1%

11 11

-

Naphthenic Specialty Oil........................................................................... Transferred Naphthenic Specialty Oil(5) .................................................... Total Naphthenic Specialty Oil ..............................................................

14 14

1%

13 13

Petrochemicals.........................................................................................

48

2%

53

2%

57

3%

Others................................................................................................ 340 Transferred Others(5).................................................................................. Total Others............................................................................................. 340

15%

236 236

11% 11%

297 297

13% 13%

Net output ................................................................................................2,221 (7) Consumption, net (gain)/loss................................................................ Total yield ................................................................................................2,214

100% 100%

2,200 (16) 2,184

101% (1) 100%

2,228 (21) 2,207

101% 100%

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(1)

Our refineries sourced 68%, 70% and 71% of the refineries’ total crude oil requirements from crude oil produced by us in 2015, 2014 and 2013, respectively. (2) Includes our interest in crude oil and other feedstock. (3) Crude oil refinery input divided by the net interest in refining capacity. (4) PDVSA’s participation in the product range. (5) Received and shipped goods from and to the international and national refining system. (6) Starting in 2011 only asphalt is reported herein. Coke is reflected in other products. NOTE: This table includes the capacity, PDVSA’s interest and the crude processing of the Chalmette Refinery, as of the date of its sale in October 2015.

In 2015, we supplied all of the crude oil requirements to our Venezuelan refineries (approximately 863 mbpd), approximately 178 mbpd of crude oil to our leased refinery in Curaçao and an aggregate of 433 mbpd of crude oil to refineries owned by our international subsidiaries or in which we otherwise have an interest (refinery input takes into account our net interest in crude oil). Of the total volumes supplied by us to our international affiliates, approximately 48 mbpd were purchased by us in the global market and supplied to our European affiliates. Additionally, CITGO purchased a total of approximately 204 mbpd of crude oil from us for processing in its refineries. Marketing In 2015, we exported 1,950 mbpd of crude oil, or 100%, of our total exports and 475 mbpd of refined petroleum products produced in Venezuela. Exports of crude oil and refined petroleum products to North America amounted to approximately 804 mbpd (or 33% of total exports). Of our total crude oil exports in 2015, a total of approximately 733 mbpd (38%) was exported to North America, 255 mbpd (13%) to the Caribbean, 4 mbpd (0.2%) to South America, 6 mbpd (0.3%) to Central America, 150 mbpd (7.6%) to Europe, and 802 mbpd (41%) to Asia and other localities. Of our total refined petroleum products produced in Venezuela in 2015, approximately 594 mbpd were used in the domestic market and approximately 475 mbpd were exported. Of the total exports of refined petroleum products in 2015, approximately 71 mbpd (15%) were sold to North America, approximately 34 mbpd (7%) to South America, approximately 30 mbpd (6%) to the Caribbean, approximately 33 mbpd (7%) to Europe, approximately 13 mbpd (3%) to Africa, approximately 4 mbpd (1%) to Central America, approximately 282 mbpd (60%) to Asia, and approximately 8 mbpd (1%) to other localities. The following table sets forth the composition and average prices of our exports of crude oil and refined petroleum products from Venezuela for the three-year period ending December 31, 2015. For the year ended December 31, 2015 2014 2013 mbpd mbpd mbpd Crude oil Light............................................................................................................................. Medium........................................................................................................................ Heavy and extra-heavy................................................................................................. Sub-total crude oil ...................................................................................................... Third-party Participation in the Orinoco Oil Belt...................................................

114 119 1,717 1,950

228 85 1,584 1,897

287 110 1,538 1,935

Refined products Gasoline/naphtha.......................................................................................................... Distillates ..................................................................................................................... Fuel oil residual............................................................................................................ Other ............................................................................................................................ Sub-total products ...................................................................................................... Total Exports ..............................................................................................................

56 15 279 125 475 2,425

53 14 254 139 460 2,357

36 6 284 164 490 2,425

Average Export Price ($/Bl) Crude oil: Light crudes..................................................................................................................

52.90

95.49

106.04

110

For the year ended December 31, 2015 2014 2013 mbpd mbpd mbpd Medium........................................................................................................................ Heavy ........................................................................................................................... Extra-heavy .................................................................................................................. Refined products .......................................................................................................... Average export price ..................................................................................................

47.75 38.94 42.52 36.25 39.98

85.31 81.86 87.98 90.47 85.75

99.94 95.80 99.99 97.49 99.08

The following table sets forth the geographic breakdown of our exports segregating crude oil and products for the three-year period ended December 31, 2015.

2015 mbpd

%

For the year ended December 31, 2014 mbpd %

2013 mbpd

%

Crude Oil North America................................................................ Latin America & Caribbean ........................................... Europe............................................................................ Asia & Others................................................................ Sub-Total Crudes .........................................................

733 265 150 802 1,950

38 14 8 41 100.0

761 333 109 694 1,897

40.0 17.0 6.0 37 100.0

773 349 87 726 1,935

40.0 18.0 4.5 37.5 100.0

Refined Products (1) North America................................................................ Latin America & Caribbean ........................................... Europe............................................................................ Asia & Others................................................................ Sub-total Refined Products..........................................

71 68 33 303 475

15 14 7 64 100.0

76 85 22 277 460

16 18 5 61 100.0

72 87 20 311 490

14.7 17.8 4.0 63.5 100.0

Crude Oil and Refined Products (2) North America................................................................ Latin America & Caribbean ........................................... Europe............................................................................ Asia & Others................................................................ Total Crude Oil and Refined Products .......................

804 333 183 1,105 2,425

33 14 7 46 100.0

837 418 131 971 2,357

36 17 6 41 100.0

845 436 107 1,037 2,425

34.9 18.0 4.4 42.7 100.0

(1) (2)

Includes LGNs. Excludes PDVSA’s share in the Orinoco Oil Belt joint venture.

Marketing in the United States Sales of Crude Oil to Affiliates. We supply our international refining affiliates with crude oil and feedstock either produced by us or purchased in the open market. Some of our U.S. affiliates have entered into long-term supply contracts with us that require us to supply minimum quantities of crude oil and other feedstock to such affiliates, usually for two to three years. The crude contracts between PDVSA and CITGO incorporate price formulas for certain conventional crude types based on widely traded crude oil prices and other hydrocarbon prices plus adjustments for market change. For any other specific heavy crude oils, the price is subject to negotiation on a case-by-case basis. The feedstock agreements between PDVSA and CITGO incorporate market-based naphtha prices from a recognized index adjusted semi-annually. Some of these contracts provide that, under certain circumstances, if supplies are interrupted, we are required to compensate the affected affiliate for any additional costs incurred in securing crude oil or other feedstock. These crude oil supply contracts may be terminated by mutual agreement, by either party in the event of a material default, bankruptcy or similar financial hardship on the part of the other party or, in certain cases, if we no longer hold, directly or indirectly, 50% or more of the ownership interests in the related affiliate.

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Sales of Crude Oil to Third Parties. Most of our export sales of crude oil to third parties, including customers in the United States with which we maintain long-standing commercial relationships, are made at market prices pursuant to our general terms and conditions, and priced in dollars. Among our customers are major oil companies and other medium-sized companies. Sales of Refined Products. We conduct all our retail sales in the United States through CITGO. CITGO’s major products are light fuels (including gasoline, jet fuel and diesel fuel), industrial products, petrochemicals and lubricants. CITGO markets gasoline to approximately 405 marketers who in turn sell to approximately 5,500 independently owned and operated CITGO-branded retail outlets located east of the Rocky Mountains, in addition to a company-owned retail outlet that opened in March 2013. CITGO also markets jet fuel directly for use at various airports in South Florida. CITGO’s light fuel marketing activities are supported by an extensive terminal distribution network throughout its service regions. CITGO owns or has equity ownership in 43 refined product storage and transfer terminals located across 21 states of the United States with a total storage capacity of approximately 12 million barrels. In addition, CITGO has access to over 125 third-party and related third-party terminals through exchange, terminaling and other similar arrangements with other major refined product suppliers and terminal operators. CITGO also produces a diverse range of industrial products, lubricants and petrochemicals, including benzene, cumene, mixed xylenes, toluene, cyclohexane, refinery-grade propylene and solvents. CITGO sells its petrochemicals primarily to large chemical and petrochemical manufacturers for use in the production of plastics, fibers and building materials, including paints, adhesives and coatings. Industrial products are byproducts that are produced or consumed during the refining process. CITGO’s industrial products include sulfur, which is sold to the U.S. and international fertilizer industries; cycle oils, which are sold for feedstock processing and blending; natural gas liquids, which are sold to the U.S. fuel and petrochemical industry for gasoline blending, heating and as feedstocks for petrochemicals; petroleum coke, which is sold primarily in international markets for use as kiln and boiler fuel; and residual fuel blendstocks, which are sold to a variety of fuel oil blenders or other refiners for further processing. CITGO also blends and markets lubricants such as industrial lubricants and automotive oils on a branded basis, with particular penetration in the retail markets for 2-cycle and small engine oil, grease products, metal working fluids and environmentally friendly and food-grade lubricants. Crude Oil and Refined Product Purchases. CITGO does not own crude oil reserves or production facilities and must therefore rely on purchases of crude oil and feedstocks for its refinery operations. We are CITGO’s largest single supplier of crude oil, and CITGO has entered into supply agreements with us with respect to the crude oil requirements for CITGO’s Gulf Coast refineries. CITGO also purchases crude oil in the market. In addition, to optimize CITGO’s refineries and meet its customers’ demands, CITGO buys and sells gasoline and distillate through bulk sales channels. CITGO’s bulk purchases and sales are with various unaffiliated oil companies and trading companies and allow CITGO to balance location, grade, volume and timing differences between CITGO’s supply sources and demand from its customers. Marketing in Europe. We supply crude oil to our European affiliates pursuant to various supply agreements. The crude oil that we supply to our European affiliates exceeds, as a percentage of total supply, our aggregate net ownership interest in such entities’ combined refining capacity. In 2013, we supplied to the European refineries in which we held an interest, approximately 34 mbpd of crude oil, of which approximately 27 mbpd were exported from Venezuela and approximately 7 mbpd were purchased in international markets. Nynäs purchases crude oil from us and produces asphalt and naphthenic specialty oils, two products for which Venezuelan heavy sour crude oil is a particularly well-suited feedstock due to its high content of naphthenic, paraffinic and aromatic compounds. Nynäs does not own crude oil reserves or crude production facilities and, therefore, must purchase crude oil for its refining operations. Nearly all crude oil purchased by Nynäs is supplied by us pursuant to long-term supply contracts. We only supply Nynäs with high sulfur, extra-heavy crude oil. Nynäs markets asphalt products through an extensive marketing network in several European countries. Nynäs markets its naphthenic specialty oils throughout Europe, Africa, the Middle East, Australia, North America, Latin America and Asia and the distillates that it produces are either sold as fuel or further processed into naphthenic 112

specialty oils. Nynäs distributes its refined products primarily by a terminal network, specialized bitumen ships, rail tanks and trucks. Marketing in Latin America and the Caribbean. We have been pursuing a commercial strategy based on integration of the oil and gas industries in Latin America and the Caribbean that entails the completion of several projects in countries located in the region within the scope of the PetroAmerica initiative. This initiative proposes the establishment of cooperation and integration agreements and the utilization of the resources and potential of Latin American and Caribbean nations, in order to support the socio-economic development of the Latin American and Caribbean population. In 2005, we created PDVSA-Cuba in order to promote refining and marketing businesses in the Caribbean area. During 2006, we supplied, under special terms, crude oil and refined products to Caribbean and Central American nations through the Petrocaribe Energy Cooperation Agreement and the Caracas Energy Cooperation Agreement. Marketing in Venezuela. The following table shows our sales of refined petroleum products and natural gas to the Venezuelan domestic market.

2015

For the year ended December 31, 2014 2013 (mbpd, unless otherwise indicated)

Refined Products: Liquefied natural gas....................................................................................................... Motor gasoline ................................................................................................................ Diesel .............................................................................................................................. Other ............................................................................................................................... Total refined products...................................................................................................

86 259 208 41 594

90 283 239 51 663

91 299 249 64 703

Natural gas (mmcf).......................................................................................................... Natural gas in boe.......................................................................................................... Total hydrocarbons in boe............................................................................................

1,633 278 872

1,388 231 894

1,432 247 950

Since 1993, the Venezuelan government has allowed private sector participants to market lubricants in Venezuela. The retail price for vehicle gasoline is set by the Venezuelan government and represents approximately 3% of the export price for vehicle gasoline in 2013. In accordance with MINPEM’s resolution, PDVSA has discounted from royalties expenses the difference between the settlement price of production taxes and U.S.$40 per barrel of the volumes sold at regulated price to the domestic market. Pursuant to the Liquid Fuel Domestic Market Deregulation Law (Ley de Apertura del Mercado Interno de Combustibles Líquidos), enacted in 1998, private domestic and international third parties were permitted to participate in marketing activities in Venezuela. However, since 2008, after the Organic Law for the Reorganization of the Liquid Fuel Domestic Market (Ley Orgánica de Reordenamiento del Mercado Interno de Combustibles Líquidos) was enacted, Venezuela, through us, assumed all of the oil marketing activities in the country. Gas According to a comparative study published by Petroleum Intelligence Weekly on November 2015, we are the sixth largest owner of proved gas reserves in the world and the largest owner of proved gas reserves in Latin America. The total amount of proven natural gas reserves amounted to 201,349 bcf reserves at the end of 2015. Our total sales of natural gas in the Venezuelan market amounted to 278 mbpd for the year ended December 31, 2015.

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Capital Expenditures The following table sets forth our actual capital expenditures by geographic locations for fiscal years ended December 31, 2015, December 31, 2014 and December 31, 2013: For the year ended December 31, 2015 2014 2013 (in millions of U.S. dollars) Venezuela ................................................................ 17,191 24,418 22,898 United States................................................................ 501 336 296 297 336 Other Countries............................................................... 414 18,106 25,051 23,530 Total................................................................

PDVSA’s estimated capital expenditures for 2016 are of U.S.$7,876 million and Bs. 209,145 million and for 2017 are of U.S.$13,622 million and Bs. 442,458 million. PDVSA expects to fund these capital expenditures with cash on hand, cash flow from operations and borrowings under our existing facilities as well as the capital markets. Overview of Main Projects Wholly-Owned by PDVSA Certain projects which were included in prior business plans, such as: the Calidad de Gas al Mercado Interno Project, the Jose Fifth Train Project, the Sistema Nor Oriental de Gas (SINORGAS) Project, the IV Tren San Joaquin Project, the Expansion Project at the El Palito Refinery and the New Refinery Project of Batalla Santa Ines, were cancelled due to the decline in oil revenues. Morichal, San Tomé and Junín Sur. The main objective of this project is to develop the underground and surface production plans to enhance the average production of the districts affected by the project, in order to achieve a 796 mbpd average oil production (with a maximum production expected for 2019 of 824 mbpd) and a 596 mmcfd average gas production. The estimated investment in this project is U.S.$25,784 million. As of December 31, 2015, approximately 44% of this project has been completed and the total investment in the project has amounted to U.S.$6,237 million. The Anaco Gas Project. The objective of the Anaco Gas Project is to build infrastructure for the development of gas reserves in order to supply the Venezuelan domestic market. The project requires developing gas handling facilities for 180 mmscfd and the cost for such development is Bs. 492 million. As of December 31, 2015, approximately 65% of this project has been completed and the total investment in the project has amounted to U.S.$3,710 million. The Mariscal Sucre Gas Project. The Mariscal Sucre Natural Gas project aims to develop and exploit reserves of non-associated offshore gas and condensate in the North Paria Fields (the five fields of Rio Caribe, Mejillones, Mejillones South, Patao and Dragon) in the north coast of Venezuela. The project includes an off shore platform, gas gathering systems, a gas pipeline, gas facilities and a gas conditioning plant to deliver gas production to the domestic market. The remaining investment required for the development of the offshore fields and the associated infrastructure is estimated at U.S.$10,302 million and Bs. 12,943 million. At the moment, PDVSA is in conversations with major companies to develop Phase 1 (Dragon Field) and Phase II (Patao, Mejillones and Rio Caribe fields) in joint ventures. As of December 31, 2015, the total investment in this project has amounted to U.S.$9,024 million. Gasificación Nacional Project. The objective of this project is to install gas distribution facilities throughout the 23 states of Venezuela. The completion of this project is scheduled for 2025 and approximately 202,000 families will benefit from the project. As of December 31, 2015, approximately 45% of this project had been completed and the total investment in the project amounted to U.S.$111 million and Bs. 8,089 million.

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Auto Gas Project. This project, commenced in 2006, is aimed at reducing the domestic gasoline demand by creating vehicle natural gas dispatch facilities and converting vehicles to dual fuel engines on a national scale. The project’s goals include the construction 473 new compressed natural gas (CNG) stations and the reactivation of 141 existing CNG stations, as well as the construction and outsourcing of more than 200 vehicle conversion centers. Completion of this project is scheduled for 2025 and the total estimated investment in this project is expected to be U.S.$2,189 million. The Pirital I Project. This project consists of the construction and use of a deep extraction facility for ethanol and NGL with a processing capacity of 1,000 mmcfd, together with the transportation of products for local consumption in Pirital, in the state of Monagas. The completion of this project is expected to be in 2021. The estimated cost of this project is U.S.$3,684 million. As of December 31, 2015, approximately 8% of this project had been completed and the total investment in this project amounted to U.S.$95 million. Deep Conversion Project at Puerto La Cruz Refinery. The Deep Conversion project at Puerto La Cruz refinery involves the revamping of distillation units DA-1 and DA-2 in order to process 80 and 90 mbpd of Merey heavy crude oil, respectively, and 40 mbpd of Santa Bárbara 40° API. The project also involves the construction of a 130 mbpd vacuum distillation unit and a 50 mbpd deep conversion plant based on Venezuelan HDHPLUS® technology. The refinery is expected to lead to minimum production of residuals, as well as increased production of gasoline, jet A-1, diesel, all in compliance with international environmental quality standards. The basic engineering efforts have commenced. The estimated capital investment for the project is U.S.$6,986 million. The completion of this project is scheduled for 2018. As of December 31, 2015, approximately 42.72% of this project had been completed and the total investment in the project amounted to U.S.$5,972.32 million. Deep Extraction Plant (Soto). The operation of the deep extraction plant at Soto involves the development of a liquid extraction module to supply raw material for the Parque Industrial Petroquimico to process 200 mmcfd of natural gas in Anaco and San Tome, which will increase the production of liquefied natural gas by 15 mbpd. As of December 31, 2015, approximately 35% of this project had been completed and the total investment in the project amounted to U.S.$408 million. Transportation and Infrastructure Certain projects which were included in prior business plans, such as: construction of the Araya facility and the construction of the storage terminal in the Orinoco River region, were cancelled due to the decline in oil revenues. Pipelines and Storage. We have an extensive transportation network in Venezuela consisting of approximately 2,771 km of crude oil pipelines. These pipelines connect production areas to terminal facilities and refineries. We have a network of gas pipelines in Venezuela totaling approximately 12.572 km. Our network is comprised of the Western and East Central systems, stretching from Lake Maracaibo, Zulia to Punto Fijo, Falcón and from Puerto Ordaz, Bolívar to Barquisimeto, Lara. We also have a network of 1,144 km of products pipelines with a total flow capacity of approximately 379 mbpd. We maintain total crude oil and refined petroleum products storage capacity of approximately 30 mmbls and 74 mmbls, respectively, in Venezuela including tank farms, refineries and shipping terminals, of which approximately 16.3 mmbls are available at our refineries. Our terminal facilities are comprised of nine maritime ports as well as two river ports. In addition to the storage and terminal facilities in Venezuela, we maintain storage and terminal facilities in the Caribbean, located in Bonaire and Curaçao, with an aggregate storage capacity of 24.2 mmbls as of December 31, 2015. The Curaçao oil terminal, which is leased from the Netherlands Antilles government, had a storage capacity of approximately 6.4 mmbls at December 31, 2015. United States. CITGO owns and operates a crude oil pipeline and three products pipeline systems.

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CITGO and CITGO Holding have an equity interest in one crude oil pipeline company and four refined product pipeline companies. Europe. Through equity interests in Nynäs AB, PDVSA refines crude oil, and commercializes and transports asphalt products, specialized lubricants and other refined products. Shipping. As of December 31, 2015, PDV Marina, our wholly-owned subsidiary, owned and operated 26tankers with a total capacity of approximately 127,546 tdwt with an average age at December 31, 2015 of approximately 14 years. Research and Development INTEVEP S.A. is our wholly-owned subsidiary responsible for research and technology support. INTEVEP S.A. focuses on generating integral technological solutions, particularly relating to exploration and production activities, refining and industrialization. INTEVEP also develops new technologies and promotes cooperation and integration with the Venezuelan scientific community. For example, in 2014 INTEVEP S.A. culminated geochemical modeling 1D, 2D and 3D part of the basin of the Golfo of Venezuela and North of Paria allowing the estimate of potential oil in the area of the Gulf of Venezuela by identifying existing oil systems and proposing possible new prospects in the area to contribute to certification opportunities (Barracuda and Snook, among others) with expectations in the order of 18 TSCF gas condensate and 1,999 MBbl. Cardon IV reaches the first gas reserves of America and fifth in the world. Also, contributed in the engineering pipeline which will transport submarine Dragon 300 MSCFD from the Dragon field to PAGMI in Guiria. Additionally, assistance replacement catalysts unit (HDT) Petropiar upgrader with increased production of 20 KBD. As of December 31, 2015, INTEVEP S.A. has a portfolio of 41 projects. As a result of its technological development, during 2011, PDVSA approved additional guidelines in the areas of pollution and toxic substances. These guidelines have influenced PDVSA’s and its affiliates’ discovery of 16 new inventions and the registration of 49 new patents and 7 new trademarks to date. Environmental and Safety Matters Environment and Occupational Health. We and our subsidiaries are subject to a complex environmental and occupational health regulation framework. Under this framework, we and our subsidiaries may be required to make significant expenditures to modify our facilities and to prevent or remedy the effects of waste disposal, pollutant spills, and accidents on the environment and the population’s health. We are taking important steps to prevent risks to the environment, the population’s health, and the integrity of our installations. During 2012 and 2013, we continued the implementation of our company-wide Integral Risk Management System (SIR-PDVSA®). The system is based on international practices and standards, such as ISO 14001 for Environmental Management, ISO 18000 and British Standard BUSINESS 8800 for health, and the Occupational Safety and Health Administration (OSHA)’s and American Petroleum Institute (API) for process safety. We have invested U.S.$42 million to complete the implementation of SIR-PDVSA®. In addition, we are undertaking an investment plan to comply with Venezuelan environmental laws under which U.S.$88 million was invested during 2011, U.S.$115 million was invested during 2012 and U.S.$56 million during 2013. In addition, CITGO plans to invest approximately U.S.$477 million for projects managing environmental risks between 2013 and 2018. As part of our environmental responsibility initiative, we have also instituted a plan to recover oil pits that were left behind from oil exploration and other environmental liabilities generated until 2004. Oil pits are excavations made on the soil surface to store oil sludge and drilling cuts. The plan includes the recovery, recycling and transformation of the disposed waste, including abandoned installations, in order to convert them into financial and environmental assets. The plan was first implemented in 2001 and had an expected duration of twelve years, but its implementation will continue until the elimination of the national inventory of environmental liabilities. In

