Lago Petroleum Corporation
| Company type | Private |
|---|---|
| Industry | Oil production |
| Founded | 1923 |
| Founder | Preston McGoodwin, Joshua S. Cosden, Payne Whitney Associates |
| Fate | Purchased by Standard Oil of New Jersey in 1932; later nationalized |
| Headquarters | Venezuela |
Area served | Lake Maracaibo region, Venezuela |
Key people | Edward L. Doheny (Pan American Petroleum), C. Ledyard Blair (Blair & Co.) |
| Products | Crude oil |
Number of employees | 4,387 (1939) |
Lago Petroleum Corporation was an oil production enterprise founded by Americans in 1923 to develop oil reserves in Venezuela's Lake Maracaibo region. The company was purchased by Standard Oil of New Jersey in 1932 and was eventually nationalized.
Ownership
Edward L. Doheny, proprietor of Pan American Petroleum and Transport Co., managed the Barco concession in Colombia and aimed to expand operations into Venezuelan oilfields, including constructing a pipeline to lower export expenses. After consultations with J.A. Coronil, Lago Petroleum was established by Preston McGoodwin, Joshua S. Cosden, and Payne Whitney Associates, officially incorporated in Delaware on April 12, 1923. Approximately 25% of its shares were acquired by British-Mexican Petroleum.
In 1924, Lago assumed control over concessions previously held by the British Equatorial Oil Company and acquired properties from Venezuelan owners who had received rights from General Juan Vicente Gómez, Venezuela’s military leader.
Toward the close of 1925, Blair & Co., led by C. Ledyard Blair, along with Chase Securities, transferred a majority interest in Lago to Pan American Petroleum through a complex deal. By the late 1920s, three foreign companies operated in eastern Lake Maracaibo: Shell Oil controlled the Aranguren onshore concession; Gulf Oil obtained leases along the lake shore from the Creole Syndicate; and Standard of Indiana, via Pan American, managed Lago’s lakebed operations.
In 1932, Pan American divested its overseas holdings—including extensive Venezuelan concessions—to Standard Oil of New Jersey for approximately $100 million. Subsequently, Lago Petroleum became a subsidiary under Creole Petroleum Corporation, Standard Oil’s Venezuelan subsidiary. This transaction also encompassed the Lago Oil and Transport Company, Lago Shipping Company, and development plans for the Lago refinery located on Aruba. The firm later operated as Creole Petroleum Company before adopting Standard Oil’s brand name, Esso. The Venezuelan government nationalized it alongside the country’s entire oil sector in 1976.
Operations
Lago controlled roughly in the waters of Lake Maracaibo, producing an estimated 30,000 barrels of crude oil each day. Its drilling sites necessitated platforms constructed offshore, and to address damage caused by teredo worms attacking wooden supports, Lago innovated by using concrete pilings with steel caps secured by steel cables. These advancements, coupled with barges for transporting heavy machinery, reduced offshore drilling expenses below those on land—even though government-imposed lower taxes and royalties assumed higher operational costs. The company prioritized exploiting existing reserves such as the La Rosa field over new exploration efforts.
The valuable Tía Juana field was discovered by Lago in 1928. Meanwhile, Standard of Indiana acquired land on Aruba to establish a tanker terminal and refinery, commencing shipments of Lago’s crude there as early as 1925. By 1929, Lago operated 129 active wells within the lake and utilized nineteen lake tankers to transport approximately 37 million barrels to Aruba’s refinery. Production inefficiencies arose due to rivalry among three companies extracting from a shared reservoir, leading to accelerated depletion that occasionally resulted in well collapses and fires damaging rigs and equipment.
The workforce at Lago included Venezuelan, Chinese, and West Indian laborers; management exploited competition among these groups to keep wages low. In response to concerns about potential labor disturbances, the government in 1929 imposed restrictions on further immigration of Afro-Caribbean and Chinese workers and mandated that current employees obtain employment certificates along with records of good conduct. Throughout the 1930s, Lago employed around 1,400 workers primarily based in Lagunillas and La Salina within Zulia State. By 1939, its labor force consisted of 268 foreign workers alongside 3,119 Venezuelans, most of whom worked as day laborers.