Tag Archives: Hugo Chavez

China’s Cloudy Investment In Chavez’s Grandiose Vision

Details of the newly struck oil deal with Venezuela remain murky. We don’t know much beyond the fact that there will be $16 billion of Chinese investment over three years to boost production from the Orinoco River basin by 450,000 barrels a day, probably from developing a new field as was the case with a similar recent $20 billion deal with Russia, also intended to add an extra 450,000 b/d. Fuller details are expected next month following talks between Chinese and Venezuelan oil officials.

China National Petroleum Corp. has a previous oil-for-investment deal with Caracas, but we understand the new deal to be separate from that, though CNPC, which also has rights to bid on the undeveloped Carabobo blocks in the Orinoco basin, is the likely company involved in the new deal. It is part of Venezuelan President Hugo Chavez’s attempt to wean the oil industry that bankrolls much of his political power off its dependence on U.S. investment (Exxon Mobil and ConocoPhillips getting the boot) and establish Venezuela as a self-styled energy giant in Chavez’s idiosyncratic vision of a multi-polar world.

The new deal would be the eighth and seemingly largest acquisition of overseas oil and gas assets this year by China’s state-owned companies. CNPC said recently that the first seven had a total value of 82 billion yuan ($12 billion),  80% up on the same period a year earlier. China Daily reported earlier this month that the company has taken a $30 billion loan from China Development Bank to finance overseas acquisitions.

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Venezula, China To Build Oil Refineries Together

Venezuelan president Hugo Chavez would like to sell more of his country’s oil to China and less to the U.S.

Venezuela sold Beijing 38 million barrels in the first seven months of this year, almost double last year’s sales, despite the logistics difficulties of shipping it. Chavez, now visiting Beijing, says Venezuela could be sending China 1 million barrels a day by 2012. Overall trade between the two countries is expected to top $8 billion this year, up from less than $200m a decade ago.

During the three-day state visit, a stop off on trips also taking in Havana and Moscow, the two countries announced they would build two refineries, one in each country, capable of processing Venezuela’s heavy crudes that China currently has to blend with lighter crudes to refine, or sell on.

Meanwhile, Chavez has to settle for the fact that he is dependent on the U.S. he so detests to buy half Venezuela’s oil.

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