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2015, 343 oil pits were sanitized and closed. As of December 31, 2015, the total amount of sanitized and closed oil pits was 6,403. In 2015, 2014 and 2013, we registered remediation and restoration expenses having an aggregate amount of U.S.$209.93 million, U.S.$73.50 million and U.S.$56.25 million, respectively. As of December 31, 2015, CITGO Holding’s non-current liabilities included an environmental accrual of U.S.$160 million compared with U.S.$158 million as of December 31, 2014. CITGO Holding estimates a possible additional loss of U.S.$67 million as of December 31, 2015 in connection with environmental matters. Our subsidiary CITGO is subject to numerous state and federal environmental statutes, including the federal Clean Air Act, which includes the New Source Review (“NSR”), National Emission Standards for Hazardous Air Pollutants (“NESHAPS”), the Risk Management Program (“RMP”) as well as the Title V Air Permitting Program; the federal Clean Water Act, which includes the National Pollution Discharge Elimination System program; the Toxic Substances Control Act; and the federal Resource Conservation and Recovery Act; the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”), and their equivalent state programs. CITGO is required to obtain permits under most of these programs and believes it is in material compliance with the requirements of the programs and terms of these permits. When the U.S. Environmental Protection Agency or a state enforcement agency issues a Notice of Violation under any applicable program, CITGO investigates and analyzes the allegations and engages the agencies to determine the appropriate resolution, which may involve taking remedial or corrective actions, and the payment of negotiated penalties if appropriate. On February 4, 2012, two surface pipelines in the Venezuelan state of Monagas ruptured, resulting in a spill of light crude oil. The resulting oil spill spread over a distance of approximately 0.5 km to the Guarapiche River. A water treatment plant that treats water from the Guarapiche River and provides such water to residents of certain areas of the state of Monagas was temporarily shut down while PDVSA contained and conducted a clean-up of the oil spill. During such shut down, PDVSA distributed potable water to residents of the affected areas. In consultation with experts, PDVSA deployed containment barriers and equipment for purposes of containing and removing the oil. After containing the spill, PDVSA worked to remediate the affected water and soil. The clean-up of the spill and the restoration of the water supply to affected residents was completed within forty days of the incident. Since May 2012, the following changes to PDVSA’s environmental safety initiatives have occurred: (i) PDVSA has increased the number of environmental indicators certified by KPMG; (ii) PDVSA has engaged in the development of the subsoil injection of waste, which has allowed PDVSA to safely dispose of approximately 650,000 barrels of mud and industrial water; (iii) PDVSA has designed and implemented new plans to address oil spills; (iv) PDVSA has commenced 4 environmental projects in different facilities throughout Venezuela; and (v) PDVSA has incorporated additional environmental policies to seven projects to be developed by PDVSA. Safety. As part of our operational plan, we have also taken steps to assure the integrity of people’s health and installations, including, without limitation, revising technical safety standards to meet the terms of new regulations, technologies and best practices; visualizing and analyzing new trends and technologies in safety matters, and investing in safety equipment for several of our subsidiaries. Amuay. On September 9, 2013, PDVSA disclosed the results of its investigation related to an event that occurred at the Amuay Refinery in August 2012, which results were published on PDVSA’s website. The investigation concluded that on August 24, 2012, a massive leak of flammable gas olefins was released into the atmosphere due to the opening of the flange between the header and suction pump P2601 of the suction pit located in Block 23 at the Amuay Refinery. The investigation concluded that this leak was due to the tampering and sabotage of retaining studs for pump P2601. Due to the weather conditions that day (low wind speed and high humidity), the cloud of gas that escaped from the flange of the pump P2601 moved in a southeast direction toward the base of Detachment 44 of the Bolivarian National Guard and was ignited in the early hours of the morning of August 25, 2012, when a vehicle at the Bolivarian National Guard base was started during the evacuation of the troops. The fire caused fatalities, injuries and property damage to third-party infrastructure and the tank farms of the Amuay Refinery. PDVSA immediately took the appropriate action to control and extinguish the fire in order to prevent greater damages to surrounding communities, to processing plants and to other areas of the Amuay Refinery. The fire was extinguished in its entirety on August 28, 2012. PDVSA estimates that the economic losses and associated costs of the incident are approximately U.S.$1.1 billion. According to the preliminary reports of the incident, the insurance policies taken by PDVSA cover all the expenditures necessary to restore the affected assets 117

and meet PDVSA’s commitment to Venezuelan communities, except for U.S.$87 million (Bs. 374 million) relating to the deductible portion of the expense and risk assumed by PDVSA. This amount was accounted for in the operating expenses of the consolidated statement of comprehensive income for the year ended December 31, 2012. Legal Proceedings PDV Sweeny and ConocoPhillips Company On February 25, 2010, PDV Sweeny, Inc. (“PDV Sweeny”) and PDV Texas, Inc. (“PDV Texas”) filed a request for arbitration with the International Chamber of Commerce (the “ICC”) against ConocoPhillips Company (“ConocoPhillips”) and Sweeny Coker Investor Sub, Inc. (“Sweeny Sub”), in connection with the exercise of a call option by ConocoPhillips and Sweeny Sub to purchase the interests of PDV Sweeny and PDV Texas in the joint venture for no consideration (the “Call Option Arbitration”). PDV Sweeny and PDV Texas seek an award declaring, among other things, that the exercise of the call option was invalid and ineffective and that they are entitled to their interests in the joint venture. Thereafter, on August 16, 2010 (amended on September 29, 2010), ConocoPhillips filed a request for arbitration with the ICC against PDVSA and its wholly-owned subsidiary PDVSA Petróleo, S.A., alleging that PDVSA Petróleo, S.A., breached an obligation under a crude oil supply agreement to participate in a joint calculation of an adjustment to the price of crude oil for the second half of 2008, and all of 2009, and that as a result ConocoPhillips suffered damages in excess of U.S.$242 million, and further alleging that PDVSA, as guarantor, had an obligation to indemnify ConocoPhillips for such damages (the “Lookback Adjustment Arbitration”). On December 17, 2010, an arbitral tribunal granted the request of PDVSA and its affiliates to consolidate the Call Option Arbitration and the Lookback Adjustment Arbitration. On February 4, 2011, ConocoPhillips resubmitted its claim related to the Lookback Adjustment Arbitration as a counterclaim and submitted two additional counterclaims, alleging that PDVSA Petróleo, S.A., under a crude oil supply agreement and PDVSA as guarantor were liable for damages caused by their failure to supply crude oil during the months of January, March, April, June, July and August 2009, in excess of U.S.$16 million, as well as damages caused by demurrage, in excess of U.S.$3.3 million. On May 3, 2011, the tribunal and the parties signed the terms of reference, and on May 26, 2011, the tribunal issued a procedural order, establishing a schedule for the arbitration. In accordance with that procedural order, PDVSA and its affiliates submitted their Statement of Claim on August 3, 2011, and the Statement of Defense and Counterclaim was filed on December 20, 2011. A hearing was conducted in December 2012. A partial award was issued by the tribunal on April 14, 2014 and a final award on August 18, 2014. Under the partial award, the tribunal dismissed the claims by PDVSA and its affiliates, declaring that ConocoPhillips properly exercised the call option and thereby validly acquired the interests of PDV Sweeny and PDV Texas in the joint venture. With respect to the counterclaims by ConocoPhillips, under the partial award, the tribunal declared that PDVSA Petróleo and PDVSA are jointly and severally liable to ConocoPhillips for approximately U.S.$5 million in damages arising out of their failure to supply crude oil during the months of April, June and July 2009, and dismissed all other counterclaims except for claims for legal costs of the arbitration and preand post-award interest. Under the final award, the tribunal declared that PDVSA and its affiliates are jointly and severally liable for approximately U.S.$3.7 million in legal costs plus pre-award interest and post-award interest. On July 11, 2014, PDV Sweeny and PDV Texas filed a petition with the United States District Court for the Southern District of New York (the “District Court”) against ConocoPhillips and Sweeny Sub, seeking to vacate the portion of the partial award that dismissed the call option claim and declared that ConocoPhillips had properly exercised the call option and validly acquired the joint venture interests of PDV Sweeny and PDV Texas (the “Petition to Vacate”). On August 29, 2014, ConocoPhillips and Sweeny Sub filed their opposition to the Petition to Vacate, as well as a cross petition to confirm the partial and final awards in their entirety (the “Cross Petition”). On September 29, 2014, PDV Sweeny and PDV Texas filed their reply, and on October 6, 2014, ConocoPhillips and Sweeny Sub filed their reply. On September 1, 2015, the District Court issued a decision denying the Petition to Vacate and granting the Cross Petition and judgment was entered that same day. On September 23, 2015, ConocoPhillips and Sweeny Sub filed a motion with the District Court seeking an order that the judgment be amended to include both the partial and final awards, reflecting all of the sums that were awarded in their favor under both of those awards, approximately U.S.$10.7 million. On October 2, 2015, PDV Sweeny and PDV Texas filed an opposition, and on October 7, 2015, respondents filed their reply. On December 21, 2015, the District Court issued a decision granting the motion of ConocoPhillips and Sweeny Sub to amend the 118

judgment, but stated that the corrected judgment does not alter whatever liability the awards assigned to PDV Sweeny and PDV Texas. Accordingly, on December 22, 2015, a corrected judgment was entered, reflecting all of the sums that were awarded in favor of ConocoPhillips and Sweeny Sub under both of the awards and stating that the entitlement of ConocoPhillips and Sweeny Sub to those sums is subject to the conditions specified in the awards. PDV Sweeny and PDV Texas have paid all of the sums they owe under the corrected judgment, a total of approximately U.S.$4 million. Accordingly, on February 16, 2016, ConocoPhillips and Sweeny Sub filed with the District Court a satisfaction of judgment reflecting that PDV Sweeny and PDV Texas had fully satisfied their payment obligations under the corrected judgment. In the interim, on January 15, 2016, PDV Texas and PDV Sweeny appealed to the United States Court of Appeals for the Second Circuit (as used in this paragraph, the “Court of Appeals”) the denial of the Petition to Vacate and the grant of the Cross Petition insofar as it confirmed the portion of the partial award that declared the exercise of the call option by ConocoPhillips to have been valid. In accordance with an order by the Court of Appeals, dated February 16, 2016, PDV Texas and PDV Sweeny filed their opening appellate brief on April 27, 2016. ConocoPhillips and Sweeny Sub filed their response on June 28, 2016, and PDV Texas and PDV Sweeny filed their reply on July 12, 2016. The Court of Appeals has yet to set a date for oral argument. Opic Arbitration On November 19, 2010, Opic Karimun Corporation (“Opic”) filed a request for arbitration before the International Court of Arbitration of the International Chamber of Commerce in New York, against Corporación Venezolana del Petróleo, S.A. (“CVP”) and PDVSA under the exploration at risk and profit sharing association agreements relating to the Gulf of Paria East and Gulf of Paria West (the “Gulf of Paria Agreements”) and PDVSA’s guaranties of CVP’s obligations thereunder. Opic alleges that PDVSA and CVP are liable under a variety of theories, including breach of the Gulf of Paria Agreements and the guaranties, and seeks damages in the amount of approximately U.S.$200 million as a result of the migration process of 2007 in accordance with Decree-Law 5.200. On January 14, 2011, PDVSA and CVP filed their answer to the Request for Arbitration. Thereafter, following the constitution of the arbitral tribunal and the establishment of the terms of reference, the parties have submitted their initial briefs and have engaged in document production. A pre-hearing briefing on the matter was completed on December 14, 2012 and a hearing on the merits was held on January 21, 2013 through January 28, 2013. The parties submitted their post-hearing briefs on March 15, 2013. Thereafter, the Secretariat of the ICC informed the parties that the ICC International Court of Arbitration has extended the time limit for rendering the award until November 29, 2013. An award was issued on November 11, 2013, pursuant to which PDVSA was ordered to pay U.S.$81 million. PDVSA has not made any payments on this award. Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela C.A. On September 23, 2011, Helmerich & Payne International Drilling Co. (“H&P-IDC”) and Helmerich & Payne de Venezuela C.A. (“H&P-V”, together with H&P-IDC, the “Plaintiffs”), filed a lawsuit against the Bolivarian Republic of Venezuela, PDVSA and PDVSA Petróleo (collectively, the “Defendants”) before the United States District Court for the District of Columbia (the “District Court”), seeking recovery of damages for the alleged expropriation of H&P-V’s assets in Venezuela (the “expropriation claim”) and for breach of contract for the alleged failure to make payments under ten drilling contracts entered into between H&P-V and PDVSA Petróleo (the “contractual claims”). The complaint alleges that payments are due under the contracts in the amount of U.S.$32 million and seeks damages for an unspecified amount on all claims. On August 31, 2012, Defendants filed motions to dismiss the complaint; on February 22, 2013, Plaintiffs filed their opposition; and on April 15, 2013, Defendants filed their reply. On July 15, 2013, the District Court heard oral argument, and on September 20, 2013, it rendered its decision, dismissing H&P-V’s expropriation claim but refusing to dismiss H&P-IDC’s expropriation claim and H&P-V’s contractual claims. Both the Plaintiffs and the Defendants appealed to the United States Court of Appeals for the District of 119

Columbia Circuit (as used in this paragraph, the “Court of Appeals”), and both appeals were subsequently consolidated. In accordance with an order by the Court of Appeals; on May 12, 2014, Defendants filed their opening brief; on July 11, 2014, Plaintiffs filed their opening brief; on August 25, 2014, Defendants filed their reply brief; and on September 24, 2014, Plaintiffs filed their reply brief. On January 26, 2015, the Court of Appeals held oral argument, and on May 1, 2015, it rendered its decision, reversing the dismissal of H&P-V’s expropriation claim and affirming the refusal to dismiss H&P-IDC’s expropriation claim but dismissing H&P-V’s contractual claims. Subsequently, Defendants sought rehearing and rehearing en banc, and the Court of Appeals denied those petitions on July 30, 2015. Thereafter, both the Plaintiffs and the Defendants filed petitions for certiorari with the Supreme Court of the United States (the “Supreme Court”). On February 29, 2016, the Supreme Court invited the Solicitor General of the United States (the “Solicitor General”) to file briefs expressing the views of the United States as to whether the petitions for certiorari should be granted. On May 24, 2016, the Solicitor General filed amicus briefs recommending that the Supreme Court partially grant Defendants’ petition for certiorari and deny Plaintiffs’ petition for certiorari in its entirety. In the interim, on October 19, 2015, the District Court issued an order, establishing a schedule for jurisdictional discovery and further briefing. In accordance with that schedule, from November 2015 until June 28, 2016, the parties engaged in jurisdictional discovery. On June 28, 2016, the Supreme Court partially granted Defendants’ petition for certiorari, but did not decide Plaintiffs’ petition for certiorari, which petition remains pending. In light of the Supreme Court’s grant of certiorari, on June 28, 2016, the District Court stayed all proceedings before it, including jurisdictional discovery, until after the Supreme Court renders a decision on the issues before it. On August 19, 2016, Defendants filed their opening brief on the merits with the Supreme Court. Plaintiffs are to file their response on September 26, 2016, and Defendants are to file their reply on October 24, 2016. The Supreme Court has yet to set a date for oral argument. PDVSA Servicios, S.A. v. Petrosaudi Oil Services (Venezuela) LTD On August 28, 2015, PDVSA Servicios, S.A. (“PDV Servicios”) filed a request for arbitration under the UNCITRAL Rules against Petrosaudi Oil Services (Venezuela) Ltd. (“Petrosaudi”), in relation to a drilling services agreement between the companies dated September 9, 2010. PDV Servicios claims relate to the payment of several invoices delivered by Petrosaudi under the services agreement, alleging that such invoices do not reflect the terms and conditions contained in the agreement. On March 22, 2016, the arbitral tribunal held a first preliminary hearing. On March 24, 2016, the arbitral tribunal issued its first partial award, where it upheld several claims raised by PDV Servicios in its allegations. This award permitted PDV Servicios to no longer abide by the “pay now, argue later” provision contained in the services agreement. On May 16, 2016, Petrosaudi submitted its statement of defense and counterclaim. Although Petrosaudi has yet to set a sum of damages in connection with its counterclaims, it is expected that damages may reach up to approximately U.S.$150,000,000.00. An additional preliminary hearing took place during July 2016, and a final hearing on the merits is set to take place in December 2016. Crystallex International Corp. v. Bolivarian Republic of Venezuela On February 16, 2011, Crystallex International Corp. (“Crystallex”) commenced an arbitration against the Bolivarian Republic of Venezuela, before the International Centre for Settlement of Investment Disputes (ICSID), for the amount of U.S.$3,417 million, plus costs and interest, claiming an alleged infringement of the Bilateral Investment Treaty between Venezuela and Canada. On April 4, 2016, the arbitral tribunal issued an arbitral award granting Crystallex damages in the amount of U.S.$1,200 million (plus interest). 120

On April 7, 2016, Crystallex filed a request for confirmation of the arbitral award before the United States District Court for the District of Columbia, which was the seat of arbitration. Venezuela has opposed confirmation of the award and filed a motion seeking to vacate the award pursuant to the Federal Arbitration Act. In this proceeding, Crystallex has also moved that Venezuela be ordered to provide a prejudgment bond in the amount of the award. Venezuela has opposed the motion. Crystallex has asserted that it has filed requests for recognition and enforcement of the award in several other jurisdictions, including Canada. On July 20, 2016 the Superior Court of Justice of Ontario, Canada issued an order recognizing and permitting enforcement of the award. On April 12, 2016, PDVSA’s affiliate, PDVSA Services B.V. was notified by the Court of The Hague that PDVSA’s ownership interests of the following European affiliates have been subject to attachment: Propernyn B.V., PDV Europa B.V. and PDVSA Services B.V. for an amount of U.S.$1,526 million, based on the allegation that PDVSA is jointly and severally liable for the debts of the Bolivarian Republic of Venezuela. PDVSA objected to such claim and will file before the court a brief during the first quarter of 2017. The embargo of these shares has not resulted in any expenditure or the suspension of activities of any of PDVSA’s affiliates. In addition, Crystallex has sued PDVSA, PDV Holding, and CITGO Holding in U.S. district court in Delaware claiming that a U.S.$2.2 billion dividend made by CITGO Holding in February 2015 was a fraudulent conveyance. Motions to dismiss have been filed and argued by the defendants. The trial court has not yet ruled on the motions. Some creditors have, in recent years, used litigation tactics against several sovereign debtors, to attach assets of state-owned entities located outside the relevant jurisdiction or interrupt payments made by these. While PDVSA and its subsidiaries are entities with a legal personality separate from the Bolivarian Republic of Venezuela, PDVSA cannot guarantee that a creditor of the Bolivarian Republic of Venezuela will not be able to interfere with the Exchange Offers, the Collateral or payments made under the New Notes, through an attachment of assets, injunction, temporary restraining order or otherwise. Phillips 66 v. Petróleos de Venezuela, S.A. and PDVSA Petróleo, S.A. On March 24, 2015, Phillips 66 filed an arbitration request against PDVSA and PDVSA Petróleo before the Court of Arbitration of the International Chamber of Commerce in New York, in relation to the claim of the Look Back Adjustment under the Crude Oil Supply Modifying Agreement (“COSA”) asserting that PDVSA and PDVSA Petróleo owed Phillips 66 U.S.$250 million, which must be deducted from the price of future purchases of crude oil delivered under the COSA. The Look Back Adjustment is a review of the look back competitiveness of the crude oil supplied under the COSA. The periods at issue are the last half of the year of 2008 and the entire year of 2009. The hearing took place from April 4 through April 6, 2016, in New York. On August 26, 2016, the arbitral tribunal rendered its final award. In accordance with article 12.3 of the COSA, the tribunal accepted, without any further adjustment, the proposal by PDVSA and PDVSA Petróleo, which was to revise the total amount of the aggregated look back adjustment amounts to U.S.$66.8 million, corresponding to the periods at issue, which will be deducted from future invoices. The tribunal also ruled that Phillips 66 must reimburse PDVSA and PDVSA Petróleo the prepayment of U.S.$325,000, plus applicable costs and fees for an amount of U.S.$1,572,833.99. Frescati Shipping, et al. v. CITGO et al. In November 2004, the Athos I, a merchant tanker, struck a submerged anchor in the public channel of the Delaware River near Paulsboro, New Jersey and released crude oil owned by CITGO Asphalt Refining Company (“CARCO”), a wholly-owned subsidiary of CITGO. Frescati Shipping Company Ltd. (“Frescati”), the owner of the Athos I, filed suit against CARCO in the U.S. District Court for the Eastern District of Pennsylvania for over U.S.$125 million in oil spill recovery and cleanup costs. In 2008, CITGO was also sued in the same court by the U.S. federal government, which was seeking to recover U.S.$87 million it paid out of the Oil Spill Liability Trust Fund to Frescati for its costs in responding to the oil spill. The cost of the entire cleanup and damages was approximately U.S.$268 million. 121

Although CITGO does not believe CARCO had any liability for the oil spill, it entered into an agreement with the U.S. federal government to cap CITGO’s potential damages at U.S.$124 million if it were to lose the Frescati lawsuit, with interest the amount is approximately U.S.$210 million. On April 12, 2011, the U.S. District Court found that neither CARCO nor CITGO was liable for any damages or cleanup expenses. On June 10, 2011, the plaintiffs filed an appeal of the verdict in CARCO’s favor with the U.S. Court of Appeals for the Third Circuit. The U.S. Court of Appeals issued its decision on May 16, 2013 in which it reversed the trial court’s decision and remanded the case for additional findings of fact. On July 1, 2013, CITGO filed a petition for rehearing with the U.S. Court of Appeals, which was denied on July 12, 2013. CITGO then filed an appeal of that decision with the U.S. Supreme Court, and on February 24, 2014, the U.S. Supreme Court denied CITGO’s petition for a writ of certiorari. The trial on remand was held in the U.S. District Court in 2015, and on July 25, 2016, the judge issued its opinion and preliminary order in favor of Frescati and the U.S. federal government for U.S.$100 million plus U.S.$20 million of prejudgment interest. CITGO intends to appeal the judgment to the Third Circuit. Legal proceedings over insurance coverage for these damages, which had been stayed pending this decision, will resume this year. CITGO does not believe that the resolution of this matter will have a material adverse effect on its financial condition or results of operations. Other Claims; Allowances for Contingencies As of December 31, 2015, we were subject to other legal claims and procedures in the ordinary course of business having an aggregate amount of U.S.$3,159 million. As of December 31, 2015 and December 31, 2014, we registered allowances for contingences having an aggregate amount of U.S.$1,244 million and U.S.$4,274 million, respectively.

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MANAGEMENT AND EMPLOYEES Directors and Senior Management In accordance with our charter, we are primarily managed by our Board of Directors and secondly by our president. Our Board of Directors is responsible for convening our shareholders’ meetings, preparing our year-end accounts, presenting our year-end accounts at our shareholders’ meetings and reviewing and monitoring our economic, financial and technical strategies and procedures. Our Board of Directors consists of eleven members: a president, two vice presidents, five internal directors and three external directors. Our Board of Directors is directly appointed by the President of Venezuela for an initial term of two years, which may be extended indefinitely until a new board of directors is appointed. Our Board of Directors meets weekly and, from time to time, when summoned by our president. Pursuant to our charter, our president has broad powers to act on our behalf and to represent us in our dealings with third parties, subject only to the authority expressly reserved to our Board of Directors or to our general shareholders’ meeting. Our president determines and is responsible for the implementation of our goals, strategies and budgets (which must be approved at our general shareholders’ meeting) for our different businesses. Such goals, strategies and budgets are monitored by our Board of Directors. Our Board of Directors was appointed in 2016 and will serve until 2018, or until new directors are appointed. Our Board of Directors and executive officers as of the date of this offering circular are set forth below.

Name Eulogio Del Pino Orlando Chacin Jesus Luongo Ana María España Delcy Rodriguez Sergio Tovar Antón Castillo Aracelis Suez Wills Rangel Rodolfo Marco Torres Ricardo Menendez

Position with PDVSA President Vice President Vice President Vice President Vice President Internal Director Internal Director Internal Director External Director External Director External Director

Age 60 62 56 38 46 62 54 59 55 49 46

Year of Appointment 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016

Information on our directors and executive officers is set forth below. Unless otherwise indicated, the principal office for all of our directors and executive officers is located in Caracas, Venezuela. Mr. Eulogio Del Pino, President Mr. Eulogio Del Pino is a geophysical engineer who graduated from the Universidad Central de Venezuela in 1979 and holds a master’s degree in Oil Exploration from Stanford University in 1985. In 1979, Mr. Del Pino began his career in the Venezuelan oil industry at INTEVEP, where he held different technical and supervisory positions until 1990. In 1990, he was appointed Latin America technical manager for Western Atlas Company. In 1991, he returned to work with us, holding several managerial positions at Corpoven (our affiliate which ceased to exist in 1997 as a result of corporate restructuring). In 1997, he was appointed Exploration and Delineation Manager of PDVSA Exploration and Production. As Exploration and Delineation manager, he coordinated our offshore exploration campaign in the Plataforma Deltana in 2001. In 2003, he was appointed General Manager of the Orinoco Oil Belt Associations at CVP, our affiliate in charge of representing the Orinoco Oil Belt Associations, and, in 2004, was appointed Director of CVP. Additionally, Mr. Del Pino has been elected president and vice president of the Venezuelan Society of Geophysical Engineers (1990-1994), vice-president of the US Society of Exploration Geophysicists (1996-1997), and founder and coordinator of the Latin American Geophysical Union. Mr. Del Pino has served as a member of our Board of Directors since January 2005 and, in September 2008, was appointed 123

Exploration and Production Vice President. Subsequently, Mr. Del Pino served as director of CVP, president of PDV Europa, president of PDVSA Servicios and vice-president of PDVSA. In April 2015, Mr. Del Pino was appointed as the coordinator for the presidential commission in charge of the plan Guayana Socialista, to increase production growth and development of the Venezuelan basic industries. Mr. Del Pino has served as President of PDVSA since September 2014 and Minister of Petroleum since 2015. Mr. Orlando Chacín, Vice President of Exploration and Production Mr. Chacín is a geodetic engineer who graduated from the Universidad de Zulia. He holds a master’s degree in geophysics from the University of Tulsa. He started working in the oil industry in 1983 and has held various positions in the areas of geologic operations and oilfields. During the oil strike, he became the general manager for production and exploration of PDVSA INTEVEP and coordinated production operations for the Western and Eastern Division. Mr. Chacín has been a member of our Board of Directors since May 2011. In October 2009, Mr. Chachin was appointed as director of PDVSA Services, Inc. Since April 2011 until January 2013 Mr. Chacín served as director of the Eastern Division. Mr. Chacin has served as Director of PDVSA and member of the Board of Directors of CITGO since October 2014. Mr. Jesús Luongo, Vice President of Refining, Trade and Supply. Mr. Luongo is a chemical engineer who graduated from the Universidad Central de Venezuela. He holds a master’s degree in oil refining from the Instituto Francés del Petróleo (French Institute of Oil). During the oil strike, Mr. Luongo was one of the two people that continued working as an engineer at the Centro de Refinación Paraguaná (Paraguaná Refining Complex) in the state of Falcón. He has assumed responsibilities over operational activities, as well as the dispatching of oil to various parts of Venezuela. He currently serves as the General Manager of the Center for Refining in Paraguaná, Executive Director of Refining, director of INTERVEN, and director of PDV Mantenimiento and PDVSA Ingeniería y Construcción. Mr. Luongo has been a member of our Board of Directors since May 2011. Mrs. Ana María España, Vice President of Finance Mrs. España is an economist who graduated from Universidad Santa Maria. She holds a specialization in Global Planning from the Instituto Venezolano de Planificación (Venezuelan National Institute of Planning). She has taken courses in the Instituto de Estudios Superiores Avanzados (IESA) (Institute of Advanced Superior Studies) in Strategic Planning and Government and Public Budget. Previously, she held several positions in the Ministry of Foreign Affairs and was appointed as Budget Director in 2013. In July 2015, Mrs. España was appointed as Director of Treasury of PDVSA. Currently, she serves as Vice President of Finance of PDVSA. Mrs. España has been a member of our board of Directors since January 2016. Ms. Delcy Rodriguez, Vice President of International Affairs Ms. Rodriguez Gomez is a lawyer who graduated from the Universidad Central de Venezuela, with a master’s degree in Social and Trade Union Law at the University of Paris X- Nanterre (France) in 1996 and studied at Birkbeck College and the University of Cambridge (United Kingdom). Ms. Rodriguez was Director of International Affairs of the Ministry of Energy and Mining, from 2003 to 2005. Later, she served as Vice Minister for Europe at the Ministry of Foreign Affairs, from 2005 to 2006. In 2006, Ms. Rodriguez was appointed Minister of the Office of the President, and between 2007 and 2008, she was General Coordinator of the Vice-presidency of the Bolivarian Republic of Venezuela. From 2011 to 2013, she was a professor at the Universidad Central de Venezuela and from 2013 to 2014 she served as Minister of Communication and Information. Since 2014, Ms. Rodriguez has served as the Minister of Foreign Affairs. Since 2015, she has also served as Director and Vice President of International Affairs of PDVSA.

