Venezuela Signs More Oil Deals with China

Caracas , Venezuela, August 23, 2006—Venezuela’s plans to reduce its dependency on the US market for its oil exports took a step forward yesterday as President Hugo Chávez signed several agreements with the Chinese government in Beijing.

This year 150,000 barrels of oil a day will be exported to China. Next year that figure is expected to double and by 2009 Chávez said he hoped to be exporting up to 500,000 barrels a day,

“We will capitalize on this visit. Since 1999, we started to weave these ties, with energy being one of the strategic guidelines. China is one of the largest consumers in the world, and Venezuela is one of the largest [oil] producers in the world. That is, we absolutely complement each other,” said Chavez.

Venezuela currently produces approximately 3 million barrels of oil a day and plans to increase that to 5.9 million by 2012. Clearly, Chávez hopes the rapidly expanding Chinese market will absorb some of this new capacity. China itself currently imports most of its oil from the increasingly volatile Middle East and is looking to diversify its suppliers.

In common with recent trips overseas, Chávez also announced several investment partnerships that will benefit the Venezuelan and Chinese economies, specifically in the housing, mining, telecommunications, and petroleum sectors.

Alcatel Shanghai Bell, Huawei Technologies, and ZTE Corporation are to partner Venezuela’s state-owned CVG Telecom to design a fiber optic cable network for Venezuela. Additionally, in the petroleum sector, Venezuela will purchase an undisclosed number of super tankers from China. China National Petroleum Corporation (CNPC) has signed an agreement with PDVSA, Venezuela’s state oil company, to develop wells in the Orinoco Belt region of the country as well. “We will soon drill a new well with them [CNPC] in the Junin field,” said Chávez.

Venezuela has a chronic housing shortage and the Bolivarian News Agency (ABN) reported that the two governments have signed a deal worth $1.2 billion to build 20,000 houses over the next two years. A railway system and gold mining cooperation were also mentioned.

Chávez is expected to spend six days in China, his fourth visit since 1999. China’s market is enormous with a population of 1.3 billion and its economy is growing rapidly. Chavez often talks of seeking new oil customers in addition to the US market.

Last year Venezuela purchased, on order, a telecommunications satellite from China, which should be in orbit by 2008. Chávez plans to visit the factory where the satellite, named Simón Bolívar, is being designed and built.

He also plans to visit Malaysia and Angola before returning home to continue election campaigning for the December 3 presidential elections. A few weeks prior this current trip, Chavez had spent two weeks abroad, visiting countries in Latin America, Eastern Europe, Africa, and Asia. His recent overseas visits are widely believed to be, in part, an attempt garner support for Venezuela to win the upcoming vacancy as non-permanent member of the United Nations Security Council.