|
Beijing: Venezuela agreed with China, the world's fastest-growing major economy, to form a joint venture that will produce oil in Venezuela's Orinoco Belt to supply a new 400,000 barrel per day (bpd) refinery they will build in China.
The venture between Petroleos de Venezuela and China National Petro-leum Corp. will pump oil from an area called Junin 4, where CNPC has quantified reserves, President Hugo Chavez said at a signing ceremony in Caracas late Friday.
China is securing long-term energy supply deals around the world to satisfy its growing needs. Chinese oil consumption will rise 5.3 per cent this year, the International Energy Agency said on January 16. Demand rose 6.6 per cent in 2006, according to the most recent BP Statistical Review.
"This isn't about an immediate advantage," said Pedro Benitez, a professor of political economy at Central University of Venezuela and oil consultant. "It's more about the political economy of China. It's to maintain a commercial relationship."
Agreement
Zhou Jiping, vice-president of CNPC, and Venez-uelan Energy and Oil Minister Rafael Ramirez, who is also president of the state energy company known as PDVSA, signed the agreement. Chinese Vice Premier Hui Liangyu attended the signing as part of a tour of South America.
China also has supply contracts with Iran and Sudan as it pursues a strategy of bilateral deals in return for development funds rather than purchases on the open market, Thomas O'Donnell, a US Fulbright scholar studying Chinese oil deals at the Central University of Venezuela, said in an interview.
PDVSA and PetroChina, the biggest oil producer in China, also agreed to begin studies on the 400,000 bpd refinery in southern China. Venezuela will be able to supply all of the refinery's needs by the time it opens in 2013, said Eulogio del Pino, a board member and head of joint ventures at PDVSA. The PDVSA-CNPC venture will extract and improve tar-like oil from the Orinoco and export it to China.
China last year promised $4 billion to a Venezuelan development fund. The money is to be repaid in fuel oil. Projects in line for the cash include a factory to make drill pipe for the oil industry, a new steel mill, agricultural projects and the construction of 10 universities, Chavez said.
Venezuela is diversifying its energy markets to reduce reliance on its biggest customer, the US. The country sends 300,000 bpd to China, Chavez said.
|