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Mr. Sergio Tovar, Director Mr. Tovar is a chemical engineer who graduated from Universidad Simón Bolívar with studies in Engineering Management at the University of California, Irvine and the State University of California, Long Beach. He has a vast experience in the oil industry and has held several management positions in several affiliates of PDVSA, including PEQUIVEN, PDVSA Argentina, PDV Texas, Petrolera del Cono Sur, ENARSA and PDVSA Brazil. Since October 2014, Mr. Tovar has served as Director of CITGO Petroleum Corporation. Since September 2013, Mr. Tovar has also served as Director of PDVSA Uruguay, S.A., Vice President of PDVSA Argentina, S.A. and Director of PDVSA Ecuador. He has served as a member of our Board of Directors since January 2016. Mrs. Aracelis Suez, Director Mrs. Suez is a chemical engineer who graduated from Universidad Central de Venezuela. She has been in the oil industry since 1982. She has held several management positions including, Manager of Strategic Planning, Manager of IT, and Corporate Manager of IT for the Exploration and Production Business. Mrs. Suez has served as a member of our Board of Directors since 2014. Mr. Anton Castillo, Director Mr. Castillo is a mechanical engineer who graduated from the Escuela Superior de Ingeniería Mecánica y Eléctrica (School of Mechanical and Electrical Engineering) (Mexico), with a specialization in Gas Engineering from Universidad de Oriente in 2002. Early in his career, he held management positions in Production Operations and Equipment Maintenance. Between 1993 and1998, he held various positions in oil industry plants. In 1999 he joins the National Gas Liquids Agreements Department. Between 1999 and 2002, he is responsible for the National Gas Liquids Marketing Superintendence. From 2003 until 2005, he was appointed Manager of Fractionating and Shipping in Jose, in PDVSA (Eastern Division). In 2007 he was appointed Director of PDVSA Bolivia SA, and in 2011 he was appointed President of the mixed capital company Venezuela Gazstroi, S.A. Since 2013, Mr. Castillo has served as President of PDVSA Gas, and in 2014 he was appointed Internal Director of or Board of Directors. Mr. Rodolfo Marco Torres, Director Mr. Marco is a brigadier general who graduated from the Military Academy of Venezuela, with master’s degree in Military Art and Science of the Escuela Superior del Ejército and holds a diploma in Public Banking from the Escuela Nacional de Hacienda Pública. Mr. Marco has vast experience in public banking. Currently, he serves as Director of the Board of Directors of CENCOEX, Minister of Economy, Finance and Public Banking, President of the Banco de Venezuela, member of the Development Bank of Latin America (CAF), representative of the Ministerial Council of the OPEC’s Fund for International Development, Director of the Central Bank of Venezuela, Vice president of Economy and Finance and Minister of Food. He has served as a member of our Board of Directors since 2014. Mr. Ricardo Menendez, Director Mr. Menendez is a geographer who graduated from Universidad Central de Venezuela with a master’s degree in Urban Planning and a PhD in Urban Studies. In 2009 he was appointed as Minister of Science, Technology and Intermediate Industries and Vice president of Productive Economy. In 2011, he was appointed as Minister of Industries and in 2014 was named as Minister of Higher Education. Mr. Menendez currently serves as Minister of Planning, Vice president of the Ministerial Council for Planning and Knowledge. He has served as a member of our Board of Directors since 2014.

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Mr. Wills Rangel, Director, President of Federación Unitaria de Trabajadores del Petróleo, Gas, Similares y Derivados de Venezuela (Venezuelan Workers Union of Petroleum, Gas and Derivatives, or FUTPV) Mr. Rangel has extensive experience in the hydrocarbon sector. He currently serves as the president of FUTPV, which seeks to defend labor rights in the oil, gas and derivatives industry. Mr. Rangel has served as an external director of PDVSA since May 2011. He holds an oil & gas technician degree and has worked for 22 years in the field. Compensation For the year ended December 31, 2015, the aggregate amount paid by us as compensation to our directors and executive officers for services in all capacities was U.S.$210,000 (based on the 2015 average exchange rate of Bs. 68.76 to U.S.$1). Board practices Our directors are appointed for an initial term of two years, which may be extended until a new board of directors is appointed. Audit Committee Structure and Objectives Basic Function Our Audit Committee assists our Board of Directors in the monitoring of the quality and adequacy of the internal control system. The committee monitors the internal control system through the evaluation of the following matters: 

Risk analysis of the different businesses.

Follow up of the elements of the internal control system, in the Venezuelan and international operations.

The performance of our corporate control units.

Compliance with requirements of existing laws and regulations, in Venezuela and with our norms and procedures.

The results of the internal and external audits.

The quality and adequacy of corporate financial information.

Authority Our Board of Directors has granted full authority to the Audit Committee so that it can carry out its responsibilities. The Audit Committee may employ the services of the corporate control units, the external auditors, independent consultants, or any other group or internal or external resource to carry out studies or investigations necessary to better comply with its responsibilities. Organization The Audit Committee consists of six members who are appointed by our Board of Directors. The chairman of the committee is our president. Our general internal auditor deputy is the secretary of the committee and two members are external directors of our board.

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The president of the Audit Committee is responsible for directing and prioritizing the issues overseen by the Audit Committee. Our internal controller and prevention and loss control manager assist the Audit Committee on a regular basis. Other corporate officials, including the CFO, attend these meetings whenever it is required. Main Functions 

To assure the adequacy of our internal control system and to monitor information processes.

To recommend to our Board of Directors any course of action regarding the main issues of the internal control system, including actions required to improve corporate information systems.

To set guidelines and support the activities of our corporate control units.

To review and approve the internal audit policy and norms, including the relationship between the corporate internal audit organization and the audit units within subsidiaries or joint ventures.

To ensure the application of general auditing standards issued by the Venezuelan government.

To ensure the independence and objectivity of the internal audit function.

To review the external auditors’ opinion of our financial statements, the quality of the internal control system, the main risk areas and the adequacy of the financial reports.

To evaluate on an annual basis the performance of the external auditors.

To review its annual performance and to submit its activity report to our Board of Directors.

Employees The following table shows our number of employees as of December 31 for the last three years.

In Venezuela ................................................................................................................... Abroad ............................................................................................................................ Total number of employees...........................................................................................

2015 114,259 4,979 119,238

Contractors ....................................................................................................................

21,248

As of December 31, 2014 116,806 4,946 121,752 25,698

2013 113,369 4,919 118,288 16,168

As of December 31, 2015, approximately 50% of our workers in Venezuela were affiliated with Federación Unitaria de Trabajadores del Petróleo, del Gas, sus Similares y Derivados de Venezuela (FUTPV) (Venezuelan Workers Union of Petroleum, Gas and Derivatives). Our directors, corporate staff, professional employees and security personnel are generally not affiliated with any unions. Organic Labor and Workers Law In the Official Gazette N° 6,076 of May 7, 2012, the new Organic Labor and Workers Law was published, which replaces the Organic Labor Law of 1997. Several provisions of the Organic Labor and Workers Law have increased our labor related costs and expenses, such as (i) our employees are entitled to a minimum of 15 days of paid vacation bonus, (ii) severance benefits will be calculated retroactively on an employee’s latest salary from the latter of June 19, 1997 or the hiring date (for purposes of this calculation, salary includes all compensation received by the employee, even if not paid on a regular basis), (iii) the floor on profit sharing payments have increased from 15 days of salary to 30 days, (iv) the weekly working hours were limited to a maximum of 40 hours per week (37.5 per week for mixed working hours), effective as of one year after the enactment of the law, and (v) the illegal outsourcing, understood as the outsourcing performed with the purpose of avoiding labor obligations by employers, 127

is prohibited. Venezuelan companies have three years from enactment of the law to include the workers of such illegal outsourcing to their payroll. Meanwhile, workers of the contractor are protected with a bar against dismissal and are entitled to receive the same labor benefits as the workers hired by the Venezuelan companies that hired the contractor. Share ownership Our common stock is not publicly traded and, as of December 31, 2015, the nominal value of our share capital amounted to Bs. 1,280 million, represented by 51,204 shares, wholly owned by the Bolivarian Republic of Venezuela. Pursuant to Article 303 of the Venezuelan Constitution, these shares may not be transferred or encumbered.

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PRINCIPAL SHAREHOLDERS We are the holding company of a group of oil and gas companies in Venezuela. We were formed by the Venezuelan government in 1975 pursuant to the Nationalization Law. The Nationalization Law reserves for the Venezuelan government the industry and trade of hydrocarbons, and our operations are supervised by Venezuela’s Ministry of Petroleum, who now also serves as our president. The Ministry of Petroleum establishes our general policies and approves our production levels, capital expenditures and operating budgets annually, while our Board of Directors is responsible for implementing these policies. Since our formation, we have been operated as a commercial entity, vested with commercial and financial autonomy. The Bolivarian Republic of Venezuela is not legally liable for our obligations, including our guarantees of indebtedness, or for the debt or obligations of our subsidiaries. Under the Venezuelan Constitution, Venezuela must retain exclusive ownership of our shares. However, the Venezuelan Constitution does not require Venezuela to retain ownership of our subsidiaries’ shares or of our interests in various exploration and joint venture arrangements. Through our subsidiaries, we supervise, control and develop the crude oil, petroleum products and gas industries in Venezuela. These activities are complemented by our operating companies abroad, which are responsible for refining and marketing activities in North America, Europe, Latin America and the Caribbean. See note 1 to our annual audited consolidated financial statements. Our oil-related activities are governed by the Organic Hydrocarbons Law, which came into effect in January 2002 and its amendment as of May 2006. We are subject to regulations adopted by the executive branch of the Venezuelan government and other laws of general application, such as the Commercial Code of Venezuela. We and our Venezuelan subsidiaries are organized under the Commercial Code, which regulates the rights and obligations of Venezuelan commercial companies. Under the Commercial Code, we and our subsidiaries are permitted to develop and execute shareholders’ objectives as a corporate entity. Our gas-related activities are regulated by the Organic Law of Gaseous Hydrocarbons of September 1999 and its regulations dated June 2000. Ownership of Reserves All oil and hydrocarbon reserves within Venezuela are owned by Venezuela and not by us. Under the Nationalization Law, every activity related to the exploration, exploitation, manufacture, refining, transportation by special means, and domestic and foreign sales of hydrocarbons and their derivatives is reserved to Venezuela. We were formed as an entity to coordinate, monitor and control all operations related to hydrocarbons. Joint Ventures (Empresas Mixtas) Pursuant to the Organic Hydrocarbons Law, private participation in hydrocarbon upstream activities, as well as gathering and initial transportation and storage, is allowed only through joint ventures – Empresas Mixtas – in which we hold a majority of the shares. Accordingly, through our subsidiary, CVP, we hold a majority interest in the joint venture created to operate (i) the fields of the former operating agreements, (ii) the Orinoco Oil Belt projects, (iii) the former profit-sharing agreements and (iv) other new ventures with foreign third-party participants. See “Business – Initiatives Involving Private Sector Participation.”

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RELATED PARTY TRANSACTIONS We consider our stockholder, non-consolidated investees, jointly controlled companies, our directors and executives and their families, employee retirement funds, companies that are also property of the stockholder and other government institutions as related parties. A summary of transactions and balances with related parties for the years ended December 31, 2015 and 2014 are as follows (in millions of dollars): For the years ended December 31, 2015 2014 Activities for the year: Income: Sales: Companies owned by the Stockholder and other government institutions Investments accounted for under the equity method Costs and expenses: Purchases of crude oil and products, net Other operating, selling, administrative and general expenses Production tax, extraction tax and other taxes Other expenses (net): Legal contributions Financial expenses: Gain on sale of stake Exchange gain, net Contributions for social development Social development contributions Contributions to FONDEN Government grants received through FONDEN Estimated income tax expenses in Venezuela Deferred tax benefit expenses in Venezuela

(47)

(1,186)

(901)

(1,919)

88

189

112

306

6,294

13,466

395

1,882

0 15,039

0 17,656

8,215 974 0 2,539 (6,719)

2,015 8,507 (5,201) 9,250 (4,563)

For the years ended December 31, 2015 Balances at year end: Buildings used by government entities Recoverable value-added tax Funds for execution of social development projects Advance special contribution Income tax paid in excess Income tax payable in Venezuela Accounts payable to related entities Withholdings and contributions payable

Productions and other taxes payable Value-added tax Accounts payable to suppliers Notes and accounts receivable: Investments accounted for under the equity method Stockholder, companies owned by the Stockholder and other government institutions Total notes and accounts receivable Less current portion Non-current portion

2014

56 490 242

56 2,903 614

1,903 732 3,085

1,904 347 9,114

8,454

7,438

1,395 1,194 277 10

2,827 1,933 264 18

707

714

10,077

11,155

10,784 10,327 457

11,869 11,571 298

Balances and Transactions with the Stockholder During the years ended December 31, 2015 and 2014, the total amount of production tax paid in cash to the Republic was U.S.$1,037 million and U.S.$9,250 million, respectively. 130

During the years ended December 31, 2015 and 2014, PDVSA delivered crude oil and byproducts in the amount of 185 TBPD and 255 TBPD, respectively, within the framework of the Energy Cooperation Agreements. Of this amount, 61 TBPD and 86 TBPD, with a value of U.S.$108 million and U.S.$2,251 million, respectively, or approximately 50% of the total deliveries under the Energy Cooperation Agreements, correspond to the portion of sales that are financed on a long term basis. During the years ended December 31, 2015 and 2014, PDVSA delivered crude oil and byproducts in the amount of 579 TBPD and 472 TBPD, amounting to U.S.$8,371 million and U.S.$14,371 million, respectively, under the Chinese-Venezuelan Fund Incorporation Agreement, payment of which was received by BANDES. During the years ended December 31, 2015 and 2014, BANDES transferred U.S.$2,950 million and U.S.$8,123 million, respectively, to PDVSA, which corresponded to the collections it received under this agreement. PDVSA was charged with the management and administration of the funds related to the implementation of the “Gran Misión Vivienda Venezuela” plan, and the administration of the “Fondo Simón Bolívar para la Reconstrucción” fund (the “Fund”). The Fund was created by the Law Decree with Merit of Organic Law for the Formation of “Fondo Simón Bolívar para la Reconstrucción,” which was published in the Official Gazette No. 39,583 of December 29, 2010. PDVSA formed a trust with BANDES (the “Trust”) to administer funds related to the “Gran Misión Vivienda Venezuela,” and as the settlor of the Trust, agreed to transfer such amounts as are necessary to satisfy the obligations of the Trust. The funds of such Trust consist of regular or special revenues set by the National Government of Venezuela, any income from its own operation or administration and any other income received from donations of any nature. Within the scope of the cooperation agreements between the Bolivarian Republic of Venezuela and several Venezuelan banking institutions, it was agreed that dematerialized participation certificates (Certificados de Participación Desmaterializados (“CPDs”)) would be issued through the Trust. In September 2011, PDVSA, as the settlor of the Trust, confirmed its commitment to transfer to the Trust such amounts as are necessary for the Trust to satisfy its obligations under the CPDs, up to an amount of Bs. 9,681,000,000. During 2015, 2014 and 2013, PDVSA did not provide contributions to this program. As provided in an amendment of Law Decree with Merit of Organic Law for the Formation of “Fondo Simón Bolívar para la Reconstrucción” published in the Official Gazette No. 39,892 of March 27, 2012, the Fund was terminated after a new state-owned corporation named “Fondo Simon Bolívar para la Reconstrucción, S.A.” (the “FSBRSA”) was formed. The FSBRSA is wholly owned by the Bolivarian Republic of Venezuela and under the control of the Governing Body of the National Housing and Habitat System. The FSBRSA is the successor to all rights and obligations previously held by the Fund, and upon its creation PDVSA ceased to have existing obligations toward the Fund. All funds received by the FSBRSA are fully supported by the Bolivarian Republic of Venezuela. Starting in 2012, with the incorporation of the FSBRSA, PDVSA continues to provide administrative assistance to the funds on behalf of that company. Balances and Transactions with Equity Accounted Investees The supply agreements entered into by PDVSA’s subsidiary, PDVSA Petróleo, S.A. (the Guarantor), with equity accounted investees as of December 31, 2015 remain effective and have the same conditions as those disclosed at December 31, 2014 and 2013. During 2015, 2014 and 2013, PDVSA made sales to equity accounted investees as follows (in millions of dollars): For the years ended December 31, 2015 Nynas AB Chalmette Refining Mount Vernon Phenol Plant Partnership (Mt. Vernon) Total

2014

2013

405 272

1,263 223

1,203 53

224

433

430

901

1,919

1,686

During the years ended December 31, 2015 and 2014, CITGO has made sales to Mount Vernon Phenol Plant of U.S.$224 million and U.S.$433 million, respectively, under a long term agreement. In addition, CITGO 131

had petroleum coke sales to a non-consolidated investee of U.S.$161 million and U.S.$201 million during the years ended December 31, 2015 and December 31, 2014, respectively, that were recorded as an offset to the cost of sales and operating expenses in the consolidated statements of income and comprehensive income. As of December 31, 2015 and December 31, 2014, the outstanding receivables related to these transactions were U.S.$38 million and U.S.$63 million, respectively, and were reported as accounts receivable from related entities. During the years ended December 31, 2015 and 2014, CITGO purchased intermediate feedstocks from a non-consolidated investee (Mount Vernon Phenol Plant) on a spot basis. These purchases, for U.S.$88 million and U.S.$189 million, respectively, were included as part of the cost of sales in the consolidated statements of income and comprehensive income. As of December 31, 2015 and December 31, 2014, accounts payable to Mount Vernon Phenol Plant related to these transactions totaled U.S.$11 million and U.S.$19 million, respectively. Balances and Transactions with Companies Owned by the Stockholder and Other Government Institutions As of December 31, 2015 and December 31, 2014, accounts receivable from Corporación Eléctrica Nacional (“CORPOELEC”) were U.S.$304 million and U.S.$1,032 million, respectively, and mainly consisted of operations carried out by PDVSA Petróleo to supply light diesel and financial support for the acquisition of equipment for the national electric system. These receivables were offset against amounts reflecting energy supplied by CORPOELEC. Balances of accounts receivable with companies owned by the Bolivarian Republic of Venezuela and other government institutions are expected to be repaid through recovery plans to be agreed upon with the Bolivarian Republic of Venezuela in the near future. As of December 31, 2015 and December 31, 2014, a total of U.S.$10,077 million and U.S.$11,155 million of these accounts receivable, respectively, are part of our current assets.

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TAX CONSIDERATIONS The following is a general description of certain tax considerations relating to the New Notes. It does not purport to be a complete analysis of all tax considerations relating to the New Notes. You should consult your tax advisors as to the consequences under the tax laws of the country of which you are resident for tax purposes and the tax laws of Venezuela of acquiring, holding and disposing of New Notes and receiving payments of interest, principal and/or other amounts on the New Notes. This summary is based upon the law as in effect on the date of this offering circular and is subject to any change in law that may take effect after such date. Venezuelan Taxation As used herein, the term “Resident of Venezuela” generally refers to an individual who is physically present in Venezuela for at least 183 days during the current calendar year or the previous calendar year and a legal entity that either is organized under Venezuelan law or maintains a registered branch or a permanent establishment pursuant to the definition contained in Venezuela’s tax law and/or the tax treaties entered into by Venezuela with other countries. Generally, if a non-Venezuelan legal entity maintains a permanent office in Venezuela, this office should be subject to Venezuelan taxation to the extent income is attributable to the conduct of activities thereby. The term “Non-Resident of Venezuela” generally refers to a natural person who is not physically present in Venezuela for a period or periods aggregating more than 183 days during the calendar year or the previous calendar year and a legal entity that neither is organized under Venezuelan law nor maintains a registered branch or a permanent establishment in Venezuela. Payment of interest by the Issuer on the New Notes to holders who are legal entities who are NonResidents of Venezuela generally will be subject to income tax in Venezuela at a rate of up to 34%, unless a lower rate is applicable under a relevant tax treaty with Venezuela. Payment of interest will be subject to withholding at source at a rate equivalent to 32.3%. Withheld amounts are creditable toward final income tax liability. Payment of interest by the Issuer on the New Notes to holders who are legal entities who are Residents of Venezuela will be subject to income tax in Venezuela at a rate of up to 34%. Payment of interest will be subject to withholding at source at a rate equivalent to 5%. Withheld amounts are creditable toward final income tax liability. Payment of interest by the Issuer on the New Notes to holders who are offshore non-domiciled qualified financial institutions will be subject to Venezuelan income tax at a flat rate of 4.95% payable through withholding. Capital gains realized by offshore non-domiciled qualified financial institutions will be subject to Venezuelan income tax at a flat rate of 4.95%. Capital gains realized by legal entities who are Non-Residents of Venezuela will be subject to income tax in Venezuela at a rate of up to 34%, unless a lower rate is applicable under a relevant tax treaty with Venezuela. This income tax on capital gains realized by legal entities who are Non-Residents of Venezuela is not subject to withholding at source. Capital gains realized from the sale of the New Notes by holders who are entitled to the benefits of tax treaties in effect between Venezuela and the United States of America, Germany, Austria, Barbados, Belarus, Belgium, Brazil, Canada, China, Korea, Cuba, Denmark, Spain, France, Netherlands, Indonesia, Iran, Italy, Kuwait, Malaysia, Norway, Portugal, Qatar, Czech Republic, Russia, Sweden, Switzerland, Trinidad & Tobago, the United Arab Emirates, the United Kingdom, and Vietnam, will not be subject to income tax in Venezuela. Although not free from doubt, Venezuelan counsel to the Issuer believes that capital gains from the sale of the New Notes realized by individuals who are for tax purposes Residents of Venezuela will not be subject to income tax in Venezuela. Although not free from doubt, notwithstanding the tax treatment of interest and capital gains described above, since payments on the New Notes will be made by the Issuer to the common depositary of the New Notes, and the common depositary of the New Notes is an offshore non-domiciled qualified financial institution for 133

purposes of the Venezuelan Income Tax law, the Issuer has concluded that payments on the New Notes to the applicable common depositary will be subject to Venezuelan Income Tax at a flat rate of 4.95% payable through withholding. The Issuer has applied to obtain an income tax exemption with respect to interest payments from the President of Venezuela who may or may not grant such exemption at his discretion. Inheritance and Gift Tax Transfer of the New Notes through inheritance or gift to Residents of Venezuela or Non-Residents of Venezuela will be subject to Venezuelan inheritance tax, at bracket levels, ranging from 1% up to 55%. Stamp Tax The issuance of the New Notes will not be subject to stamp tax in Venezuela. Material U.S. Federal Income Tax Consequences The following discussion is a summary of the material U.S. federal income tax consequences of acquiring, owning and disposing of the New Notes. Except where otherwise noted, this discussion applies only to Holders (as defined below) that purchase the New Notes on the date of this offering circular for their fair market value and that hold the New Notes as “capital assets” (generally, property held for investment). This discussion is based on the Code, its legislative history, existing final, temporary and proposed U.S. Treasury Regulations, administrative pronouncements by the IRS, and judicial decisions, all as currently in effect and all of which are subject to change (possibly on a retroactive basis) and to different interpretations. For purposes of this discussion, a “Holder” is any beneficial owner of the New Notes. This discussion does not purport to address all U.S. federal income tax consequences that may be relevant to a particular Holder and you are urged to consult your own tax advisor regarding your specific tax situation. The discussion does not address the tax consequences that may be relevant to Holders subject to special tax rules, including, for example: 

insurance companies;

tax-exempt organizations;

dealers in securities or currencies;

traders in securities that elect to mark-to-market their securities holdings;

banks or other financial institutions;

partnerships or other pass through entities;

U.S. Holders (as defined below) whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

U.S. expatriates; or

Holders that hold the New Notes as part of a hedge, straddle, conversion or other integrated transaction.

