Mérida, March 30, 2006 (venezuelanalysis.com)— Venezuela is currently selling approximately 200,000 barrels of oil per day to China, announced the Chinese Ambassador to Venezuela yesterday. This figure is expected to increase to 300,000 barrels by the end of the year and is part of a growing bilateral trade relationship between the two countries. Venezuela has expressed the desire to increase oil exports to China as a way to reduce its dependency on the U.S. market.
Representatives of the two nations met in Caracas last Monday to sign agreements with the motive of creating greater strategic integration. Venezuelan President Hugo Chávez and Communist Party of China leader Li Changchun signed six cooperation agreements, mostly in the energy sector, to further integrate the two nations.
Among the agreements is the creation of Petrozumano, a joint-company between the two nations with the purpose of exploring new oil and gas deposits, along with their extraction, transportation, and storage. This agreement was signed by Energy Minister Rafael Ramírez, who emphasized the importance of the agreements.
"It's infrastructure that our nation needs to take a step forward in areas of industrialization and joint-companies, as well as in other non-petroleum initiatives," he stressed.
Another agreement signed between Venezuela's state oil company PDVSA, and China's National Petroleum Corporation allows for a joint project for the production of crude oil in the Orinoco oil fields. The agreement will also create a joint venture to construct oil tankers to transport the crude, with the objective of creating its own fleet of oil tankers.
Other agreements include joint efforts between the two nations' state oil companies to service and maintain oil wells and to increase the daily supply of Venezuelan oil to China.
President Chávez emphasized that the objective is to increase Venezuela's supply of oil to China with the goal of reaching one million barrels of oil per day by the year 2012. Currently Venezuela sends around 200,000 barrels daily to China, with the intention of increasing this to 300,000 by the end of this year.
When Chavez first became president in 1999, Venezuela exported no oil to China. Currently Venezuela’s largest oil market is the U.S., to which it exports between 1.2 and 1.4 million barrels per day.
The Chinese Ambassador to Venezuela declared yesterday that China now has more investments in Venezuela than any other Latin American nation. "We're talking about 600 million dollars in conservative terms, but I believe it could be more than 2 billion dollars," said Ambassador Ju Yijle.
The Ambassador said that the countries did more than $4 billion worth of trade in 2006, and that Venezuela maintains a trade surplus with China. The intention is to increase this amount in 2007 and to also promote the growth of non-petroleum sectors.
A meeting yesterday of Businessmen for Venezuela (Empreven) also had the intention of increasing trade between the two nations and to integrate Venezuelan businesses with the Asian country. More than a thousand Venezuelan companies showed interest in doing business with China. The medical and automotive sectors are some of the main sectors that could benefit from this alliance, according to the president of Empreven.
Chávez expressed the desire to further the strategic alliances. Future plans between the two nations include the installation of oil refineries in China, and the construction of railroads and ships to transport the oil.
Chávez also announced this week the launch of a bi-national fund of $6 billion to finance joint projects. $4 billion will be provided by China, and the other $2 billion by Venezuela. Joint projects will include the manufacture of cellular phones, automobiles, and railroads.
Rafael Ramirez stressed the importance of using the petroleum-based alliances as a platform for the promotion of projects in the non-petroleum sectors. He insisted that Venezuela and China have a "strategic trade relationship in the energy sector that will allow for the expansion of our cooperation in other sectors."