China, Venezuela agree to speed up increased oil shipments
Venezuelan President Hugo Chavez and his Chinese counterpart Hu Jintao, have agreed to bring forward the starting date of long-planned increased Venezuelan oil exports to the East Asian nation.
Apart from advancing the date of stepped up exports, however, Chavez’s visit to China last week did not achieve any new break-throughs for his country, cash-strapped due to high social expenditures and the worldwide decline in oil prices over the past year.
“I proposed that, given the global situation, we study the possibility, and we agreed to move up the target [date] set in the strategic accord for 2013,” Chavez said, adding that the extra shipments will begin in 2010.
During his visit, Chavez and Hu also held talks on the investment needed from China to reach the long-planned target of 1 million b/d, as well as the launch of a joint venture for oil transport, and construction of a Venezuelan refinery in China.
“Those three top strategic objectives already justify the working visit to China, but we have other political and geo-political interests to discuss with President Hu Jintao,” Chavez said after arriving in Beijing.
According to Chavez, the goal of shipping 1 million b/d to China is reachable because his country plans to divert much of the current 1.5 million b/d it sends to the US.
“We’re diversifying our oil business,” Chavez said. “Even though we’re a small country, we’re an oil giant and China doesn’t have the reserves necessary to meet its needs,” he said, adding that “God put the oil that China needs for the next 200 years in Venezuela.”
During the visit, Venezuela’s Energy and Mines Minister Rafael Ramirez, along with top executives of state-owned Petroleos de Venezuela SA, met with leaders of Chinese state-owned China National Petroleum Corp. and Sinopec to discuss current and future cooperation.
Venezuelan officials said the talks also took up the idea of a joint refinery project on Chinese territory capable of processing Venezuelan heavy crude into fuel and other products.
Following the Venezuelan leader’s visit, CNPC Pres. Jiang Jiemin said the state firm would submit a plan to set up joint venture refinery with PDVSA in Guangdong province. Jiang said the refinery, which will process 20 million tonnes/year of oil, will be owned 51% by CNPC and 49% by PDVSA.
The talks between the two leaders largely reiterated discussions the two sides have been having for some time on the ways they can cooperate on a variety of oil developments.
In September 2008, Venezuela and China signed several accords, including one agreement for a joint study with Sinopec for construction of a refinery in Cabruta, northern Venezuela, to process heavy crude from the Orinoco heavy oil belt.
The signed documents also included a contract for the supply of crude and fuel oil between PDVSA and PetroChina as well as an agreement for the construction of four oil tankers for the Venezuelan-Chinese company CV Shipping.
In May 2008, Chinese state media reported that CNPC subsidiary PetroChina entered into a joint venture agreement with PDVSA to build a 400,000 b/d refinery in Guangdong province, configured to process Venezuelan heavy oil.
Under the agreement, witnessed by Chavez and Chinese Vice-Premier Hui Liangyu, the crude is to be sourced from the Junin 4 block in the Orinoco belt. At the time, officials said that the joint refinery, Venezuela’s first such investment in China, would advance Chavez’s goal of shipping 1 million b/d of oil to China by 2011, or 13% of current Chinese oil demand. Reports vary on just how much oil Venezuela actually ships to China. Last May, Ramirez said shipments amounted to 500,000 b/d of oil, while Chinese state media reported 380,000 b/d—300,000 b/d of products and 80,000 b/d of crude.