Further, this discussion does not address market discount, acquisition premium or the alternative minimum tax consequences of holding the New Notes or the consequences to partners in partnerships (or any other entities treated as partnerships for U.S. federal income tax purposes) that own the New Notes. In addition, this discussion does not address the state, local and non-U.S. tax consequences of acquiring, owning and disposing of the New Notes. 134

You are a “U.S. Holder” if you are a beneficial owner of the New Notes and you are for U.S. federal income tax purposes: 

an individual who is a citizen or resident of the United States;

a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

an estate the income of which is subject to U.S. federal income tax regardless of its source; or

a trust if (i) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. Persons have the authority to control all substantial decisions of the trust or (ii) the trust has an election in effect under current U.S. Treasury Regulations to be treated as a U.S. Person.

A Non-U.S. Holder is a beneficial owner of New Notes that is neither a U.S. Holder nor a partnership (or other entity that is treated as a partnership for U.S. federal income tax purposes). If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds the New Notes, the tax treatment of the partnership and a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Such partner or partnership should consult its own tax advisor as to its consequences of holding the New Notes. Consequenes of Tendering Your Existing Notes Taxable Exchange Under general principles of U.S. federal income tax law, a modification of the terms of a debt instrument (including an exchange of one debt instrument for another debt instrument having different terms) is a taxable event upon which gain or loss is realized only if such modification is “significant.” A modification of a debt instrument that is not a significant modification does not create a taxable event. Under applicable regulations, the modification of a debt instrument is a “significant” modification if, based on all the facts and circumstances and taking into account all modifications, other than certain specified modifications, the legal rights or obligations that are altered and the degree to which they are altered is “economically significant.” The applicable regulations also provide specific rules to determine whether certain modifications, such as a change in the timing of payments, are significant. Pursuant to these regulations, the Issuer intends to take the position that the exchange of any series of Existing Notes for any series of New Notes should be considered a taxable exchange; however, with respect to the Novemeber 2017 Notes, such conclusion is not without doubt. Subject to the application of the market discount rules discussed below, you will recognize capital gain or loss in the exchange (subject in the case of loss to the potential application of the “wash sale” rules) in an amount equal to the difference between the amount that you realize in the exchange and your adjusted tax basis in the Existing Notes that you tender at the time of the consummation of the Exchange Offer. Your adjusted tax basis in an Existing Notes generally will equal the amount paid therefor increased by any market discount previously included in income by the U.S. Holder, and decreased by the amount of any bond premium previously amortized by the U.S. Holder. The amount that you realize in the exchange should be equal to the aggregate issue price of the New Notes that you receive in the exchange (determined for each New Note as described below under “—Issue Price”). Any such capital gain or loss will be long-term capital gain or loss if your holding period for the Existing Notes on the date of exchange is more than one year. Long-term capital gains of non-corporate U.S. Holders are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Your initial tax basis in the New Notes will be equal to their issue price (determined as described under “—Issue Price”). Your holding period with respect to such New Notes will begin the day following the consummation of the Exchange Offer.

135

If an exchange is treated as a wash sale within the meaning of Section 1091 of the Code, any loss recognized by a U.S. Holder resulting from the exchange would be deferred. U.S. Holders should consult their own tax advisers regarding whether the exchange may be subject to the wash sale rules. No ruling or opinion is being sought with respect to the conclusion that the exchange of the Existing Notes for the New Notes is a taxable exchange for U.S. federal income tax purposes. However, if the IRS were to successfully challenge such treatment and assert, for example, that the exchange of the November 2017 Notes for New Notes did not result in a significant modification of the November 2017 Notes, U.S. Holders of November 2017 Notes that received New Notes would not recognize gain or loss on the exchange, and the adjusted tax basis and holding period of the New Notes would be the same as such U.S. Holder’s adjusted tax basis and holding period in the November 2017 Notes surrendered in the exchange. However, because it would be impossible to distinguish between the New Notes that were exchanged for the April 2017 Notes (which New Notes, as described below, are expected to be treated as issued with original issue discount (“OID”)) and the New Notes exchanged for the November 2017 Notes, U.S. Holders that received New Notes in exchange for November 2017 Notes would be required to accrue OID even though such exchange were determined not to be a taxable exchange for U.S. federal income tax purposes and such U.S. Holders were not required to recognize any gain or loss on such exchange. U.S. Holders of Existing Notes that receive New Notes pursuant to this Exchange Offer should consult their own tax advisor regarding the U.S. federal income tax treatment of the exchange. Issue Price As discussed under “—Taxable Exchange,” the amount you realize with respect to your tender of Existing Notes will be equal to the issue price of the New Notes received in the exchange. Your initial tax basis in such New Notes also will be equal to their issue price. The issue price of a debt instrument, such as a New Note generally will be equal to the fair market value of the debt instrument, determined as of the date of the issuance, if (i) a substantial amount of the debt instruments in an issue is considered “traded on an established market” for U.S. federal income tax purposes during the 31-day period ending 15 days after the date of the issuance and (ii) the debt instrument is issued for property (which includes certain currencies other than the functional currency of the issuer). Applicable U.S. Treasury Regulations require an issuer to determine whether debt instruments are “traded on an established market” for such purposes and, if so, their fair market value. If an issuer determines the debt instruments are traded on an established market, the issuer is required to make that determination as well as the fair market value of the debt instrument (which can be stated as the issue price of the debt instrument) available to holders in a commercially reasonable fashion, including by electronic publication, within 90 days of the date of issuance. Each determination by an issuer is binding on a holder of the debt instrument unless the holder explicitly discloses that its determination is different from the issuer’s in the manner required by the applicable U.S. Treasury Regulations. If an issuer for any reason does not make the issue price of a debt instrument reasonably available to a holder, the holder must determine the issue price of the debt instrument in accordance with the applicable U.S. Treasury Regulations. PDVSA expects that the New Notes will be traded on an established market for this purpose. Therefore, PDVSA anticipates that the issue price of the New Notes will be their fair market value as of the date of the issuance. If a substantial amount of a series of New Notes is not “traded on an established market,” but the Existing Notes delivered in exchange for such New Notes are so traded, the issue price of the relevant New Notes will be the fair market value of such Existing Notes determined as of the date of the exchange. If neither the New Notes nor the Existing Notes are “traded on an established market,” the issue price of the New Notes will be the stated principal amount of the New Notes. You should consult your tax advisor as to the issue price of the New Notes. Market Discount Subject to a de minimis rule, any gain recognized on the exchange of Existing Notes for New Notes generally would be characterized as ordinary income to the extent of the accrued market discount, if any, on such Existing Notes as of the Settlement Date. U.S. Holders who acquired their Existing Notes other than at original issuance should consult their own tax advisors regarding the possible application of the market discount rules of the Code to a tender of the Existing Notes pursuant to the Exchange Offers.

136

Taxation of Receipt of Early Tender Premium The U.S. federal income tax treatment of the Early Tender Premium is unclear. We intend to treat the Early Tender Premium as part of the consideration received by a U.S. Holder in exchange for the U.S. Holder’s Existing Note. The Early Tender Premium should therefore be treated as sales proceeds, as discussed above in “— Consequenes of Tendering Your Existing Notes – Taxable Exchange”. It is possible, however, that the IRS may take the position that the Early Tender Premium is not part of the consideration received by a U.S. Holder in exchange for the U.S. Holder’s Existing Note but rather that it is a separate amount payable for tendering your Existing Notes, which may be treated as fees or as additional interest on the Existing Notes. In that case, the Early Tender Premium would be taxable as ordinary income to the U.S. Holder. Consequences of Holding the New Notes Stated Interest and Original Issue Discount If you are a U.S. Holder, stated interest paid to you on a New Note, including any amount withheld in respect of any taxes and any Additional Amounts, will be includible in your gross income as ordinary interest income at the time such payments are received or accrued in accordance with your usual method of tax accounting for U.S. federal income tax purposes. The New Notes are expected to be issued with OID for U.S. federal income tax purposes. As discussed in more detail below, in such case you will be required to include OID on the New Notes in your gross income in advance of the receipt of corresponding cash payments on such New Notes. The amount of OID with respect to the New Notes will be equal to the excess of (i) the stated redemption price at maturity of the New Notes, over (ii) the issue price of the New Notes (as described above under the heading “—Issue Price”). A New Note’s stated redemption price at maturity is the sum of all payments due under the New Note other than payments of stated interest. In general, you will be required to include OID in gross income under a constant-yield method over the term of the New Notes in advance of cash payments attributable to such income, regardless of whether you are a cash or accrual method taxpayer, and without regard to the timing or amount of any actual payments. Under this treatment, you will include in ordinary gross income the sum of the “daily portions” of OID on the New Notes for all days during the taxable year that you own the New Notes. The daily portions of OID on a New Note are determined by allocating to each day in any accrual period a ratable portion of the OID allocable to that accrual period. Accrual periods may be of any length and may vary in length over the term of the New Notes, provided that no accrual period is longer than one year and each scheduled payment of principal or interest occurs on either the final day or the first day of an accrual period. The amount of OID on a New Note allocable to each accrual period will be the excess, if any, of the “adjusted issue price” (as defined below) of the New Note at the beginning of the accrual period multiplied by the “yield to maturity” (as defined below) of such New Note over the amount of any stated interest paid in that period. The “adjusted issue price” of a New Note at the beginning of any accrual period generally will be the sum of its issue price, and the amount of OID allocable to all prior accrual periods, reduced by the amount of payments made on the New Note other than stated interest. The “yield to maturity” of a New Note will be the discount rate (appropriately adjusted to reflect the length of accrual periods) that causes the present value of all payments on the New Note to equal the issue price of such New Note. In addition, interest and accruals of OID on the New Notes will be treated as foreign source income for U.S. Federal income tax purposes. Subject to generally applicable restrictions and conditions, if any foreign income taxes are withheld on interest payments on the New Notes, a U.S. Holder will be entitled to a foreign tax credit in respect of any such foreign income taxes. Alternatively, the U.S. Holder may deduct such taxes in computing taxable income for U.S. Federal income tax purposes provided that the U.S. Holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued for the relevant taxable year. For U.S. foreign tax credit limitation purposes, the limitation on foreign income taxes eligible for credit is calculated separately with respect to specific classes of income. In this regard, interest and OID on the New Notes generally will constitute “passive category income” for most U.S. Holders. Additionally, a foreign tax credit for foreign income taxes imposed with respect to the New Notes may be denied where you do not meet a minimum holding period requirement during which you are not protected from risk of loss. The rules governing the foreign tax credit are complex. You are 137

urged to consult your tax advisor regarding the availability of the foreign tax credit under your particular circumstances. Subject to the discussion below under the caption “—U.S. Backup Withholding and Information Reporting,” if you are a Non-U.S. Holder, payments to you of interest and accruals of OID on a New Note generally will not be subject to U.S. Federal income tax unless the income is effectively connected with your conduct of a trade or business in the United States (and if an income tax treaty applies, such income is attributable to a permanent establishment maintained by you in the United States). Sale, Exchange or Other Taxable Disposition If you are a U.S. Holder, upon the sale, exchange or other taxable disposition (including a redemption) of a New Note you will recognize taxable gain or loss equal to the difference, if any, between the amount realized on the sale, exchange or other taxable disposition, other than accrued but unpaid stated interest which will be taxable as ordinary income to the extent not previously included in your gross income, and your adjusted tax basis in the New Note. Your adjusted tax basis in a New Note generally will equal your initial tax basis in a New Note, determined as described under “Consequences of Tendering Your Existing Notes—Issue Price,” increased over time by the amount of OID included in your gross income and decreased by the amount of payments on the New Notes other than payments of stated interest. Any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if you have held the New Note for more than one year as of the date of disposition. Certain noncorporate U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. The deductibility of capital losses is subject to limitations under the Code. Any gain or loss realized on the sale, exchange or other taxable disposition by a U.S. Holder of a New Note generally will be treated as U.S. source gain or loss, as the case may be. As a result, if any such gain is subject to foreign income tax, U.S. Holders may not be able to credit such tax against their U.S. federal income tax liability under the U.S. foreign tax credit limitations of the Code, unless such income tax can be credited (subject to applicable limitations) against U.S. federal income tax due on other income treated as derived from foreign sources. Subject to the discussion below under the caption “—U.S. Backup Withholding and Information Reporting,” if you are a Non-U.S. Holder, any gain realized by you upon the sale, exchange or other taxable disposition of a New Note generally will not be subject to U.S. federal income tax, unless: 

the gain is effectively connected with your conduct of a trade or business in the United States (and if an income tax treaty applies, the gain is attributable to a permanent establishment maintained by you in the United States); or

if you are an individual Non-U.S. Holder, you are present in the United States for 183 days or more in the taxable year of the sale, exchange or other taxable disposition and certain other conditions are met.

U.S. Backup Withholding and Information Reporting Backup withholding and information reporting requirements generally apply to payments of principal of, and interest on, a New Note and to proceeds of the sale or redemption of a New Note, to U.S. Holders. Information reporting generally will apply to accruals of OID and payments of principal of, and interest on, New Notes, and to proceeds from the sale or redemption of, New Notes within the United States, or by a U.S. Payor or U.S. Middleman, to a U.S. Holder (other than an exempt recipient). Backup withholding will be required on payments made within the United States, or by a U.S. Payor or U.S. Middleman, on a New Note to a U.S. Holder, other than an exempt recipient, if the U.S. Holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. Payments within the United States, or by a U.S. Payor or U.S. Middleman, of principal and interest to a Non-U.S. Holder generally will not be subject to backup withholding and information reporting requirements if an appropriate certification is provided by the Non-U.S. Holder to the payor and the payor does not have actual knowledge or a reason to know that the certificate is incorrect.

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Backup withholding is not an additional tax. You generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability or to a refund of the amounts withheld provided the required information is furnished to the IRS in a timely manner. Medicare Contribution Tax on Unearned Income A 3.8% Medicare Tax is generally imposed on the net investment income of U.S. Holders that are individuals, estates, and trusts. “Net Investment Income” generally includes, among other things: (i) gross proceeds from interest other than from the conduct of a non-passive trade or business; (ii) other gross income from a passive trade or business; and (iii) net gain attributable to the disposition of property other than property held in a nonpassive trade or business. As a result, certain U.S. Holders who are individuals, estates or trusts may be required to pay up to an additional 3.8% tax on interest and capital gains earned with respect to the New Notes. The above description is not intended to constitute a complete analysis of all tax consequences relating to the ownership of New Notes. You should consult your own tax advisors concerning the tax consequences of your particular situation. Consequences to U.S. Holders that do not Tender their Existing Notes in the Exchange Offers The Exchange Offers will not result in a taxable event for any U.S. Holders (i) that do not validly tender their Exisitng Notes in the Exchange Offer, (ii) that tender their Existing Notes but validly withdraw the Exchange Offers at or before the Withdrawal Deadline, or (iii) whose Existing Notes are not accepted for exchange.

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DESCRIPTION OF THE NEW NOTES Petróleos de Venezuela, S.A. (the “Issuer”) will issue the new notes (the “New Notes”) under an indenture (the “Indenture”), among the Issuer, PDVSA Petróleo, S.A. (the “Guarantor”), MUFG Union Bank, N.A., as trustee (the “Trustee”), GLAS Americas LLC, as collateral agent (the “Collateral Agent”), Law Debenture Trust Company of New York, as principal paying agent (the “Principal Paying Agent”), as transfer agent (the “Transfer Agent”), as registrar (the “Registrar”), and Banque Internationale à Luxembourg, société anonyme, as Luxembourg listing agent and paying agent. The following is a summary of the material provisions of the Indenture and the Security Documents. It does not include all of the provisions of the Indenture and the Security Documents. You are urged to read the Indenture and the Security Documents because they, and not this summary, define your rights. The terms of the New Notes include those stated in the Indenture. The Security Documents referred to below under the caption “—Security” will define the terms of the agreements that will secure the New Notes. You can obtain a copy of the Indenture, upon written request, at the offices of the Trustee and, for so long as the New Notes are listed on the Official List of the Luxembourg Stock Exchange, at the office of the listing agent in Luxembourg. You can find definitions of certain capitalized terms used in this description under “Certain Definitions.” The Principal Paying Agent will initially act as paying agent and as registrar for the New Notes. You may present New Notes for registration of transfer and exchange at the offices of the registrar, which initially will be the Principal Paying Agent’s corporate trust office. No service fee will be charged for any registration of transfer or exchange or redemption of New Notes, but the Issuer, the Trustee or the Paying Agent may require payment in certain circumstances of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. The Issuer may change any paying agent and registrar without notice to Holders of the New Notes. We intend to apply to list the New Notes on the Official List of the Luxembourg Stock Exchange and to trade them on the Euro MTF market of such exchange, although no assurance can be given as to the approval of said applications, if any. Brief Description of the New Notes and the Guaranty The New Notes. The New Notes will: 

be senior secured Obligations of the Issuer;

rank effectively senior in right of payment to all existing and future senior unsecured Obligations of the Issuer to the extent of the value of the Collateral, and any outstanding amounts due after the foreclosure of the Collateral will rank equally in right of payment with all existing and future senior unsecured Obligations of the Issuer (other than Obligations preferred by statute or operation of law);

rank senior in right of payment to all existing and future Obligations of the Issuer that by their terms are subordinated to the New Notes;

be effectively subordinated to all existing and future secured Indebtedness of the Issuer that is secured by liens on assets that do not constitute the Collateral to the extent of the value of the assets securing such Indebtedness; and

be structurally subordinated to all existing and future Indebtedness of the Issuer’s subsidiaries (other than the Guarantor).

The Guaranty. The full and prompt payment of all Obligations of the Issuer under the Indenture and the New Notes will be unconditionally guaranteed by the Guarantor (the “Guaranty”). The Guaranty will: 

be a senior secured Obligation of the Guarantor;

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rank effectively senior in right of payment to all existing and future senior unsecured Obligations of the Guarantor to the extent of the value of the Collateral, and any outstanding amounts due after the foreclosure of the Collateral will rank equally in right of payment with all existing and future senior unsecured Obligations of the Guarantor (other than Obligations preferred by statute or by operation of law);

be effectively subordinated to all existing and future secured indebtedness of the Guarantor that is secured by liens on assets that do not constitute the Collateral to the extent of the value of the assets securing such indebtedness.

As of June 30, 2016, the Issuer and the Guarantor had total indebtedness of U.S.$37,345 million (of which U.S.$2,583 million was secured indebtedness). As of June 30, 2016, CITGO Holding and CITGO had total indebtedness of U.S.$4,082 million and U.S.$1,927 million, respectively. As of the same date, on a consolidated basis, CITGO had U.S.$817 million of available capacity under its senior secured revolving credit facility and U.S.$67 million of available capacity under its accounts receivable securitization facility. As of June 30, 2016, the non-Guarantor subsidiaries (excluding CITGO Holding) had total indebtedness of U.S.$3,863 million (of which U.S.$760 million was secured indebtedness). Principal, Maturity and Interest The Issuer will issue the New Notes in fully registered form without coupons. The New Notes will have minimum denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof. No additional Notes shall be issued under the Indenture. The New Notes will mature on the fourth anniversary of the Settlement Date, unless earlier redeemed in accordance with the terms of the New Notes. See “—Redemption” below. Interest on the New Notes will accrue at the rate of 8.50% per annum and will be due and payable in cash semi-annually in arrears on each six month anniversary of the Settlement Date (each an “Interest Payment Date”). Principal payments on the New Notes will be payable annually, in four equal installments, on each anniversary of the Settlement Date. The first principal installment will be payable on the first anniversary of the Settlement Date, the second will be payable on the second anniversary of the Settlement Date, the third will be payable on the third anniversary of the Settlement Date, and the fourth will be payable on the Maturity Date (each a “Principal Payment Date,” and together with the Interest Payment Dates, the “Payment Dates”). For the avoidance of doubt, if any such Payment Date is not a Business Day, such Payment Date will be the next succeeding Business Day. Each payment of principal and/or interest will be made to the Persons who are registered Holders of the New Notes at the close of business of the date which is fifteen calendar days immediately preceding the applicable Payment Date (whether or not a Business Day). Interest on the New Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30day months. Collateral The New Notes, the Guaranty and all other Obligations of the Issuer and the Guarantor under the Transaction Documents will be secured on a first-priority basis by the Collateral, which, pursuant to the terms of the Security Documents will include a first-priority security interest in 50.1% of the outstanding Capital Stock of CITGO Holding, held by PDV Holding Inc. (the “Pledgor”). The Issuer, the Guarantor, the Pledgor, the Trustee and the Collateral Agent shall enter into on or before the Issue Date, the Security Documents establishing the terms of the first-priority security interests and Liens that secure the New Notes, the Guaranty and all other Obligations of the Issuer and the Guarantor under the Transaction Documents. On or before the Issue Date, the Issuer and the Guarantor shall ensure that all security interests in the Collateral are duly created and enforceable, and perfected.

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The ability of the holders of the New Notes to realize the full value of the Collateral upon an enforcement action will be subject to several additional limitations and risks as described in “Risk Factors—Risks Relating to the New Bonds, the Guaranty and the Collateral,” including the specific Risk Factors “—It may be difficult to realize the value of the Collateral pledged to secure the New Notes in a timely manner or at all,” “The value of the Collateral securing the New Notes may not be sufficient to satisfy all our obligations under the New Notes,” “—The Exchange Offers described herein constitute separate and distinct Exchange Offers and any modifications to the terms of one Exchange Offer will not impact the terms of the other Exchange Offer. This may impact the level of participation in each Exchange Offer and your rights with respect to the Collateral securing the New Notes” and “—The Collateral may not be enforceable in the event PDVSA is subject to bankruptcy or reorganization proceedings.” In connection with any enforcement action with respect to the Collateral or any insolvency or liquidation proceeding, all proceeds of any Collateral securing the Obligations, after paying the fees and expenses of the Trustee, and any expenses of selling or otherwise foreclosing on the Collateral, will be applied to the repayment of the New Notes, and all other Obligations of the Issuer and the Guarantor under the Transaction Documents. Security Documents; Further Assurances; etc. (1) On the Issue Date, the Collateral Agent and the Trustee shall have received an Officer’s Certificate of the Issuer and legal opinions from external counsel satisfactory to the Collateral Agent (subject to customary exceptions and qualifications) with respect to each Security Document, including that all actions have been taken as are necessary to perfect the Liens purported to be created by each such Security Document. (2) The Issuer shall take, or cause to be taken, all actions necessary (and/or requested by the Collateral Agent) to maintain each Security Document in full force and effect and enforceable in accordance with its terms and to maintain and preserve the Liens created by such Security Documents and the first-priority thereof. In furtherance of the foregoing, the Issuer shall ensure that all of its after-acquired property (including 50.1% of any capital stock issued by CITGO Holding) intended to be covered by the Security Documents shall become subject to the Lien of the Security Documents having the priority contemplated thereby promptly upon the acquisition thereof. (3) Except as permitted under “—Limitation on Liens” below, the Issuer will not, and will not permit any Subsidiary to, assume or suffer to exist any Lien on any portion of the Collateral; it being acknowledged and agreed that nothing in the Transaction Documents shall or is intended to prohibit or restrict the Pledgor’s or any other Person’s right to dispose of or create any Liens over any remaining portion of the shares of CITGO Holding that are not part of the Collateral. (4) On an annual basis, the Issuer shall furnish, or cause to be furnished, to the Trustee and the Collateral Agent, an opinion or opinions of legal counsel either stating that, in the opinion of such counsel, such actions have been taken with respect to (i) amending or supplementing the Security Documents (or providing additional Security Documents, notifications or acknowledgments) as is necessary to subject all the Collateral (including any after-acquired Property of the Issuer intended to be part of the Collateral) to the first-priority Lien of the Security Documents and (ii)(A) the recordation of the Security Documents (including, without limitation, any amendment or supplement thereto) and any other requisite documents and (B) the execution and filing of any financing statements and continuation statements as are necessary to maintain the first-priority Liens purported to be created by the Security Documents and reciting the details of such action or stating that, in the opinion of such counsel, no such action is necessary to maintain such first-priority Liens. Such opinion or opinions of counsel shall also describe the recordation of the Security Documents and any other requisite documents and the execution and filing of any financing statements and continuation statements, or the taking of any other action that will, in the opinion of such counsel, be required to maintain the Liens purported to be created by the Security Documents after the date of such opinion. Notwithstanding anything to the contrary contained herein or in applicable law, none of the Trustee, the Principal Paying Agent or the Collateral Agent shall have responsibility for: (i) preparing, recording, filing, rerecording or re-refiling any financing statement, perfection statement, continuation statement or other instrument in any public office or for otherwise ensuring the perfection or maintenance of any security interest granted pursuant to, or contemplated by, the Indenture and the Security Documents; (ii) taking any necessary steps to preserve rights 142

against any parties with respect to any Collateral; (iii) taking any action to protect against any diminution in value of the Collateral; or (iv) monitoring or confirming the Issuer’s or the Guarantor’s compliance with any of its covenants, including but not limited to, covenants regarding the granting, perfection or maintenance of any security interest. Release of Collateral Subject to the terms of the Security Documents, the Issuer and the Guarantor will be entitled to the release of Collateral from the Liens securing the New Notes, the Guaranty and all other Obligations of the Issuer and the Guarantor under the Transaction Documents and under any one or more of the following circumstances: (1) in accordance with the Indenture and the applicable Security Documents if at any time the Collateral Agent forecloses upon or otherwise exercises remedies against any Collateral resulting in the sale or disposition thereof; (2)

as described under “—Modification of the Indenture” herein;

