A great article from the Economist Intelligence Unit points to the growing investments in Venezuelan energy projects by the China National Petroleum Corp, as China moves to diversify its oil imports. Now we know who is going to be filling the gap if Chavez follows through on his promises to reduce exports to the United States.
“Venezuela is a natural ally for China, given the government’s socialist ideology and, more importantly for China, the country’s enormous oil and gas reserves … The current energy policy of the Venezuelan president, Hugo Chavez, has steadily raised state control over the oil and gas industry since assuming power in 1999. By law, all foreign operations in Venezuela must be joint ventures with PDVSA, which owns a majority stake in the project.
Mr Chavez’s foreign policy is closely linked with his energy policy, and his antipathy towards the US has led him to declare that Venezuela will reduce its oil exports to the US, to which it currently directs around 60% of its oil products. China has been able to take advantage of this favourable environment to promote itself as a new strategic partner for Venezuela. China’s links with Venezuela are now its strongest in Latin America. As well as the US$1.5bn already committed to Venezuela, the Orinoco joint venture could require further investment of US$3bn-4bn, making Venezuela by far the greatest recipient of Chinese investment in the region.”
Is this bad news? We don’t really want Venezuela’s oil, but this could be a worrisome partnership.
This entry was posted on Wednesday, April 11th, 2007 at 11:41 am and is filed under International Environmental News, Oil and Gas . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
April 16th, 2007 at 11:53 am
Chavez will have no problem selling his oil.