(3) upon payment in full of the principal of, together with accrued and unpaid interest on, the New Notes and all other Obligations that are due and payable at or prior to the time such principal, together with accrued and unpaid interest, is paid; and (4) upon a legal defeasance or covenant defeasance under the Indenture as described below under “— Defeasance” or a discharge of the Indenture as described under “—Satisfaction and Discharge.” Redemption Optional Redemption. The Issuer may redeem the New Notes in whole or in part at any time or from time to time, at its option, at a redemption price equal, determined by the Issuer, to the greater of (1) 100% of the then outstanding principal amount of the New Notes to be redeemed, and (2) the sum of the present values of the remaining scheduled payments of principal, interest (exclusive of interest accrued but unpaid, if any, to the date of redemption) and Additional Amounts, if any, on the New Notes to be redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest, if any, on the principal amount being redeemed and Additional Amounts, if any, to, but excluding, the date of redemption. The Issuer and its Subsidiaries may acquire New Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws. Selection and Notice of Redemption. Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to the Trustee, the Principal Paying Agent, and each holder of the New Notes to be redeemed at its registered address. Notices of redemption shall be irrevocable and unconditional. Notice of redemption shall identify the New Notes to be redeemed and shall state the redemption date (and that interest thereon will cease to accrue on and after such date), the redemption price, and the place of payment of the redemption price. If New Notes are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed, and that a new New Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original New Note. For so long as the New Notes are listed on the Luxembourg Stock Exchange, the Issuer will cause notices of redemption to also be published as provided under “— Notices.” Partial Redemption. In the event that the Issuer elects to redeem less than all of the New Notes at any time and the New Notes are global notes, selection of the New Notes for redemption will be made in accordance with the applicable procedures of the Depositary. If the New Notes are not global notes, the Trustee shall select the New Notes to be redeemed as follows: (1) if the New Notes are listed, in compliance with the requirements of the principal securities exchange on which the New Notes are listed, which is expected to be the Luxembourg Stock Exchange; or 143

(2) if such securities exchange has no requirement governing redemptions of the principal securities exchange or if the New Notes are not so listed on a securities exchange, on a pro rata basis, by lot or by such method as the Trustee may reasonably determine is fair and appropriate. No New Notes of a principal amount of U.S.$150,000 shall be redeemed in part, and New Notes of a principal amount in excess of U.S.$150,000 may be redeemed in part in multiples of U.S.$1,000 only. New Notes called for redemption become due on the date fixed for redemption. The Issuer will pay the redemption price for any New Note together with accrued and unpaid interest, and Additional Amounts, if any, thereon, to the date of redemption. On and after the redemption date, interest will cease to accrue on New Notes or portions thereof called for redemption as long as the Issuer has deposited with the paying agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. Upon redemption of any New Notes by the Issuer, such redeemed New Notes will be cancelled. Redemption for Tax Reasons. The Issuer may, at its option, at any time redeem, in whole but not in part, upon not less than 30 days, nor more than 60 days’ notice, the New Notes at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) and Additional Amounts, if any, to the redemption date, if as a result of: (1) any amendment to, or change in, the laws (or rules or regulations promulgated thereunder) of a Relevant Taxing Jurisdiction, or (2) any amendment to or change in an official interpretation or application regarding such laws, rules or regulations (including a holding, judgment or order by a court or administrative body of competent jurisdiction), which amendment, change, interpretation or application is proposed and becomes effective on or after the Issue Date, the Issuer has become or would become obligated to pay, on or before the next date on which any amount would be payable with respect to such New Notes, any Additional Amounts in excess of those attributable to Taxes that are imposed, deducted or withheld at a rate of 4.95% (or such lower rate as may be contemplated by any regulation issued by the National Executive or new law enacted by the Venezuelan National Assembly or decision by the President of Venezuela exempting payments of interest under the New Notes from Venezuelan income tax or reducing the current 4.95% income tax withholding rate) on or from any payments of interest under the New Notes (See “Tax Considerations—Venezuelan Taxation”) and such obligations cannot be avoided by taking commercially reasonable measures available to the Issuer (which, for the avoidance of doubt, do not include changing the jurisdiction of incorporation of the Issuer); provided that: (a) no such notice of redemption may be given earlier than 90 days prior to the earliest date on which the Issuer would be obligated to pay such Additional Amounts were a payment in respect of the New Notes then due and payable, and (b) at the time such notice is given, such obligation to pay such Additional Amounts remains in effect. No such redemption shall be effective unless and until the Principal Paying Agent receives the amount payable upon redemption as set forth above. Immediately prior to the publication of any notice of redemption pursuant to this provision, the Issuer will deliver to the Trustee and the Principal Paying Agent: (i) an Officer’s Certificate (A) stating that (i) the amendment, change, interpretation or application as a result of which the Issuer has or will become obligated to pay such Additional Amounts is effective with respect to all companies in the Relevant Taxing Jurisdiction and (ii) the Issuer is entitled to effect such redemption and (B) setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and 144

(ii) an Opinion of Counsel (which may be Issuer’s counsel) to the effect that (A) the Issuer has or will become obligated to pay such Additional Amounts as a result of such amendment, change, interpretation or application and (B) the amendment, change, interpretation or application as a result of which the Issuer has or will become obligated to pay such Additional Amounts is effective with respect to all companies in the Relevant Taxing Jurisdiction. No Mandatory Redemption; Open Market Purchases. Other than as described below in “—Limitation on Sales of Collateral and Restricted Assets,” the Issuer is not required to make any mandatory redemption or sinking fund payments with respect to the New Notes. The Issuer and its Subsidiaries may acquire New Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws. Additional Amounts All payments made by the Issuer or the Guarantor under, or with respect to, the New Notes will be made free and clear of, and without withholding or deduction for or on account of, any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (collectively, “Taxes”) imposed or levied by or on behalf of Venezuela or any other jurisdiction in which the Issuer or the Guarantor is organized or resident for tax purposes or any political subdivision or taxing authority or governmental agency thereof or therein having the power to tax of any jurisdiction from or through which any payment on the New Notes is made (each, a “Relevant Taxing Jurisdiction”), unless the Issuer or the Guarantor, as the case may be, is required to withhold or deduct Taxes by law or by the official interpretation or administration thereof. If the Issuer or the Guarantor is so required to withhold or deduct any amount for, or on account of, such Taxes of any Relevant Taxing Jurisdiction from any payment made under or with respect to the New Notes, the Issuer or the Guarantor, as the case may be, will pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each holder (including Additional Amounts) after such withholding or deduction will not be less than the amount such holder would have received if such Taxes had not been required to be withheld or deducted; provided, however, that the foregoing obligation to pay Additional Amounts does not apply to: (1) any Taxes that would not have been so imposed but for the existence of any present or former connection between the relevant holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of power over the relevant holder, if the relevant holder is an estate, nominee, trust, partnership, limited liability company or corporation) and the Relevant Taxing Jurisdiction (other than the receipt of such payment or the ownership or holding of or the execution, delivery, registration or enforcement of such Note or Guaranty); (2) any estate, inheritance, gift, sales, excise, transfer, personal property tax or similar Tax, assessment or governmental charge; (3) any Taxes that would not have been so imposed but for the presentation of such New Notes (where presentation is required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever is later, except to the extent that the beneficiary or holder thereof would have been entitled to Additional Amounts had the New Notes been presented for payment on any date during such 30 day period; (4) any Taxes that would not have been so imposed or would have been imposed at a lower rate if the holder of the Note had provided to the Issuer or the Guarantor, as the case may be, any information, certification, documentation or evidence required under applicable law, rules, regulations or generally published administrative practice of the Relevant Taxing Jurisdiction for such Taxes not to be imposed or to be imposed at a lower rate (provided that (a) such information, certification, documentation or evidence is required by the applicable law, rules, regulations or generally published administrative 145

practice of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold all or part of such Taxes and (b) at least 30 days prior to the first payment date with respect to which such information, certification, documentation or evidence is required under the applicable law, rules, regulations or generally published administrative practice of the Relevant Taxing Jurisdiction, the relevant holder at that time has been notified in writing by the Issuer, the Guarantor or any other Person through whom payment may be made, that such information, certification, documentation or evidence is required to be provided to the Issuer or Guarantor, as the case may be); (5) any Tax imposed other than by way of withholding or deduction; or (6) any Tax imposed on overall net income (or any branch profits tax imposed in lieu thereof). Such Additional Amounts will also not be payable where, had the beneficial owner of the Note been the Holder of the Note it would not have been entitled to payment of Additional Amounts by reason of clauses (1) to (6) inclusive above. Notwithstanding the foregoing, the limitations on the Issuer’s obligation to pay Additional Amounts set forth in clause (4) above shall not apply if the provision of information, certification, documentation or other evidence described in such clause (4) would be substantially more onerous, in form, in procedure or in the substance of information disclosed, to a holder or beneficial owner of a Note (taking into account any relevant differences between U.S. law, rules, regulations or administrative practice and those of the Relevant Taxing Jurisdiction) than comparable information or other reporting requirements imposed under U.S. tax law, regulations and administrative practice (such as IRS Forms W-8IMY, W-8BEN-E and W-9). The foregoing provisions will survive any termination or discharge of the Indenture and shall apply mutatis mutandis to any taxing jurisdiction with respect to any successor Person to the Issuer. The Issuer will (i) make such withholding or deduction of Taxes as is required under applicable law and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law. The Issuer will use reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes, and will furnish such certified copies to the Principal Paying Agent promptly after the date the payment of any Taxes so deducted or so withheld is due pursuant to applicable law or, if such tax receipts are not reasonably available, furnish such other documentation that provides reasonable evidence of such payment. In the event that Additional Amounts actually paid with respect to the New Notes as described above are based on rates of deduction or withholding of withholding taxes in excess of the appropriate rate applicable to the holder of such New Notes, and, as a result such holder is entitled to make a claim for a refund or credit in respect of such excess from the authority imposing such withholding tax, then by accepting such New Notes such holder shall be deemed to have assigned and transferred all right, title, and interest to any such claim for a refund or credit in respect of such excess to the Issuer. At least 30 days prior to each date on which any payment under or with respect to the New Notes is due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Issuer will be obligated to pay Additional Amounts with respect to such payment, the Issuer will deliver to the Trustee and Principal Paying Agent an Officer’s Certificate stating the fact that such Additional Amounts will be payable and the amounts so payable and will set forth such other information necessary to enable the Principal Paying Agent to remit such Additional Amounts to Holders of New Notes on the payment date. Each such Officer’s Certificate shall be relied upon until receipt of a new Officer’s Certificate addressing such matters. The Issuer will pay any present or future stamp, transfer, court or documentary taxes, or any other excise or property taxes, charges or similar levies or Taxes which arise in any Relevant Taxing Jurisdiction from the initial execution, delivery or registration of the New Notes, the Indenture or any other document or instrument in relation thereto and the enforcement of the New Notes following the occurrence and during the continuance of any Default, excluding all such Taxes, charges or similar levies imposed by any Relevant Taxing Jurisdiction outside of Venezuela other than those resulting from, or required to be paid in connection with, the enforcement of the New 146

Notes or any other document or instrument in relation thereto following the occurrence and during the continuance of any Default with respect to the New Notes, and the Issuer will agree to indemnify each of the Trustee, the Principal Paying Agent and the Holders of the New Notes for any such Taxes paid by the Trustee, the Principal Paying Agent or such Holders. Whenever this offering circular, the Indenture or the New Notes mention, in any context, the payment of principal, premium or interest, if any, or any other amount payable under or with respect to the New Notes by the Issuer or the Guaranty with respect to the Guarantor, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. Certain Covenants Set forth below are summaries of certain covenants contained in the Indenture. Limitation on Sales of Collateral and Restricted Assets. (1) The Issuer will not, and will not permit any Subsidiary to, cause, make or suffer to exist a Collateral Disposition; provided however, that Pledgor may assign and transfer the capital stock of CITGO Holding to a direct, wholly-owned subsidiary of Pledgor, which subsidiary acknowledges in writing that it accepts such assignment and transfer subject to the terms and provisions of the CITGO Holding Share Pledge Agreement. (2) The Issuer will not, and will not permit any Subsidiary, to make a disposition of CITGO Restricted Assets unless: (a) the Subsidiary receives consideration at the time of such disposition at least equal to the fair market value (as determined in good faith by the such Subsidiary) of the CITGO Restricted Assets sold or otherwise disposed of; and (b) at least 75% of the consideration therefor received by such Subsidiary is in the form of cash or Cash Equivalents or Investments in one or more Similar Businesses or other assets that could be acquired under clause (b) of paragraph (3) below; provided that the amount of: (i)

any liabilities (as shown on such Subsidiary’s most recent balance sheet or in the footnotes thereto) of such Subsidiary, other than liabilities that are by their terms subordinated to the Subsidiary’s outstanding notes or that are owed to the Subsidiary, that are assumed by the transferee of any such assets and for which the Subsidiaries have been validly released by all creditors in writing, and

(ii)

any securities received by such Subsidiary from such transferee that are converted by such Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such disposition,

shall be deemed to be cash for purposes of this provision and for no other purpose. (3) Within 365 days after the receipt of any Net Available Cash from a disposition of CITGO Restricted Assets, the Net Available Cash shall be used to: (a)

permanently repay Indebtedness for borrowed money of CITGO Holding or its subsidiaries; or

(b) (i) make an investment in any Person principally engaged in one or more Similar Businesses, (ii) acquire assets or (iii) make capital expenditures or improvements or repairs that, in the case of each of clauses (ii) and (iii), (x) are used or useful in a Similar Business or (y) replace the businesses, properties and/or assets that were disposed of in disposition of CITGO Restricted Assets.

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Pending the final application of any Net Available Cash pursuant to this covenant, the holder of such Net Available Cash may apply such Net Available Cash temporarily to reduce Indebtedness outstanding under a revolving credit facility. (4) Any Net Available Cash not invested or applied as provided and within the time period set forth in the preceding paragraph, but only to the extent of amounts in excess of U.S.$100.0 million, will be deemed to constitute “Excess Proceeds;” provided that if CITGO Holding and its subsidiaries have no Indebtedness for borrowed money outstanding, any Net Available Cash (or excess thereof) from such asset sales shall be deemed to constitute “Excess Proceeds.” (5) The Issuer shall, within 10 days after receipt of such Net Available Cash constituting Excess Proceeds make an offer (the “Offer”) to purchase Notes at a purchase price equal to 100% of the principal amount plus accrued interest to the date of purchase; provided that, pending the final application of any proceeds from such Net Available Cash in accordance with this clause (5), the Collateral Agent shall hold such proceeds in a New York account over which it has a first-priority perfected security interest for the benefit of the holders of the New Notes in accordance with the Indenture and the Security Documents. (6) If the Offer is for less than all of the outstanding Notes and Notes in an aggregate principal amount in excess of the purchase amount are tendered and not withdrawn pursuant to the offer, the Issuer will purchase Notes having an aggregate principal amount equal to the purchase amount on a pro rata basis, with adjustments so that only Notes in multiples of U.S.$1,000 will be purchased and that only Notes with a minimum denomination of U.S.$150,000 or in multiples of U.S.$1,000 in excess thereof will remain outstanding following such purchase. (7) The Issuer will comply, to the extent applicable, with the requirements of Section 14(e)-1 of the Exchange Act and any other applicable securities laws or regulations in connection with any repurchase of Notes pursuant to this covenant. To the extent that the provisions of any applicable securities laws or regulations conflict with provisions of this covenant, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof. Limitation on Liens. The Issuer will not, and will not cause or permit any of its Subsidiaries to, incur, permit or suffer to exist any Liens (the “Initial Lien”), of any kind against or upon any Property or assets of the Issuer or any of its Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, to secure any Indebtedness, except (a) in the case of any Property or assets that constitute Collateral, the Permitted Collateral Liens and (b) in the case of Property or assets that do not constitute Collateral, (1) Permitted Liens or (2) Liens on Property or assets that are not Permitted Liens (x) if the New Notes and the Indenture (or the Guaranty in the case of Liens of a Guarantor) are secured by such Lien equally and ratably with (or prior or senior thereto, in the event such Indebtedness is subordinated in right of payment to the New Notes) all other Indebtedness of the Issuer or any of its Subsidiaries secured by such Lien and (y) if such Lien secures Obligations subordinated to the New Notes in right of payment, such Lien shall be subordinated to a Lien securing the New Notes in the same Property as that securing such Lien to the same extent as such subordinated Obligations are subordinated to the New Notes. Any Lien created for the benefit of the Secured Parties pursuant to clause (b)(2) of the preceding paragraph shall provide by its terms that such Lien will be automatically and unconditionally released and discharged upon release and discharge of the Initial Lien. Limitation on Consolidation, Merger, Sale or Conveyance. The Issuer will not, in one or a series of transactions, consolidate or amalgamate with or merge into any corporation or convey, lease or transfer substantially all of its properties, assets or revenues to any Person or entity (other than a direct or indirect subsidiary of the Issuer) or permit any person (other than a direct or indirect subsidiary of the Issuer) to merge with or into it unless: 

either the Issuer is the continuing entity or the Person (the “successor company”) formed by the consolidation or into which the Issuer is merged or that acquired or leased the property or assets of the Issuer will assume (jointly and severally with the Issuer unless the Issuer will have ceased to exist as a result of that merger, consolidation or amalgamation), by a supplemental indenture, all of the Issuer’s obligations under the Indenture, the Security Documents and the New Notes;

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the successor company (jointly and severally with the Issuer unless the Issuer will have ceased to exist as part of the merger, consolidation or amalgamation) agrees to indemnify each Holders of New Notes against any tax, assessment or governmental charge thereafter imposed on the Holders of New Notes solely as a consequence of the consolidation, merger, conveyance, transfer or lease with respect to the payment of principal of, or interest, the New Notes;

immediately after giving effect to the transaction, no Default or Event of Default has occurred and is continuing; and

the Issuer has delivered to the Trustee, the Principal Paying Agent and the Collateral Agent an Officer’s Certificate and an Opinion of Counsel, each stating that the transaction complies with the terms of the Indenture and the Security Documents and that all conditions precedent provided for in the Indenture and the Security Documents and relating to the transaction have been complied with.

Notwithstanding anything to the contrary in the foregoing, so long as no Default or Event of Default under the Indenture, the Security Documents or the New Notes will have occurred and be continuing at the time of the proposed transaction or would result from the transaction: 

the Issuer may merge, amalgamate or consolidate with or into, or convey, transfer, lease or otherwise dispose of all or substantially all of its properties, assets or revenues to a direct or indirect Subsidiary of the Issuer in cases when the Issuer is the surviving entity in the transaction and the transaction would not have a material adverse effect on the Issuer and its Subsidiaries taken as a whole, it being understood that if the Issuer is not the surviving entity, the Issuer will be required to comply with the requirements set forth in the previous paragraph; or

any direct or indirect Subsidiary of the Issuer may merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of assets to, any Person (other than the Issuer or any of its Subsidiaries or affiliates) in cases when the transaction would not have a material adverse effect on the Issuer and its Subsidiaries taken as a whole; or

any direct or indirect Subsidiary of the Issuer may merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of assets to, any other direct or indirect Subsidiary of the Issuer; or

any direct or indirect Subsidiary of the Issuer may liquidate or dissolve if the Issuer determines in good faith that the liquidation or dissolution is in the best interests of the Issuer, and would not result in a material adverse effect on the Issuer and its Subsidiaries taken as a whole and if the liquidation or dissolution is part of a corporate reorganization of the Issuer; or

the Issuer may omit to comply with any term, provision or condition set forth in certain covenants or any term, provision or condition of the indenture, if before the time for the compliance the Holders of at least a majority in principal amount of the outstanding New Notes waive the compliance, but no waiver can operate except to the extent expressly waived, and, until a waiver becomes effective, the Issuer’s obligations and the duties of the Trustee in respect of any such term, provision or condition will remain in full force and effect.

Reports to Holders. The Issuer shall provide the Trustee, the Principal Paying Agent and the Holders of the New Notes (1) within 180 days following the end of each fiscal year of the Issuer after the Issue Date, the annual consolidated financial statements (including the notes thereto) of the Issuer, prepared in accordance with IFRS and presented in the English language, and a report thereon by the Issuer’s certified independent accountants; and (2) within 180 days following the end of the second fiscal quarter in each fiscal year of the Issuer beginning with the second fiscal quarter ending after the Issue Date, the semi-annual consolidated financial 149

statements of the Issuer, prepared in accordance with IFRS and presented in the English language; provided that each annual and semi-annual financial statement shall include a “management discussion and analysis” or other report of management providing an overview in reasonable detail of the results of operations and financial condition of the Issuer and its Subsidiaries; Concurrently with providing the Trustee, the Principal Paying Agent and the Holders of the New Notes with the information described above, the Issuer will post copies of such information on a web site maintained by the Issuer or provide substantially comparable public availability of such information. Delivery of reports, information and documents to the Trustee, the Principal Paying Agent and the Collateral Agent is for informational purposes only and their respective receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s, the Guarantor’s or any other Person’s compliance with any of its covenants under the Indenture or the New Notes (as to which the Trustee, the Principal Paying Agent and the Collateral Agent, as applicable, are entitled to rely exclusively on Officer’s Certificates). None of the Trustee, the Principal Paying Agent or the Collateral Agent shall be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuer’s, the Guarantor’s or any other Person’s compliance with the covenants described herein or with respect to any reports or other documents filed under the Indenture. For so long as any of the New Notes remain outstanding and constitute “restricted securities” under Rule 144, the Issuer will furnish to the Holders of the New Notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. For so long as the New Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, the above information will also be made available through the offices of the paying agent in Luxembourg. See “—Listing.” Ratings. The Issuer will maintain international foreign currency global ratings by at least two of the three Rating Agencies for as long as the New Notes remain outstanding. U.S. Dollar Equivalent. For purposes of determining compliance with any covenant in the Indenture that is limited or otherwise refers to a specified amount of U.S. dollars, the amount of any item denominated in a currency other than U.S. dollars shall be the U.S. Dollar Equivalent of such item. Additional Covenants. The Indenture will also contain customary covenants with respect to, among other things, the following matters: (1) payment of principal and interest; (2) maintenance of corporate existence; (3) maintenance of insurance; (4) compliance with laws, (5) maintenance of books and records and (6) obtaining and maintaining of all necessary governmental approvals to comply with the Issuer’s obligations under the New Notes. Events of Default The following events are defined in the Indenture as “Events of Default”: (1) the failure to pay the principal of, or premium, if any, on any New Notes, when such principal becomes due and payable, at any of the Principal Payment Dates, upon redemption or otherwise; (2) the failure to pay interest and Additional Amounts, if any, on any New Notes when the same becomes due and payable and the default continues for a period of 30 days; (3) a default in the observance or performance of any other covenant or agreement contained in the Indenture (other than the payment of the principal of, or premium, if any, or interest and Additional Amounts, if any, on any New Note) which default continues for a period of 60 days after the Issuer receives written notice specifying the default (and demanding that such default be remedied) from Holders of at least 25% of the Outstanding principal amount of the New Notes;

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(4) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Issuer or any of its Significant Subsidiaries, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 30 days from the date of acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final stated maturity or which has been accelerated (in each case with respect to which the 30-day period described above has elapsed), aggregates U.S. $100 million or more at any time; (5) one or more judgments in an aggregate amount in excess of U.S. $100 million shall have been rendered against the Issuer or any of its Significant Subsidiaries and such judgments remain undischarged, unpaid or, unstayed, unbonded or not suspended by agreement for a period of 60 days after such judgment or judgments become final and non-appealable; (6) the Issuer or any Significant Subsidiary shall (a) apply for or consent to the appointment of a receiver, conciliador, trustee, fiscal agent liquidator or similar official for all or any substantial part of the Property of the Issuer or such Significant Subsidiary, (b) make a general assignment for the benefit of the creditors of the Issuer or such Significant Subsidiary, (c) be adjudicated bankrupt (declaración de quiebra), in reorganization (concurso mercantil) or insolvent, or (d) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization (concurso mercantil) or seeking to take advantage of any applicable insolvency law; (7) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Issuer or any Significant Subsidiary, in an involuntary case or proceeding under any applicable bankruptcy, insolvency, suspension of payments, concurso mercantil, quiebra, reorganization or other similar law, or (B) a decree or order adjudging the Issuer or any Significant Subsidiary bankrupt or insolvent, or suspending payments, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Issuer or any Significant Subsidiary under any applicable law, or appointing a custodian, receiver, liquidator, assignee, fiscal agent, trustee, síndico, conciliador, sequestrator or other similar official of the Issuer or any Significant Subsidiary or of any substantial part of the property of the Issuer or any Significant Subsidiary, or ordering the winding up or liquidation of the affairs of the Issuer or any Significant Subsidiary, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; (8) any of the New Notes, the Indenture or any part thereof, shall cease to be in full force and effect (except as contemplated by the terms thereof) or is declared to be null and void and unenforceable in a judicial proceeding or inadmissible in evidence in the courts of Venezuela, or the Issuer shall contest the enforceability of, deny or disaffirm its material obligations under the New Notes or the Security Documents; and (9) except as expressly permitted by the indenture and the Security Documents, any of the Security Documents shall for any reason cease to be in full force and effect in all material respects, or the Issuer or any Subsidiary shall so assert, or any security interest created, or purported to be created, by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby, except solely as a result of the Collateral Agent taking or refraining from taking any action in its sole control. Acceleration of Maturity, rescission and Annulment. If an Event of Default (other than an Event of Default specified in clauses (6) or (7) above) shall occur and be continuing and has not been waived, Holders of at least 25% in principal amount of Outstanding New Notes may declare the principal of, and premium, if any, accrued interest and Additional Amounts, if any, on all the New Notes to be due and payable by notice in writing to the Issuer and the Trustee specifying the Event of Default and that it is a “notice of acceleration,” and the same shall become immediately due and payable.

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If an Event of Default specified in clauses (6) or (7) above occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest and Additional Amounts, if any, on all of the Outstanding New Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of Trustee any Holder. The Indenture will provide that, at any time after such notice of acceleration and before a judgment or decree for payment of the money due has been obtained by the Trustee as described in the preceding paragraphs, the Holders of a majority in principal amount of the New Notes, by written notice delivered to the Issuer and the Trustee, may rescind and cancel such declaration and its consequences: (a) if the rescission would not conflict with any judgment or decree; (b) if all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, interest or Additional Amounts, if any, that has become due solely because of the acceleration; (c) if the Issuer has paid or deposited with the Principal Paying Agent (to the extent the payment of such interest is lawful) interest on overdue installments of interest and overdue principal and premium, if any, and Additional Amounts, if any, which has become due otherwise than by such declaration of acceleration; and (d) if the Issuer has paid or deposited with the Principal Paying Agent the reasonable compensation of the Trustee and the Principal Paying Agent and reimbursed the reasonable expenses, disbursements, indemnity amounts and advances of each of the Trustee, the Principal Paying Agent and the Collateral Agent, and their respective agents, and counsel under the Indenture. No such rescission shall affect any subsequent Default or impair any right consequent thereto. The Holders of a majority in principal amount of the New Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or premium, if any, interest or Additional Amounts, if any, on any New Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then Outstanding New Notes voting as a single class may direct the Trustee in its exercise of any trust or power. The Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Holder may pursue any remedy with respect to the Indenture or the New Notes unless: (1) such Holder has previously given the Trustee notice that an Event of Default is continuing; (2) Holders of at least 25% in aggregate principal amount of the then Outstanding New Notes voting as a single class have requested the Trustee to pursue the remedy; (3) such Holders have offered the Trustee and the Collateral Agent security or indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and (5) Holders of a majority in aggregate principal amount of the then Outstanding New Notes voting as a single class have not given the Trustee a direction inconsistent with such request within such 60-day period.

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Under the Indenture, the Issuer will be required to provide an Officer’s Certificate to the Trustee and the Principal Paying Agent promptly upon any Officer obtaining knowledge of any Event of Default that has occurred and is continuing (provided that such Officer’s Certificate shall be provided at least annually whether or not such Officer knows of any such Event of Default) and, if applicable, describe such Event of Default and the status thereof. If a Default or an Event of Default occurs and is continuing, and is actually known to a responsible officer of the Trustee, the Trustee will notify each Holder (or cause each Holder to be notified) as provided herein under “— Notices” of the Default or Event of Default within the earlier of 90 days after such Default occurs and thirty (30) days after written notice of such Default is received by a Responsible Officer of the Trustee; provided that except in the case of a Default or an Event of Default in payment of principal of, premium, if any, or interest on any New Notes, the Trustee may withhold the notice to the Holders if and so long as a committee of its trust officers in good faith determines that withholding the notice is in the interest of the Holders. Defeasance The Indenture will provide that the Issuer may, at its option, terminate (i) all of its obligations with respect to the notes (“defeasance”), except for certain obligations, including those regarding any trust established for a defeasance and obligations relating to the transfer and exchange of the notes, to replace mutilated, destroyed, lost or stolen notes and to maintain agencies with respect to the notes or (ii) its obligations under the covenants set forth in the Indenture and the failure to comply with such obligations shall not constitute an Event of Default with respect to the notes issued under the Indenture (“covenant defeasance”). In order to exercise either defeasance or covenant defeasance, the Issuer must irrevocably deposit in trust, for the benefit of the Noteholders, with the Trustee or its designee cash, cash equivalents or U.S. government obligations, or any combination thereof, in such amounts as will be sufficient in the opinion of an internationally or nationally recognized firm of independent certified public accountants, investment bank or consulting firm (delivered to the Issuer, the Trustee and the Principal Paying Agent) to pay the principal, premium, if any, and interest (including Additional Amounts, if any) on the notes then outstanding on the maturity date of the notes, and comply with certain other conditions including the delivery of an opinion of counsel as to certain tax matters. Provisions Relating to the Collateral. In addition to the actions described above, in the event of the declaration of any Event of Default, the Trustee may, at the written direction of Holders of at least 25% in aggregate principal amount of the then Outstanding Notes voting as a single class: (i) institute proceedings to seek or enforce any remedy to protect and enforce any of its rights or powers with respect to the Collateral, including directing the Collateral Agent to enforce the security interest created pursuant to the CITGO Holding Share Pledge Agreement, (ii) apply any monies collected thereunder to the satisfaction of all Obligations of the Issuer and the Guarantor under the Transaction Documents, and (iii) take any other action of a secured party available under Applicable Law. Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the New Notes, as expressly provided for in the Indenture) as to all Outstanding New Notes when: (1) either: (a) all the New Notes theretofore authenticated and delivered (except lost, stolen or destroyed New Notes which have been replaced or paid and New Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust) have been delivered to the Principal Paying Agent for cancellation; or (b) in respect of all New Notes not theretofore delivered to the Principal Paying Agent for cancellation (i) the entire principal amount of such New Notes has become due and payable, (ii) such New Notes will become due and payable at their stated maturity within one year or (iii) such New Notes are to be 153

called for redemption within one year under arrangements reasonably satisfactory to the Trustee, and the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the New Notes not theretofore delivered to the Principal Paying Agent for cancellation, for principal of, premium, if any, interest and Additional Amounts, if any, on the New Notes to the date of deposit together with irrevocable instructions from the Issuer directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (2) the Issuer has paid all other sums payable by it under the Indenture; and (3) the Trustee, the Principal Paying Agent and the Collateral Agent shall have received an Officer’s Certificate of the Issuer and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with. Modification of the Indenture From time to time, without the consent of the Holders adversely affected thereby, (a) the Issuer, the Trustee, the Principal Paying Agent and the Collateral Agent, may amend, modify or supplement the Indenture and the New Notes or enter into a written Indenture Supplement and (b) the Issuer, the Trustee and the Collateral Agent may amend, modify or supplement the Security Documents: (1) to cure any ambiguity, defect or inconsistency contained therein; (2) to convey, transfer, assign, mortgage or pledge any property or assets to the Collateral Agent as additional Collateral for the Holders, to add to the covenants of the Issuer for the benefit of the Holders or to surrender any right or power herein conferred upon the Issuer; (3) to provide for uncertificated New Notes in addition to or in place of certificated New Notes; (4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect in any material respect the legal rights of the Holders under the Indenture or the New Notes; (5) to allow any Subsidiary or any other Person to guarantee the New Notes; (6) to provide for the issuance of additional New Notes in accordance with the Indenture; (7) to evidence the replacement of the Trustee, the Collateral Agent or Principal Paying Agent as provided for under the Indenture or the CITGO Holding Share Pledge Agreement; (8) to enter into additional or supplemental Security Documents or, if necessary, in connection with any addition or release of any security permitted under the New Notes; or (9) to conform the text of the Indenture, the Security Documents or the New Notes to any provision of this Description of the New Notes to the extent that such provision in this Description of the New Notes was intended by the Issuer to be a verbatim recitation of a provision of the Indenture or the New Notes; or (10) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA. Other amendments of, modifications to and supplements to the Indenture, the Security Documents and the New Notes may be made with the consent of the Holders of a majority in principal amount of the then Outstanding New Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment may:

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(a) reduce the percentage of the principal amount of the New Notes whose Holders must consent to an amendment, supplement or waiver of any provision of the Indenture or the New Notes; (b) reduce the stated rate of or extend the stated time for payment of interest, including defaulted interest, or Additional Amounts on any New Notes; (c) reduce the principal of any of the New Notes, change the principal installment amount on any New Notes, change the fixed final maturity of any New Notes or extend any Principal Payment Date, or change the date on which any New Notes may be subject to redemption or reduce the redemption price therefor; (d) make any New Note payable in money other than that stated in the New Notes; (e) impair the right of each Holder to receive payment of principal of, premium, if any, interest and Additional Amounts, if any, on such Note on or after the due date thereof or to institute suit to enforce such payment; (f) subordinate the New Notes in right of payment to any other Indebtedness of the Issuer; or (g) make any change in the preceding amendment and waiver provisions which require each Holder’s consent. In addition, without the consent of the holders of at least 66 2/3% in aggregate principal amount of the outstanding New Notes, no amendment, supplement or waiver may release any Lien on Collateral granted for the benefit of the Secured Parties, except in accordance with the terms of the relevant Security Documents and the Indenture. The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, the Issuer will be required to give notice to the Luxembourg Stock Exchange and the Holders as provided under “—Notices,” briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of such amendment. Each of the Trustee, the Principal Paying Agent and the Collateral Agent will be entitled to rely solely on an Opinion of Counsel to the effect that such amendment, modification or supplement, is authorized or permitted by the terms and conditions of the Indenture. In addition, under certain circumstances the Holders of a majority in principal amount of the New Notes Outstanding may waive compliance with certain restrictive covenants and provisions of the Indenture. See “— Events of Default.” Currency Indemnity U.S. dollars are the sole currency of account and payment for all sums payable by the Issuer under the New Notes and the Indenture. Any amount received or recovered in a currency other than U.S. dollars in respect of the New Notes (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Subsidiary of the Issuer or otherwise) by the Holder in respect of any sum expressed to be due to it from the Issuer shall constitute a discharge of the Issuer only to the extent of the U.S. dollar amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that U.S. dollar amount is less than the U.S. dollar amount expressed to be due to the recipient under any New Note, the Issuer shall indemnify the recipient against the cost of making any such purchase. If that U.S. dollar amount is more than the U.S. dollar amount expressed to be due to the recipient under any New Note, such recipient will promptly remit the excess to the Principal Paying Agent who, in turn, will remit such amount to the Issuer. For purposes of this indemnity, it will be sufficient for the Holder to certify (indicating the sources of information used) that it would have suffered a loss had the actual purchase of U.S. dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a 155

purchase of U.S. dollars on such date had not been practicable, on the first date on which it would have been practicable). The above indemnity, to the extent permitted by law: 

constitutes a separate and independent obligation from the other obligations of the Issuer;

shall give rise to a separate and independent cause of action;

shall apply irrespective of any waiver or indulgence granted by any Holder; and

shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any New Note or any other judgment.

Consent to Jurisdiction and Service of Process; Sovereign Immunity The Issuer has consented to the non-exclusive jurisdiction of any court of the State of New York or any United States federal court sitting in the Borough of Manhattan, New York City, New York, United States, and any appellate court from any thereof, and has waived any immunity from the jurisdiction of such courts over any suit, action or proceeding that may be brought in connection with the Indenture and the New Notes. The Issuer, the Guarantor and the Pledgor, have appointed Corporation Service Company as its agent to receive and forward any writs, process and summonses in any suit, action or proceeding brought in connection with the Indenture, the Security Documents or the New Notes against the Issuer, the Guarantor or the Pledgor. in any court of the State of New York or any United States federal court sitting in the Borough of Manhattan, New York City and has agreed that such appointment shall be so long as the New Notes remain Outstanding or until the appointment by the Issuer of a successor in The City of New York as its agent for such purpose and the acceptance of such appointment by such successor. To the extent that the Issuer has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process, the Issuer will waive such immunity and will agree not to assert, by way of motion, as a defense or otherwise, in any suit, action or proceeding the defense of sovereign immunity or any claim that it is not personally subject to the jurisdiction of the above-named courts by reason of sovereign immunity or otherwise, or that it is immune from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property or from attachment either prior to judgment or in aid of execution by reason of sovereign immunity. Governing Law The Indenture will provide that the New Notes will be governed by, and construed in accordance with, the laws of the State of New York. The Security Documents will also be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Principal Paying Agent and the Collateral Agent MUFG Union Bank, N.A. is the Trustee under the Indenture. Its address is 350 California Street, 11th Floor, San Francisco, CA 94104, Attention: Corporate Trust Administration. The Indenture will provide that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

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The Trustee may resign at any time by so notifying the Issuer. In addition, the Holders of a majority in aggregate principal amount of the New Notes then Outstanding and the Issuer may remove the Trustee by so notifying the Trustee and the Issuer may appoint a successor Trustee satisfactory to the Issuer. If the Trustee resigns, is removed by the Issuer or by the Holders of a majority in aggregate principal amount of the New Notes then Outstanding and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of the Trustee for any reason, the Issuer shall promptly appoint a successor Trustee. So long as the New Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, the successor Trustee shall mail a notice of its succession to Holders of the New Notes and give notice as described under “—Notices.” Law Debenture Trust Company of New York is the Principal Paying Agent under the Indenture. Its address is at 400 Madison Avenue, New York, NY 10017, Attention: Corporate Trust or such other office as the Principal Paying Agent may from time to time designate in writing to the Issuer. The Indenture will provide that the Principal Agent will perform only such duties as are specifically set forth in the Indenture. The Principal Paying Agent may resign at any time by so notifying the Issuer. In addition, the Holders of a majority in aggregate principal amount of the New Notes then Outstanding and the Issuer may remove the Principal Paying Agent by so notifying the Principal Paying Agent and may appoint a successor Principal Paying Agent satisfactory to the Issuer. If the Principal Paying Agent resigns, is removed by the Issuer or by the Holders of a majority in aggregate principal amount of the New Notes then Outstanding and such Holders do not reasonably promptly appoint a successor Principal Paying Agent, or if a vacancy exists in the office of the Principal Paying Agent for any reason, the Issuer shall promptly appoint a successor Principal Paying Agent. So long as the New Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, the successor Principal Paying Agent shall mail a notice of its succession to Holders of the New Notes and give notice as described under “—Notices.” GLAS Americas LLC is the Collateral Agent under the Security Documents. Its address is 230 Park Avenue, Suite 1000, New York, New York 10169. Listing We intend to apply to list the New Notes on the Luxembourg Stock Exchange in accordance with the rules of that exchange; however, the New Notes are not yet listed and the Issuer cannot assure you they will be accepted for listing. Following the issuance of the New Notes, the Issuer will use its best efforts to obtain and maintain listing of the New Notes on the Luxembourg Stock Exchange. In addition, so long as the New Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, a listing agent and a paying agent will be maintained in Luxembourg. The address of the listing agent and paying agent are set forth on the last page of this offering circular. Notices All notices shall be deemed to have been given upon the mailing by first class mail, postage prepaid, of such notices to Holders at their registered addresses as recorded in the New Notes register not later than the latest date, and not earlier than the earliest date, prescribed in the New Notes for the giving of such notice. Any requirement of notice hereunder may be waived by the Person entitled to such notice before or after such notice is required to be given, and such waivers shall be filed with the Trustee. As long as the New Notes are listed on the Luxembourg Stock Exchange and its rules so require, the Issuer will also give notices to Holders by publication in a daily newspaper of general circulation in Luxembourg. If publication in Luxembourg is impracticable, the Issuer will make the publication in a widely circulated newspaper in Western Europe. By “daily newspaper” the Issuer means a newspaper that is published on each day, other than a Saturday, Sunday or holiday, in Luxembourg or, when applicable, elsewhere in Western Europe. If the Issuer is 157

unable to give notice as described in this paragraph because the publication of any newspaper is suspended or it is otherwise impractical for the Issuer to publish the notice, then the Issuer, the Trustee or the Principal Paying Agent acting on the Issuer’s instructions, will give Holders notice in another form. That alternate form of notice will be sufficient notice to you. Neither the failure to give any notice to a particular Holder, nor any defect in a notice given to a particular Holder, will affect the sufficiency of any notice given to another Holder. Certain Definitions Set forth below is a summary of certain of the defined terms to be used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided. “Additional Amounts” has the meaning set forth under “Additional Amounts” above. “Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. Solely for purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, the terms “controlling” and “controlled” have meanings correlative of the foregoing. “Board of Directors” means, as to any Person, the board of directors or similar governing body of such Person or any duly authorized committee thereof. “Bolívar” or “Bolívares” means the lawful currency of Venezuela. “Business Day” means a day other than a Saturday, Sunday or any day on which banking institutions are authorized or required by law to close in The City of New York, New York or in Venezuela. “Capital Stock” of any Person means any and all quotas, shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) the equity of such Person, including any preferred stock and partnership interests, but excluding any debt securities convertible into such equity. “Cash Equivalent” means: (1) United States dollars; (2) (a) euros; or (b) in the case of the Issuer or any Subsidiary, such local currencies held by them from time to time in the ordinary course of business; (3) securities, with maturities of 12 months or less from the date of acquisition, issued or directly and fully and unconditionally guaranteed or insured by the U.S. government or any agency or instrumentality thereof, the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government; (4) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than $500.0 million or the foreign currency equivalent thereof, and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency; (5) repurchase obligations for underlying securities of the types described in clauses (3) and (4) entered into with any financial institution meeting the qualifications specified in clause (4) above; 158

(6) commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P and in each case maturing within 24 months after the date of creation thereof; (7) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) and in each case maturing within 12 months after the date of creation thereof; (8) investment funds investing 95% of their assets in securities of the types described in clauses (1) through (7) above and (9) below; and (9) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P with maturities of 12 months or less from the date of acquisition; provided, however, that if S&P or Moody’s or both shall not make ratings of commercial paper of the type referred to in clause (6) above or securities of the type referred to in clause (9) above publicly available, the references in clause (6) or (9) or both, as the case may be, to S&P or Moody’s or both, as the case may be, shall be to a nationally recognized U.S. rating agency or agencies, as the case may be, selected by the Issuer, and the references to the ratings in categories in clause (6) or (9) or both, as the case may be, shall be to the corresponding rating categories of such rating agency or rating agencies, as the case may be. “CITGO Holding Share Pledge Agreement” means the Pledge and Security Agreement entered into among the Pledgor, the Issuer, the Guarantor, the Trustee and the Collateral Agent, pursuant to which 50.1% of the outstanding Capital Stock of CITGO Holding, Inc. is pledged by the Pledgor to or on behalf of the Collateral Agent for the benefit of (among others) the holders of the New Notes and the Trustee. “CITGO Opco Party” means CITGO Petroleum Corporation and its consolidated Subsidiaries. “CITGO Restricted Assets” means (i) the Capital Stock of CITGO Petroleum Corporation, (ii) any Principal Property, the Lake Charles Storage Terminal or any Intercompany Pipeline Facility or (iii) any Capital Stock in any Subsidiary that, at the time of such asset sale, directly or indirectly either owns, leases or has material contract rights in respect of any Principal Property, Lake Charles Storage Terminal or Intercompany Pipeline Facility. “Collateral” means all Property that, in accordance with the terms of the Security Documents, is intended to be subject to any Lien in favor of the Secured Parties. “Collateral Disposition” means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Issuer or any Subsidiary, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a “disposition”), of assets or other rights or property that constitute Collateral under the Security Documents. The sale or issuance of Capital Stock in a Subsidiary that owns Collateral such that it thereafter is no longer a Subsidiary shall be deemed to be a Collateral Disposition of the Collateral owned by such Subsidiary. “Comparable Treasury Issue” means the United States Treasury security selected by an Independent Financial Advisor as having a maturity comparable to the remaining term (“Remaining Life”) of the New Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such New Notes. “Comparable Treasury Price” means, with respect to the redemption date, (1) the average of five Reference Treasury Dealer Quotations for the redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations or (2) if the Independent Financial Advisor obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

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“Corpus Christi Land” means the land identified in the mortgage securing the 6.25% senior secured notes issued by CITGO Petroleum Corporation. “Corpus Christi Refinery Assets” means CRCCLP’s refinery located at Corpus Christi, Texas (including without limitation the Corpus Christi Land, buildings, real property improvements, component parts, other constructions permanently attached to the Corpus Christi Land and fixtures, equipment, and other tangible property at such location. “CRCCLP” means CITGO Refining and Chemicals Company L.P., a Delaware limited partnership, formerly known as CITGO Refining and Chemicals, Inc., the partners in which are CITGO Investment Company, a Delaware corporation, and CITGO Petroleum Corporation. “Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. “Fair Market Value” of any Property, asset, share of Capital Stock, other security, investment or other item means, on any date, the fair market value of such property, asset, share of Capital Stock, other security, investment or other item on that date as determined in good faith by the management of PDVSA. “Guarantor” means PDVSA Petróleo, S.A. “Holder” means the Person in whose name a Note is registered on the registrar’s books. “IFRS” means the International Financial Reporting Standards promulgated from time to time by the International Accounting Standards Board or any successor institution (“IASB”) (which includes standards and interpretations approved by the IASB and International Accounting Standards issued under its previous constitutions), together with its pronouncements thereon from time to time. “Incur” shall mean to create, issue, assume, Guarantee or otherwise become liable for, with respect to, or otherwise become responsible for the payment of an obligation. The term “Incurrence”, when used as a noun, shall have a correlative meaning. “Indebtedness” means any obligation (whether present or future, actual or contingent and including, without limitation, any Guaranty) for the payment or repayment of money which has been borrowed or raised. “Independent Financial Advisor” means a nationally recognized accounting, appraisal or, investment banking firm or consultant in the United States selected by the Issuer: (1) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Issuer or any of its Subsidiaries; and (2) which, in the judgment of the Issuer’s Board of Directors, is otherwise independent and qualified to perform the task for which such firm is being engaged. “Intercompany Pipeline Facilities” means, with respect to any Principal Property, all pipelines (other than Federal Energy Regulatory Commission regulated common carrier pipelines), delivery lines, interconnections and lateral connections used in the transportation of crude oil, feedstock or refined product to or from such Principal Property, in each case, owned or operated by CITGO Petroleum Corporation or any of its Subsidiaries. “Investment” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers and other extensions of credit in the nature thereof, prepayments to lessors, suppliers and other vendors, commission, travel and similar advances to directors, officers, employees and consultants, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Capital Stock or other securities issued by any other Person and investments that are required by

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IFRS to be classified on the balance sheet (excluding the footnotes) of such Person in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. “Issue Date” means the date of issuance of the New Notes. “Lake Charles Land” means the land identified in the mortgage securing the 6.25% senior secured notes issued by CITGO Petroleum Corporation. “Lake Charles Refinery Assets” means CITGO’s refinery located at Lake Charles, Louisiana (including without limitation the Lake Charles Land, buildings, real property improvements, component parts, other constructions permanently attached to the Lake Charles Land and fixtures, equipment, and other tangible property at such location. “Lake Charles Storage Terminals” means (a) the ‘Less and Except Tract 3 Clifton Ridge Tank Farm’ as shown on the survey of the Lake Charles refinery (including, without limitation, all buildings, component parts, other constructions permanently attached to the ground, and other improvements now or hereafter attached thereto, and all appurtenances thereto) and all fixtures (including, without limitation, fixtures now or hereafter attached to such real property) owned by CITGO Petroleum Corporation or any of its Subsidiaries and (b) the ‘Less and Except Tract 5 Pecan Grove Tank Farm’ as shown on the survey of the Lake Charles refinery (including, without limitation, all buildings, component parts, other constructions permanently attached to the ground, and other improvements now or hereafter attached thereto, and all appurtenances thereto) and all fixtures (including, without limitation, fixtures now or hereafter attached to such real property) owned by CITGO Petroleum Corporation or any of its Subsidiaries. “Lemont Land” means the land identified in the mortgage securing the 6.25% senior secured notes issued by CITGO Petroleum Corporation. “Lemont Refinery Assets” means PDV Midwest Refining, L.L.C.’s refinery located at Lemont, Illinois (including without limitation the Lemont Land, buildings, real property improvements, component parts, other constructions permanently attached to the Lemont Land and fixtures, equipment, and other tangible property at such location). “Lien” means any lien, mortgage, pledge, security interest, charge or similar encumbrance. “Net Available Cash” from a Collateral Disposition or a disposition of the CITGO Restricted Assets means cash payments received (including any cash payments received by way of deferred payment of principal, but not interest, pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the transferee of Indebtedness or other obligations relating to the properties or assets that are the subject of such disposition or received in any other noncash form) therefrom minus all legal fees and expenses, title and recording tax expenses, accounting expenses, investment banking expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign, local and other taxes paid or payable or accrued as a liability as a consequence of such Collateral Disposition or disposition of CITGO Restricted Assets. “Obligations” means all payment obligations, whether or not contingent, for principal, premium, interest, Additional Amounts, penalties, fees, indemnification, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. “Officer” means the Chief Executive Officer, the Chairman of the Board of Directors, the Chief Financial Officer, the Secretary of the Board of Directors, the Treasurer or the Controller of the Issuer (or any equivalent officer of the Issuer). “Officer’s Certificate” means a certificate signed by two Officers of the Issuer, at least one of whom shall be the Chief Financial Officer of the Issuer, and delivered to the Trustee, the Principal Paying Agent or the Collateral Agent, as applicable.

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“Opinion of Counsel” means a written opinion of counsel, who may be an employee of or counsel for the Issuer and who is reasonably acceptable to the Trustee, the Principal Paying Agent or the Collateral Agent, as applicable. “Outstanding” when used with respect to the New Notes, means, as of the date of determination, all New Notes theretofore authenticated and delivered under the Indenture, except: (1) New Notes theretofore canceled by the Principal Paying Agent or delivered to the Principal Paying Agent for cancellation; (2) New Notes, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee, Principal Paying Agent or any paying agent (other than the Issuer) in trust or set aside and segregated in trust by the Issuer (if the Issuer shall act as their own paying agent) for the Holders of such New Notes; provided that, if such New Notes are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor satisfactory to the Trustee has been made; and (3) New Notes which have been paid pursuant to the provisions for “Mutilated Notes” under the Indenture or in exchange for or in lieu of which other New Notes have been authenticated and delivered pursuant to the Indenture, other than any such New Notes in respect of which there shall have been presented to the Trustee and the Principal Paying Agent proof satisfactory to it that such New Notes are held by a protected purchaser in whose hands such New Notes are valid obligations of the Issuer; provided, however, that in determining whether the Holders of the required principal amount of the New Notes have concurred in any direction, notice, waiver, or consent, New Notes owned by the Issuer or any Affiliate of the Issuer, shall be considered as though not Outstanding, except that for purposes of determining whether the Trustee and/or the Principal Paying Agent, as the case may be, shall be protected in relying upon any such direction, notice, waiver or consent, only New Notes which a Responsible Officer of the Trustee and/or the Principal Paying Agent, as the case may be, actually knows to be so owned shall be so disregarded. New Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee and/or the Principal Paying Agent, as the case may be, the pledgee’s right so to act with respect to such New Notes and that the pledgee is not either of the Issuer or its Affiliates. “Permitted Collateral Liens” means the following types of Liens: (1) Liens in favor of the Collateral Agent for the benefit of the Secured Parties created pursuant to the Indenture and the Security Documents with respect to the New Notes and the Guaranty issued on the date of the Indenture; (2) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent (taking into account all available extensions) or (b) contested in good faith by appropriate proceedings and as to which the Issuer or its Subsidiaries shall have set aside on its books such reserves to the extent required pursuant to IFRS; and (3) Liens arising by operation of law. “Permitted Liens” means the following types of Liens: (1) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent (taking into account all available extensions) or (b) contested in good faith by appropriate proceedings and as to which the Issuer or its Subsidiaries shall have set aside on its books such reserves to the extent required pursuant to IFRS; (2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law or pursuant to customary reservations or retentions of title Incurred in the ordinary course of business for sums not yet delinquent or being contested in good 162

faith, if such reserve or other appropriate provision, if any, to the extent required by IFRS shall have been made in respect thereof; (3) Liens Incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure public or statutory obligations, the performance of tenders, statutory obligations, surety and/or appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), including any Lien securing letters of credit issued in the ordinary course of business in connection therewith; (4) any judgment Lien not giving rise to an Event of Default; (5) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real Property not interfering in any material respect with the ordinary conduct of the business of the Issuer or any of its Subsidiaries; (6) any interest or title of a lessor under any Capitalized Lease Obligation provided that such Liens do not extend to any Property or assets which are not leased Property subject to such Capitalized Lease Obligation; (7) Liens granted upon or with respect to any assets hereafter acquired by the Issuer or any Subsidiary to secure the acquisition costs of such assets or to secure Indebtedness incurred solely for the purpose of financing the acquisition of such assets, including any Lien existing at the time of the acquisition of such assets as long as the maximum amount so secured shall not exceed the aggregate acquisition costs of all such assets or the aggregate Indebtedness incurred solely for the acquisition of such assets, as the case may be; (8) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (9) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other Property relating to such letters of credit and products and proceeds thereof; (10) Liens arising in the ordinary course of business in connection with Indebtedness maturing not more than one year after the date on which such Indebtedness was originally incurred and which are related to the financing of export, import or other trade transactions; (11) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Issuer or any of its Subsidiaries, including rights of offset and set-off; (12) Liens securing Hedging Obligations otherwise permitted under the Indenture; (13) Liens existing on any asset or on any stock of any Subsidiary prior to the acquisition thereof by the Issuer or any Subsidiary as long as such Lien is not created in anticipation of such acquisition; (14) Liens existing as of the Issue Date; (15) Liens securing the New Notes and all other monetary obligations under the Indenture; (16) Liens in favor of the Issuer or any Subsidiary of the Issuer; (17) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Issuer or any Subsidiary of the Issuer or becomes a Subsidiary of the Issuer; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any other assets owned by the Issuer or the Subsidiary of the Issuer; 163

(18) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods or other Liens on inventory and goods to facilitate the purchase, shipment, or storage of such inventory or goods; (19) Liens on assets that are the subject of a Sale and Lease-Back Transaction; (20) Liens arising by operation of law; (21) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; (22) Liens on the receivables or inventory of the Issuer or any Subsidiary of the Issuer securing obligations under or in connection with any lines of credit or working capital facilities; (23) Leases, licenses, subleases or sublicenses granted to others in the ordinary course of business that do not interfere in any material respect with the business of the Issuer and its Subsidiaries; (24) Liens in favor of the Venezuelan government or any agency or instrumentality thereof to secure payments under any agreement entered into between such entity and the Issuer or a Subsidiary of the Issuer; (25) Liens to secure obligations of the Issuer or a Subsidiary of the Issuer under agreements that provide for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or Subsidiary; provided that the maximum aggregate liability in respect of all such Liens will at no time exceed the gross proceeds actually received by the Issuer and the Subsidiary of the Issuer in connection with such disposition; (26) Lien over any Qualifying Asset relating to a project financed by, and securing Indebtedness incurred in connection with, the Project Financing of such project by the Issuer, any of the Issuer’s Subsidiaries or any consortium or other venture in which the Issuer has any ownership or similar interest; and (27) Lien in respect of Indebtedness the principal amount of which in the aggregate, together with all Liens not otherwise qualifying as the Issuer’s Permitted Liens pursuant to this definition, does not exceed 15% of the Issuer’s consolidated total assets (as determined in accordance with IFRS) at any date as at which the Issuer’s balance sheet is prepared and published as provided herein. “Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. “Pledgor” means PDV Holding, Inc. “Project Financing” of any project means the incurrence of Indebtedness relating to the exploration, development, expansion, renovation, upgrade or other modification or construction of such project pursuant to which the providers of such Indebtedness or any trustee or other intermediary on their behalf or beneficiaries designated by any such provider, trustee or other intermediary are granted security over one or more Qualifying Assets relating to such project for repayment of principal, premium and interest or any other amount in respect of such Indebtedness. “Principal Property” means (a) the Lake Charles Refinery Assets, (b) the Corpus Christi Refinery Assets and (c) the Lemont Refinery Assets. “Property” means any property of any kind whatsoever, whether movable, immovable, real, personal or mixed and whether tangible or intangible, any right or interest therein or any receivables or credit rights.

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“Qualifying Asset” in relation to any Project Financing means:  any concession, authorization or other legal right granted by any governmental authority to the Issuer or any of the Issuer’s subsidiaries, or any consortium or other venture in which the Issuer or any subsidiary has any ownership or other similar interest;  any drilling or other rig, any drilling or production platform, pipeline, marine vessel, vehicle or other equipment or any refinery, oil or gas field, processing plant, real property (whether leased or owned), right of way or plant or other fixtures or equipment;  any revenues or claims that arise from the operation, failure to meet specifications, failure to complete, exploitation, sale, loss or damage to, such concession, authorization or other legal right or such drilling or other rig, drilling or production platform, pipeline, marine vessel, vehicle or other equipment or refinery, oil or gas field, processing plant, real property, right of way, plant or other fixtures or equipment or any contract or agreement relating to any of the foregoing or the project financing of any of the foregoing (including insurance policies, credit support arrangements and other similar contracts) or any rights under any performance bond, letter of credit or similar instrument issued in connection therewith;  any oil, gas, petrochemical or other hydrocarbon-based products produced or processed by such project, including any receivables or contract rights arising therefrom or relating thereto and any such product (and such receivables or contract rights) produced or processed by other projects, fields or assets to which the lenders providing the project financing required, as a condition therefore, recourse as security in addition to that produced or processed by such project; and  shares, rights or other ownership interest in, and any subordinated debt rights owing to the Issuer by, a special purpose company or vehicle formed solely for the development of a project, and whose principal assets and business are constituted by such project and whose liabilities solely relate to such project. “Reference Treasury Dealer” means a primary U.S. government securities dealer in New York City, New York designated by the Issuer. “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Financial Advisor, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Financial Advisor at 5:00 p.m., New York City, New York time, on the third Business Day preceding such redemption date. “Relevant Taxing Jurisdiction” has the meaning set forth under “—Additional Amounts.” “Responsible Officer” means, with respect to the Trustee, the Principal Paying Agent or the Collateral Agent, any officer within the corporate trust office of the Trustee, the corporate office of the Principal Paying Agent or the corporate office of the Collateral Agent, respectively, with direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject. “Sale and Lease-Back Transaction” means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the Issuer or a Subsidiary of the Issuer transfers such Property to another Person and the Issuer or a Subsidiary of the Issuer leases it from such Person. “Secured Parties” means, collectively, the Collateral Agent, the Trustee, the Principal Paying Agent, the holders of New Notes and any other Person (other than the Issuer, the Guarantor or any Affiliate of any thereof) that has a right to receive any payment from any of the Issuer or the Guarantor under the Transaction Documents. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

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“Security Documents” means, collectively, the following documents: (1) the CITGO Holding Share Pledge Agreement; and (2) each other agreement or instrument designated as a “Security Document” by the Issuer or the Guarantor from time to time. “Significant Subsidiary” means any Subsidiary of the Issuer that would be a “Significant Subsidiary” of the Issuer within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. “Similar Business” means any business conducted or proposed to be conducted by the Issuer’s Subsidiaries on the Issue Date or any business that is similar, reasonably related or ancillary thereto. “Subsidiary” with respect to any Person, means: (1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be Beneficially Owned by such Person; or (2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time Beneficially Owned by such Person. “Taxes” has the meaning set forth under “—Additional Amounts.” “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§77aaa-77bbbb) as in effect on the Issue Date. “Transaction Documents” means, collectively, the following documents: (i) the Indenture; (ii) the New Notes; (iii) the Security Documents; and (iv) each other agreement or instrument designated as a “Transaction Document” by the Issuer or the Guarantor from time to time. “Treasury Rate” means, with respect to the redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the redemption date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price of the redemption date. The Treasury Rate will be calculated by the Issuer or its nominee on the third Business Day preceding the redemption date. “U.S. Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any time of determination thereof, the amount of U.S. dollars obtained by translating such other currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable other currency as published in U.S. dollars on the date that is two Business Days prior to the date of such determination; provided that the exchange rate published by the Banco Central de Venezuela in the Venezuelan Federal Official Gazette, as the exchange rate for satisfaction of foreign currency denominated obligations in effect on the relevant date, will be used for any such translation of Venezuelan Bolívares into U.S. dollars.

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Notwithstanding any other provision of the Indenture, no specified amount of U.S. dollars shall be deemed to be exceeded due solely to the result of fluctuations in the exchange rates of currencies. “Venezuela” means the Bolivarian Republic of Venezuela. Book-Entry; Delivery and Form The Global Notes The New Notes will be issued in the form of one or more fully registered global notes (the “Global Notes”), which will be deposited with, or on behalf of, The Depository Trust Company, New York, New York (the “Depositary” or “DTC,”) and registered in the name of Cede & Co., the Depositary’s nominee. Beneficial interests in the Global Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in the Depositary. Investors may elect to hold interests in the Global Notes through the Depositary, Clearstream Banking Luxembourg S.A. (“Clearstream”) or Euroclear Bank S.A., as operator of the Euroclear System (“Euroclear”) if they are participants in such systems, or indirectly through organizations which are participants in such systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries, which in turn will hold such interests in customers’ securities accounts in the depositaries’ names on the books of the Depositary. Citibank, N.A. will act as depositary for Clearstream and JPMorgan Chase Bank will act as depositary for Euroclear. Except as described below, the Global Notes may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee. PDVSA will apply to DTC for acceptance of the global notes in its book-entry settlement system. The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Issuer does not take responsibility for these operations and procedures and urge holders to contact the system or their participants directly to discuss these matters. DTC, Euroclear and Clearstream have advised the Issuer as follows: DTC. DTC is (i) a limited purpose trust company organized under the laws of the State of New York, (ii) a “banking organization” within the meaning of the New York Banking Law, (iii) a member of the Federal Reserve System, (iv) a “clearing corporation” within the meaning of the Uniform Commercial Code, as amended, and (v) a “clearing agency” registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitates the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC’s participants include securities brokers and dealers, banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies, or indirect participants that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Investors who are not participants may beneficially own securities held by or on behalf of DTC only through participants or indirect participants. Euroclear. Euroclear Bank holds securities for its participants and clears and settles transactions between its participants through simultaneous electronic book-entry delivery against payment. Euroclear Bank provides various other services, including safekeeping, administration, clearance and settlement and securities lending and borrowing, and interfaces with domestic markets in several countries. Securities clearance accounts and cash accounts with Euroclear Bank are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable law (collectively, the “Euroclear Terms and Conditions”). The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear.

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Clearstream. Clearstream is incorporated under the laws of The Grand Duchy of Luxembourg as a professional depositary. Clearstream holds securities for its participants and facilitates the clearance and settlement of securities transactions between its participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to its participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. We expect that pursuant to procedures established by DTC (i) upon deposit of each global note, DTC will credit the accounts of participants designated by the Exchange Agent with an interest in the global note and (ii) ownership of the New Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of participants) and the records of participants and the indirect participants (with respect to the interests of persons other than participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the New Notes represented by a global note to such persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of a person having an interest in New Notes represented by a global note to pledge or transfer such interest to persons or entities that do not participate in DTC’s system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest. So long as DTC or its nominee is the registered owner of a global note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the New Notes represented by the global note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in respect of a global note will not be entitled to have New Notes represented by such global note registered in their names, will not receive or be entitled to receive physical delivery of certificated notes, and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee or the Principal Paying Agent thereunder. Accordingly, each holder owning a beneficial interest in respect of a global note must rely on the procedures of DTC and, if such holder is not a participant or an indirect participant, on the procedures of the participant through which such holder owns its interest, to exercise any rights of a holder of New Notes under the Indenture or such global note. We understand that under existing industry practice, in the event that we request any action of holders of New Notes, or a holder that is an owner of a beneficial interest in respect of a global note desires to take any action that DTC, as the holder of such global note, is entitled to take, DTC would authorize the participants to take such action and the participants would authorize holders owning through such participants to take such action or would otherwise act upon the instruction of such holders. Neither we, the Trustee, the Principal Paying Agent or any paying agent, security registrar or transfer agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of New Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such New Notes. Transfers between participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures. Payments on the New Notes Payments on the New Notes will be made in U.S. dollars. Payments of principal and interest under each global note will be made to DTC’s nominee as the registered owner of such global note. PDVSA expects that the nominee, upon receipt of any such payment, will immediately credit DTC participants’ accounts with payments proportional to their respective beneficial interests in the principal amount of the relevant global note as shown on the records of DTC. PDVSA also expects that payments by DTC participants to owners of beneficial interests will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants, and none of PDVSA, the Trustee, the Principal Paying Agent, the custodian or any paying agent or registrar will have any responsibility or liability for 168

any aspect of the records relating to or payments made on account of beneficial interests in any global note or for maintaining or reviewing any records relating to such beneficial interests. Certificated New Notes A certificated note may be transferred to a Person who wishes to hold a beneficial interest in the Rule 144A Global Note only upon receipt by the Principal Paying Agent of a Rule 144A certificate of the transferee. A certificated note may be transferred to a Person who wishes to hold a beneficial interest in the Regulation S Global Note only upon receipt by the Principal Paying Agent of a Regulation S certificate of the transferor. A certificated note may be transferred to a Person who wishes to hold a certificated note only upon receipt by the Principal Paying Agent of (x) a Rule 144A certificate of the transferee or (y) a Regulation S certificate of the transferor. The restrictions on transfer described in this paragraph will not apply (1) to New Notes sold pursuant to a registration statement under the Securities Act or to exchange notes or (2) after such time (if any) as PDVSA determines and instructs the Principal Paying Agent that the New Notes are eligible for resale pursuant to Rule 144 under the Securities Act without the need for current public information. There is no assurance that the New Notes will become eligible for resale pursuant to Rule 144. Notwithstanding the foregoing, certificated notes that do not bear the restricted legend set forth under “Transfer Restrictions” will not be subject to the restrictions described above applicable to transfers to Persons who will hold in the form of beneficial interests in the Regulation S Global Note or certificated notes. If DTC notifies PDVSA that it is unwilling or unable to continue as depositary for a global note and a successor depositary is not appointed by PDVSA within 90 days of such notice, or an Event of Default has occurred and the Principal Paying Agent has received a request from DTC, each beneficial interest in that global note will be exchanged for one or more certificated notes registered in the name of the owner of such beneficial interest, as identified by DTC. Any such certificated note issued in exchange for a beneficial interest in the Rule 144A Global Note or the Regulation S Global Note will bear the restricted legend set forth under “Transfer Restrictions” and accordingly will be subject to the restrictions on transfer applicable to certificated notes bearing such restricted legend. Same Day Settlement and Payment The Indenture will require that payments in respect of the New Notes represented by the global notes be made by wire transfer of immediately available funds to the accounts specified by holders of the global notes. With respect to New Notes in certificated form, PDVSA will make all payments by wire transfer of immediately available funds to the accounts specified by the holders thereof or, if no such account is specified, by mailing a check to each holder’s registered address. The New Notes represented by the global notes are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such New Notes will, therefore, be required by DTC to be settled in immediately available funds. PDVSA expects that secondary trading in any certificated notes will also be settled in immediately available funds.

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NOTICE TO PROSPECTIVE INVESTORS Notice to Prospective investors in Venezuela On January 8, 2010, the Venezuelan government, through the Ministry of Finance and the Central Bank, enacted Foreign Exchange Agreement No. 14, which established a dual exchange rate regime (Convenio Cambiario No. 14), and was in place throughout 2010. As of January 11, 2010, the dual exchange rate regime established an exchange rate of Bs. 2.60 to U.S.$1 for essential goods, including food, health, imports of machinery and equipment, science and technology, as well as all non-petroleum public sector transactions and other special cases. The exchange rate for all other transactions was set at Bs. 4.30 to U.S.$1. This dual exchange rate regime abrogated Foreign Exchange Agreement No. 2 from March 1, 2005, which established a single exchange rate for all transactions of Bs. 2.15 to U.S.$1. Subsequently, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 18, dated as of June 1, 2010 (Convenio Cambiario No. 18), under which the Central Bank was vested with the authority to regulate the transaction in Bolívares of securities denominated in foreign currency issued or to be issued by Venezuela and other entities owned directly or indirectly by Venezuela. On December 30, 2013, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 24 (Convenio Cambiario No. 24), effective as of December 30, 2013. Pursuant to this Foreign Exchange Agreement, foreign currency originating from activities and transactions that differ from exports of hydrocarbons of PDVSA and its affiliates, joint ventures created under the Organic Hydrocarbons Law, and service companies that are part of the so-called Petroleum Industrial National Conglomerate (Conglomerado Nacional Industrial Petrolero) may be sold at an exchange rate based on the most recent foreign currency auction granted through the direct and indirect currency conversion mechanism, “Supplementary System for the Administration of Foreign Currency” (SICAD), as published by the BCV on its web page, less 0.25%. This Foreign Exchange Agreement No. 24 was abrogated on April 4, 2014 by Foreign Exchange Agreements No. 27 and No. 28. On March 10, 2014, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 27 (Convenio Cambiario No. 27), effective as of March 10, 2014, published in Official Gazette No. 40,368 dated March 10, 2014, which established SICAD II, a new system for currency exchange that operates in parallel to SICAD. This new system created a new legal variable exchange rate, and unlike SICAD, SICAD II operates via auctions that are held on a daily basis by the Central Bank and are open to the general public in Venezuela for the exchange of currency between U.S. dollars and Bolívares. Unlike SICAD, the proceeds from SICAD II transactions are not restricted to a specific list of uses, provided that SICAD II is not available for use by PDVSA directly. The SICAD II exchange rate may not be lower than the exchange rate established in Foreign Exchange Agreement No. 14 dated February 8, 2013, published in Official Gazette No. 40,108 dated February 8, 2013 (Bs. 6.30/U.S.$1 for the sale of foreign currency, and Bs. 6.2842/U.S.$1 for the purchase of foreign currency). The Central Bank publishes a reference exchange rate for SICAD II operations on a daily basis on its official website. On April 3, 2014, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 28 (Convenio Cambiario No. 28), effective as of April 4, 2014. Pursuant to this Foreign Exchange Agreement, foreign currency originating from activities and transactions other than from sales and/or exports of hydrocarbons by PDVSA, its affiliates and joint ventures created under the Organic Hydrocarbons Law, may only be sold at an exchange rate based on the most recent foreign currency auction granted through SICAD II, as published by the BCV, less 0.25%. The sale of foreign currency originating from oil exports by PDVSA, its affiliates and joint ventures are made at the exchange rate of Bs. 6.2842/U.S.$1 set forth in Exchange Agreement No. 14. Additionally, pursuant to this Foreign Exchange Agreement, foreign currency originating from activities carried out by service companies that are part of the so-called Petroleum Industrial National Conglomerate (Conglomerado Nacional Industrial Petrolero) may only be sold at an exchange rate equivalent to the most recent last foreign currency auction granted through SICAD II, as published by the BCV. Both Foreign Exchange Agreement No. 27 and 28 abrogate and replace Foreign Exchange Agreement No. 24 enacted on December 30, 2013. On February 10, 2015, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 33 (Convenio Cambiario No. 33), published in the Official Gazette No. 6,171 dated February 10, 2015. Through 170

this Foreign Exchange Agreement No. 33, a new foreign exchange system was created, known as Sistema Marginal de Divisas (SIMADI). This system replaced SICAD II, which ceased its operations on February 12, 2015. SIMADI consists of a mechanism to buy and sell foreign currency at a rate set by market transactions where the general public and private and public entities can offer and buy foreign currency without such funds being limited to a specific use or purpose. Likewise, this system established two types of operations based on the amount to be offered or bought in the relevant transaction: (i) high value operations, where the minimum amount to be offered or bought was set at U.S.$3,000; and (ii) retail operations, where the minimum amount to be offered or bought is set at U.S.$300, as published in an Official Communication issued by the Central Bank, dated February 11, 2015. Under the regime of Foreign Exchange Agreement No. 33 there were three (3) official exchange rates: (i) the exchange rate of the CENCOEX of Bs. 6.30/U.S.$1; (ii) the exchange rate of SICAD I and (iii) the exchange rate of SIMADI. On March 9, 2016, the Ministry of Finance and the Central Bank enacted Foreign Exchange Agreement No. 35 (Convenio Cambiario No. 35), effective as of March 10, 2016, published in Official Gazette No. 40,865 dated March 9, 2016, which established two exchange rates: (i) a protected exchange rate (known as “DIPRO”) fixed at 9.975 to buy and Bs. 10.00 to sell for products related to the food and pharmaceuticals sectors as well as other sectors specified in the Foreign Exchange Agreement and; (ii) the complementary floating exchange market rate (known as “DICOM”), which varies in accordance with market needs, for the remaining sectors. The exchange transactions derived from the export and/or sale of hydrocarbons by PDVSA and its affiliates and joint ventures, as well as those derived from financing operations, financial instruments, capital contributions, asset sales, dividends, collection of debts, and provision of services can be made using any of the exchange rates described above, or any other rate; provided, that if any rate other than the exchange rates described above is to be used, such rate shall be reduced in one-quarter of a percent (0.25%) and must be authorized by the Vice-presidency of the Economic Sector, the Ministry for Bank and Finance and the Central Bank. The Foreign Exchange Agreement No. 35 provides that the mechanisms for the exchange transactions provided in the partially abrogated Foreign Exchange Agreement No. 33 of February 10, 2015, published in the Extraordinary Official Gazette No. 6,171 dated February 10, 2015, shall continue to remain in force until such mechanisms are replaced pursuant to a subsequent Foreign Exchange Agreement. Therefore, the acquisition of foreign currency at the DICOM exchange rate shall continue to be executed through the SIMADI system, which consists of auctions that are held on a daily basis by the Central Bank and are open to the general public in Venezuela for the exchange of currency between U.S. dollars and Bolívares. The purchase and sale of the New Notes in the secondary market in Venezuela in transactions payable in Bolívares by individuals and legal entities domiciled in Venezuela can occur only through universal banks (under Venezuelan law, a universal bank is a bank that can carry out any financial operation permitted by Venezuelan laws), authorized stock brokers and the Bolsa de Valores Pública Bicentenaria (Bicentennial Public Stock Exchange) and it must be made at the complementary floating exchange market rate (DICOM) pursuant to the Foreign Exchange Agreement No. 35 dated March 9, 2016 published in the Official Gazette No. 40,865 and the Foreign Exchange Agreement No. 33 dated February 10, 2015 published in the Extraordinary Official Gazette No. 6,171. These regulations do not apply to the purchase and sale of New Notes effected in the international markets. In the future, the New Notes might be sold in Venezuela in the Public Securities Exchange (Bolsa Pública de Valores Bicentenaria), created pursuant to the Public Securities Exchange Law (Ley de la Bolsa Pública de Valores Bicentenaria) published in the Special Official Gazette No. 5,999 dated November 13, 2010 and its General Rules (Reglamento General de la Bolsa Pública de Valores Bicentenaria) published in the Official Gazette No. 39,566 dated December 3, 2010, as amended by Official Gazette No. 39,659 dated April 25, 2011, in accordance with the procedures and subject to the terms and conditions established in the Rules relating to the Registration, Negotiation and Settlement of Securities in the Public Securities Exchange (Reglamento de Inscripción, Negociación y Liquidación de Valores en la Bolsa Pública de Valores Bicentenaria) issued by the Venezuelan Superintendency of Securities (Superintendencia Nacional de Valores) and published in the Official Gazette No. 39,600 dated January 24, 2011.

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Notice to Prospective Investors in the European Economic Area In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the relevant implementation date), an exchange of the New Notes described in this offering circular may not be made to the public in that Relevant Member State other than: 

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by us for any such offer; or

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For purposes of this provision, the expression an “offer of securities to the public” in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU) and includes any relevant implementing measure in each Relevant Member State. Notice to Prospective Investors in the United Kingdom This offering circular is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a “relevant person”). This offering circular and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

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TRANSFER RESTRICTIONS We are offering the New Notes pursuant to the exemption from the registration requirements of the Securities Act provided by Section 3(a)(9) thereof. Accordingly, the New Notes are subject to the same restrictions on transfer as the Existing Notes as summarized below. By submitting the Exchange Instructions, each holder of Existing Notes will be deemed to have made the following acknowledgements and representations to and agreements with the Issuer (terms used in this paragraph that are defined in Rule 144A or Regulation S under the Securities Act are used herein as defined therein): (1) It understands that the New Notes are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, that the New Notes have not been and will not be registered under the Securities Act and that (A) if in the future it decides to offer, resell, pledge or otherwise transfer any of the New Notes, such New Notes may be offered, resold, pledged or otherwise transferred only (i) to PDVSA or any of its subsidiaries (ii) pursuant to an effective registration statement under the Securities Act, (iii) to a QIB in compliance with Rule 144A, (iv) outside the U.S. in compliance with Rule 904 under the Securities Act, or (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or any other available exemption from registration under the Securities Act, and that (B) the investor will, and each subsequent holder is required to, notify any subsequent investor that purchases the New Notes from it of the resale restrictions referred to in (A) above. (2) Each holder of the Existing Notes being tendered acknowledges that none of the Issuer, the Trustee, the Principal Paying Agent nor any person representing the Issuer, the Trustee or the Principal Paying Agent has made any representation to such holder with respect to the Issuer, the Exchange Offers or the offering of the New Notes, other than the information contained in this offering circular. The holder represents that it is relying only on this offering circular in making its decision to exchange the Existing Notes for the New Notes as it has deemed necessary in connection with its decision to exchange the Existing Notes for the New Notes, including an opportunity to ask questions and request information from the Issuer. (3) Each holder represents that it is tendering the Existing Notes in exchange for the New Notes for its own account, or for one or more other holder’s accounts for which it is acting as a fiduciary or agent, in each case not with a view to, or for offer or sale in connection with, any distribution of the New Notes in violation of the Securities Act, subject to any requirement of law that the disposition of the holder’s property or the property of that other holder’s account or accounts be at all times within its or their control and subject to its or their ability to resell the New Notes pursuant to any available exemption from registration under the Securities Act. (4) Each holder understands that the New Notes (other than those issued to persons other than U.S. Persons purchasing New Notes in reliance on Regulation S) will, until the expiration of the one year period following the completion of the distribution of the New Notes by PDVSA and any of its affiliates, unless otherwise agreed by us, bear a legend substantially to the following effect: THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER (1) REPRESENTS THAT: (A) IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT OR (B) IT IS NOT A UNITED STATES PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT); AND (2) AGREES FOR THE BENEFIT OF PDVSA THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT IN 173

ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ONLY: (A) TO PETRÓLEOS DE VENEZUELA, S.A. OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) ABOVE OR (2)(D) ABOVE, A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE PRINCIPAL PAYING AGENT) MUST BE DELIVERED TO THE PRINCIPAL PAYING AGENT. PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, PDVSA RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION OR WARRANTY IS MADE AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST THEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND CAN BE REMOVED ONLY AT THE OPTION OF THE ISSUER. In addition to the representations, acknowledgements and agreements herein made by the holders of Existing Notes, each holder of Existing Notes tendered in exchange for New Notes offered in reliance on Regulation S will be deemed to have represented and agreed that (i) it is not a U.S. Person (as such term is defined in Regulation S) and is exchanging the Existing Notes for the New Notes in an offshore transaction pursuant to Regulation S, (ii) it is exchanging the Existing Notes for the New Notes for its own account or an account for which it exercises sole investment discretion and that it and any such account is a foreign purchaser that is outside the United States and acknowledge that the New Notes have not been and will not be registered under the Securities Act or with any securities regulatory authority in any jurisdiction and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except as set forth below; (iii) if it should resell or otherwise transfer the New Notes prior to the expiration of a restricted period (defined as 40 days after the date of completion of the distribution of the New Notes by PDVSA and any of its affiliates) it will do so only (a)(i) outside the United States in compliance with Rule 904 under the Securities Act or (ii) to a qualified institutional buyer in compliance with Rule 144A, and (b) in accordance with all applicable securities laws of the states of the United States or any other applicable jurisdiction and (iv) it understands that such New Notes will, unless otherwise agreed by us, bear an additional legend substantially to the following effect: THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AGENCY IN ANY JURISDICTION, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR IN A TRANSACTION NOT 174

SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS NOTE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THE REVERSE HEREOF. PRIOR TO THE EXPIRATION OF A RESTRICTED PERIOD ENDING ON THE 40TH DAY AFTER THE DATE OF COMPLETION OF THE DISTRIBUTION OF THE NEW NOTES BY PDVSA AND ANY OF ITS AFFILIATES, THIS SECURITY, OR ANY BENEFICIAL INTEREST HEREIN, MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED EXCEPT (A)(1) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (2) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN COMPLIANCE WITH RULE 144A, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST THEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND CAN BE REMOVED ONLY AT THE OPTION OF THE ISSUER. (5) Each holder also acknowledges that the Issuer, the Principal Paying Agent and others will rely upon the truth and accuracy of the above acknowledgements, representations and agreements. The holder agrees that if any of the acknowledgements, representations and agreements the holder is deemed to have made by its tender of the Existing Notes is no longer accurate, the holder will promptly notify the Issuer and the Principal Paying Agent. If the holder is exchanging any Existing Notes for New Notes as a fiduciary or agent for one or more holder accounts, the holder represents that it has sole investment discretion with respect to each of those accounts and that it has full power to make the above acknowledgements, representations and agreements on behalf of each account.

175

LEGAL MATTERS Certain legal aspects of U.S. law and New York law and the issuance of the New Notes offered hereby will be passed upon for us by Hogan Lovells US LLP as our U.S. legal counsel. Certain legal matters with respect to Venezuelan law will be passed upon for us by Despacho de Abogados Hogan Lovells, S.C. as our Venezuelan legal counsel. INDEPENDENT AUDITORS Our annual audited consolidated financial statements as of December 31, 2015, 2014 and 2013, and for the years then ended included elsewhere in this offering circular have been audited by Rodríguez Velázquez & Asociados, a member firm of KPMG International, an independent auditor. The audit report as of December 31, 2015 dated June 30, 2016 contains emphasis paragraphs indicating that: (i) PDVSA is conducting an independent investigation on certain events to which the Company was subject in connection with the international procurement process for goods and services through one of its subsidiaries. The external specialists have estimated that it will be extended for a while, and that it might require changes in its scope as the investigation progresses. As a result thereof, such investigation is subject to a series of uncertainties which possible effects on the results of operations and the consolidated financial position of PDVSA cannot be currently determined with sufficient accuracy, and (ii) PDVSA as the national oil company owned by the Bolivarian Republic of Venezuela and according to its corporate objective and specific responsibilities, performs significant transactions with its stockholder, government institutions and others related entities, resulting in significant effects on the annual audited consolidated financial statements. The audit report as of December 31, 2014 dated March 30, 2015 contains emphasis paragraphs indicating that PDVSA as the national oil company owned by the Bolivarian Republic of Venezuela and according to its corporate objective and specific responsibilities, performs significant transactions with its stockholder, government institutions and others related entities, resulting in significant effects on the annual audited consolidated financial statements. The audit report as of December 31, 2013 dated May 6, 2014 contains emphasis paragraphs indicating that: (i) PDVSA as the national oil company owned by the Bolivarian Republic of Venezuela and according to its corporate objective and specific responsibilities, performs significant transactions with its stockholder, government institutions and others related entities, resulting in significant effects on the annual audited consolidated financial statements, and (ii) in preparing the consolidated financial statements for the year ended December 31, 2013, PDVSA recognized the effect of the revised International Accounting Standard 19 Employee Benefits, which shall be applied retrospectively and for annual periods beginning on or after January 1, 2013. Therefore, the Company restated its consolidated financial statements for the years ended as of December 31, 2012 and 2011. The financial information as of June 30, 2016, July 31, 2016 and September 12, 2016 included elsewhere in this offering circular has not been reviewed nor audited by Rodríguez Velázquez & Asociados. AVAILABLE INFORMATION We will furnish, upon prior written request of any registered owner of a New Note, or holder of New Note, or beneficial owner of a New Note, such information as is specified in paragraph (d)(4) of Rule 144A under the Securities Act: (a) to such holder or owner of the New Note, (b) to a prospective holder of such New Note (or beneficial interest therein) who is a qualified institutional buyer designated by such holder or owner of the New Note or (c) to the Principal Paying Agent for delivery to such holder or owner or such prospective holder so designated, in each case in order to permit compliance by such holder or owner with Rule 144A in connection with the resale of such New Note (or a beneficial interest therein) in reliance upon Rule 144A unless, at the time of such request, (1) we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or (2) we qualify for the exemption to Rule 12g3-2(b).

176

TECHNICAL AND REGULATORY TERMS A unit conversion table and a glossary of certain oil and gas terms, including abbreviations for certain units, used in this offering circular are contained below. When used in this offering circular, the following terms mean: “m” means thousand; “mm” means million; “b” means billion; “t” means trillion; “one billion” means one thousand million; “bcf” means billion cubic feet; “bls” means barrels; “boe” means barrel-of-oil equivalent; “bpd” means barrel per day; “dwt” means deadweight tons, a designation for the size or displacement of a ship; “km” means kilometer; “mboe” means thousand barrel-of-oil equivalent; “mbpd” means thousand barrels per day; “mmbpd” means million barrels per day; “mmcf” means million cubic feet; “mmcfd” means million cubic feet per day; “mmscfd” means million standard cubic feet per day; “tcf” means thousand cubic feet; and “tdwt” means thousand of dead weight tons. Equivalent measures are based upon: 1 barrel equals 42 U.S. gallons; 1 barrel of oil equivalent equals 1 barrel of crude oil; 1 barrel of oil equivalent equals 5,800 cubic feet of natural gas; 1 barrel of crude oil per day equals 50 tons of crude oil per year (33º degrees API); 1 cubic meter equals 33.315 cubic feet; 1 metric ton equals 1,000 kilograms; and 1 metric ton crude oil equals 7.3 barrels of crude oil (33º degrees API). Terms: “2D” means two dimensional seismic lines (square kilometers). “3D” means three dimensional seismic lines (square kilometers). “API gravity” means an indication of density of crude oil or other liquid hydrocarbon as measured by a system recommended by the American Petroleum Institute (API), measured in degrees. The lower the API gravity, the heavier the compound. For example, asphalt has an API gravity of 8º and gasoline has a gravity of 50º. “barrels” means barrel of crude oil, including condensates and natural gas liquids. “condensate” means light carbon substance produced from natural gas that condenses into liquid at normal temperatures and pressures associated with surface production equipment. “crude slate” means a listing of the various crudes that are processed in a refinery during a given period in a given configuration. “Distillate” means liquid hydrocarbons distilled from crude or condensates. “Empresas Mixtas” means joint stock contractual structure between us and third-party companies. 177

“feedstock” means partially refined products that are added to the crude slate and converted into refined petroleum products. “fractionation” means a processing unit that breaks down feedstock into desired fractions (specific boiling ranges). “HDHPLUS®” is a high conversion process for heavy and extra heavy oils and refinery residuals via hydro conversion that produces a very good performance in output liquids (115%) to high quality products. It is a flexible technology that allows for processing different crude streams with high sulfur and metals content. At the same time, it reduces the handling of solids and refinery byproducts and is environmentally friendly. “light crude oil” means, unless the context otherwise requires, crude oil with average API gravity of 30º or more. “LNG” means liquefied natural gas. “medium crude oil” means, unless the context otherwise requires, crude oil with an average API gravity between 21º, inclusive, and 30º. “NGL” means natural gas liquids. “proved developed reserves” means the reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing natural forces and mechanisms of primary recovery are included as “proved developed reserves” only after testing by a pilot project or after the operating of an installed program has confirmed through production response that increased recovery will be achieved. “proved reserves” means the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrates with reasonable certainty to be recoverable in future years from known reserves under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not escalations based upon future conditions. “Ratio Reserves/Production” means remaining reserves life in years of proved crude oil reserves at the end of the period divided by production from the top of the wells. Company Abbreviations: “BANDES” means Banco de Desarrollo Económico y Social de Venezuela (Bank for Social and Economic Development of Venezuela). “BCV” or “Central Bank” means Banco Central de Venezuela. “BITOR” means Bitumenes Orinoco, S.A. “BP” means BP Plc. “Cerro Negro” means Petrolera Cerro Negro, S.A. “CGC” means Compañía General de Combustibles. “Chalmette Refining” means Chalmette Refining L.L.C. “Chevron” means Chevron Corporation. “CITGO” means CITGO Petroleum Corporation. 178

“CITGO Holding” means CITGO Holding, Inc. “CNPC” means China National Petroleum Corporation. “ConocoPhillips” means ConocoPhillips Company. “CPZ” means ConocoPhillips Petrozuata B.V. “CRP” means Centro Refinador Paraguaná (Paraguaná Refining Complex). “CVP” means Corporación Venezolana del Petróleo, S.A. “Deutsche BP” means Deutsche BP AG. “ENI” means Eni B.V. “ExxonMobil” means ExxonMobil Corporation. “FEM” means Fondo para la Estabilización Macroeconómica (Macroeconomic Stabilization Fund). “Hamaca” means Petrolera Hamaca, C.A. “Hess” means Hess Corporation. “Hovensa” means HOVENSA, L.L.C. “ICC” means International Chamber of Commerce. “INTEVEP” means INTEVEP, S.A. “Isla refinery” means Refinería Isla (Curazao), S.A. “Merey Sweeny” means Merey Sweeny, L.P. “MINPEM” means Ministry of Petroleum. “Neste Oil” means Neste Oil Corporation. “NGL” means natural gas liquids. “Nynäs” means AB Nynäs Petroleum. “ONT” means the National Treasury Office (Oficina Nacional del Tesoro). “OPEC” means Organization of Petroleum Exporting Countries. “OPIC” means OPIC Karimun Corporation. “Orinoco Oil Belt” means natural bitumen and extra-heavy crude reserves located in eastern Venezuela. “PDV Chalmette” means PDV Chalmette, Inc. “PDV Europa” means PDV Europa B.V. “PDV Holding” means PDV Holding, Inc. 179

“PDV Marina” means PDV Marina, S.A. “PDV Sweeny” means Sweeny Coker LLC. “PDV Texas” means PDV Texas, Inc. “PDVSA Cerro Negro” means PDVSA Cerro Negro, S.A. “PDVSA-Cuba” means PDVSA Cuba S.A. “PDVSA Gas” means PDVSA Gas, S.A. “PDVSA P&G” means PDVSA Petróleo y Gas, S.A. “PDVSA Petróleo” means PDVSA Petróleo, S.A. “PEQUIVEN” means Petroquímica de Venezuela, S.A. “PetroCanada” means Petro-Canada La Ceiba, GmbH (formerly Veba Oel & Gas La Ceiba, GmbH). “Petrozuata” means Petrolera Zuata, C.A. “Phillips Venezuela” means Phillips Petroleum Company Venezuela Limited. “Rosneft” means Rosneft Holdings Limited S.A. “Rühr” means Rühr Oel GmbH. “SEC” means United States Securities and Exchange Commission. “SENIAT” means Servicio Nacional Integrado de Administración Aduanera y Tributaria (National Service of Tax and Customs Administration of Venezuela). “Sincor” means Sincrudos de Oriente, S.A. “Statoil” means Statoil Sincor AS. “Sweeny Sub” means Sweeny Coker Investor Sub, Inc. “Venezuela” means República Bolivariana de Venezuela (The Bolivarian Republic of Venezuela). “Veba Oel” means Veba Oel AG.

180

INDEX OF DEFINED TERMS 2D ..........................................................................177 3D ..........................................................................177 Additional Amounts ........................................16, 145 adjusted issue price................................................137 Affected Notes.........................................................39 Affiliate..................................................................158 Announcement Date ................................................41 API gravity ............................................................177 April 2017 Notes ..................................................i, 10 AR Funding .............................................................82 ATOP.................................................................11, 36 b .............................................................................177 Banco de Venezuela ................................................70 Banco del Tesoro .....................................................70 BANDES .........................................................69, 178 barrels ....................................................................177 bcf..........................................................................177 BCV.......................................................................178 BITOR ...................................................................178 bls ..........................................................................177 Board of Directors .................................................158 boe .........................................................................177 Bolívar ...................................................................158 Bolívares................................................................158 BP ..........................................................................178 bpd .........................................................................177 Business Day .........................................................158 Business Plan.............................................................3 Call Option Arbitration..........................................118 Capital Stock .........................................................158 Cash Equivalent.....................................................158 Central Bank ..........................................................178 Cerro Negro ...........................................................178 CGC.......................................................................178 Chalmette Refining................................................178 Chevron .................................................................178 CITGO...................................................................178 CITGO Holding.....................................................179 CITGO Holding Senior Secured Notes ...................82 CITGO Holding Senior Secured Term Loan B .......81 CITGO Holding Share Pledge Agreement ............159 CITGO Opco Party................................................159 CITGO Restricted Assets ......................................159 CITGO Senior Secured Credit Facility....................79 CITGO Senior Secured Notes ...........................79, 80 Clearstream....................................................167, 168 Clearstream, Luxembourg .......................................11 CNG.....................................................................5, 90 CNPC.....................................................................179 Collateral ............................................................i, 159 Collateral Agent.....................................................140 Collateral Disposition ............................................159 Comparable Treasury Issue ...................................159 Comparable Treasury Price ...................................159

condensate .............................................................177 ConocoPhillips ..............................................118, 179 CORPOELEC........................................................132 Corpus Christi Land...............................................160 Corpus Christi Refinery Assets .............................160 covenant defeasance ..............................................153 CPDs......................................................................131 CPZ........................................................................179 CRCCLP................................................................160 CRP .......................................................................179 crude slate..............................................................177 Crystallex...............................................................120 CVP ...............................................................119, 179 daily newspaper .....................................................157 Default ...................................................................160 defeasance..............................................................153 Depositary..............................................................167 Deutsche BP ..........................................................179 DICOM........................................................6, 58, 171 DIPRO .........................................................6, 58, 171 Direct Participant.....................................................37 Discontinued Operations ..........................................vi Distillate ................................................................177 downstream....................................................3, 54, 84 DTC .............................................................ii, 36, 167 dwt .........................................................................177 Early Tender Deadline................................................i Early Tender Premium................................................i EEA ......................................................................... iii Empresas Mixtas....................................................177 ENI ........................................................................179 Euroclear......................................................ii, 11, 167 Events of Default ...................................................150 Excess Proceeds.....................................................148 Exchange Act.........................................................160 Exchange Agent.......................................................45 Exchange Consideration .............................................i Exchange Offers .........................................................i Existing Notes ............................................................i Expiration Date...........................................................i ExxonMobil...........................................................179 Fair Market Value..................................................160 feedstock................................................................178 FEM.......................................................................179 FIEL...........................................................................v Financial Promotion Order....................................... iii FOGADE .................................................................70 FONDESPA ............................................................69 fractionation...........................................................178 FSBRSA ................................................................131 Gazprombank ........................................................104 Global Notes..........................................................167 Guarantor ....................................................i, 140, 160 Guaranty .............................................................i, 140 181

Gulf of Paria Agreements ......................................119 Hamaca ..................................................................179 HDHPLUS®..........................................................178 Hess .......................................................................179 Holder ............................................................134, 160 Hovensa .................................................................179 ICC ........................................................................179 IFRS.......................................................................160 Indebtedness ..........................................................160 Indenture................................................................140 Independent Financial Advisor..............................160 Information Agent ...................................................45 Initial Lien .............................................................148 Intercompany Pipeline Facilities ...........................160 Interest Payment Date............................................141 Investment .............................................................160 Isla refinery............................................................179 Issue Date ..............................................................161 Issuer ..................................................................i, 140 km..........................................................................177 Lake Charles Land.................................................161 Lake Charles Refinery Assets................................161 Lake Charles Storage Terminals............................161 Lemont Land .........................................................161 Lemont Refinery Assets ........................................161 Lien........................................................................161 light crude oil.........................................................178 LNG.......................................................................178 Lookback Adjustment Arbitration .........................118 Luxembourg Prospectus Act.....................................iv m............................................................................177 mboe ......................................................................177 mbpd ......................................................................177 medium crude oil ...................................................178 Merey Sweeny .......................................................179 MINPEM ...............................................................179 mm.........................................................................177 mmbpd...................................................................177 mmcf......................................................................177 mmcfd....................................................................177 mmscfd ..................................................................177 Neste Oil................................................................179 Net Available Cash................................................161 New Notes ..........................................................i, 140 NGL...............................................................178, 179 notice of acceleration.............................................151 November 2017 Notes ................................................i November 2017 Notes” ...........................................10 Nynäs...............................................................87, 179 Obligations ............................................................161 Offer ......................................................................148 Officer ...................................................................161 Officer’s Certificate ...............................................161 OID........................................................................137 one billion..............................................................177 ONT.......................................................................179

OOIP....................................................................4, 89 OPEC...............................................................27, 179 Opic .......................................................................119 OPIC......................................................................179 Opinion of Counsel................................................162 Order......................................................................172 Orinoco Oil Belt ..........................................4, 89, 179 Outstanding............................................................162 passive category income ........................................137 Payment Dates .......................................................141 PDV Chalmette......................................................179 PDV Europa...........................................................179 PDV Holding .........................................................179 PDV Marina...........................................................180 PDV Servicios .......................................................120 PDV Sweeny .................................................118, 180 PDV Texas.....................................................118, 180 PDVSA .......................................................................i PDVSA Cerro Negro .............................................180 PDVSA Gas...........................................................180 PDVSA P&G.........................................................180 PDVSA Petróleo.................................................i, 180 PDVSA-Cuba ........................................................180 PEQUIVEN ...........................................................180 Permitted Collateral Liens .....................................162 Permitted Liens......................................................162 Person ....................................................................164 Petrobonos ...............................................................71 PetroCanada...........................................................180 Petrosaudi ..............................................................120 Petrozuata ..............................................................180 Phillips Venezuela .................................................180 Pledgor...........................................................141, 164 pool..........................................................................82 Principal Paying Agent ..........................................140 Principal Payment Date .........................................141 Principal Property ..................................................164 Project Financing...................................................164 Property .................................................................164 Prospectus Directive .................................................iv proved developed reserves.....................................178 proved reserves ......................................................178 PSO Project ...........................................................102 Qualifying Asset ....................................................165 Ratio Reserves/Production.....................................178 Reference Treasury Dealer ....................................165 Reference Treasury Dealer Quotations..................165 Registrar ................................................................140 Relevant Member State ................................... iii, 172 relevant person.......................................................172 Relevant Taxing Jurisdiction .........................145, 165 Reserve Law ............................................................99 Responsible Officer ...............................................165 Rosneft...................................................................180 Rühr .......................................................................180 Sale and Lease-Back Transaction ..........................165 182

SEC........................................................................180 Secured Parties ......................................................165 Securities Act.....................................ii, 165, 173, 174 Security Documents...............................................166 SENIAT.................................................................180 Settlement Date .......................................................42 SICAD .............................................................57, 170 Significant Subsidiary............................................166 Similar Business ....................................................166 Sincor.....................................................................180 Statoil.....................................................................180 Subsidiary ..............................................................166 successor company ................................................148 Sweeny Sub ...................................................118, 180 t..............................................................................177

Taxes .............................................................145, 166 tcf...........................................................................177 tdwt ........................................................................177 Total Exchange Consideration....................................i Transaction Documents .........................................166 Transfer Agent.......................................................140 Treasury Rate.........................................................166 Trustee ...................................................................140 U.S. Dollar Equivalent...........................................166 U.S. Holder............................................................135 upstream ........................................................3, 54, 84 Veba Oel................................................................180 Venezuela ...................................................i, 167, 180 Withdrawal Deadline .....................................ii, 12, 39 yield to maturity ....................................................137

183

INDEX TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS PDVSA’s Consolidated Financial Statements with Independent Auditors’ Report for the year Ended December 31, 2015 Independent Auditors’ Report ..........................................................................................................................

F-5

Consolidated Statement of Comprehensive Income .........................................................................................

F-7

Consolidated Statement of Financial Position ..................................................................................................

F-8

Consolidated Statement of Changes in Equity..................................................................................................

F-9

Consolidated Statement of Cash Flows ............................................................................................................

F-10

Notes to the Consolidated Financial Statements...............................................................................................

F-11

F-1

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F-2

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