Japan and Venezuela Initiate Joint Orinoco Oil Projects and Expand Economic Ties

Venezuelan and Japanese officials met in Tokyo on Sunday and Monday to create mixed enterprises to exploit Venezuela's Orinoco Oil Belt. The officials also planned future economic collaboration in the areas of finance, infrastructure, agriculture, automobile production, and oil-based chemical products.

By James Suggett – Venezuelanalysis.com

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Venezuelan President Hugo Chavez (Left) and Japanese Prime Minister Taro Aso (YVKE Mundial)
Venezuelan President Hugo Chavez (Left) and Japanese Prime Minister Taro Aso (YVKE Mundial)
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Mérida,April 6th 2009 (Venezuelanalysis.com) - Venezuelan and Japanese officials met in Tokyo on Sunday and Monday to create mixed enterprises to exploit Venezuela's Orinoco Oil Belt. The officials also planned future economic collaboration in the areas of finance, infrastructure, agriculture, automobile production, and oil-based chemical products. 

Venezuelan President Hugo Chávez and the heads of Venezuela's Ministries of Foreign Relations, Commerce, Tourism, Agriculture and Lands, and Energy and Petroleum met with their Japanese counterparts as well as the Confederation of Japanese Business Associations to discuss how Venezuela and Japan can complement each other's import and export needs.

 "We came to re-establish a strategic economic, social, and technological alliance with this country that possesses great scientific advancements and which needs energy that we can help to supply," said Venezuelan President Hugo Chávez upon his arrival in Tokyo on Sunday.

"Japan is interested in diversifying the sources of its oil supply, while Venezuela wants to diversify the market for oil exportation," he said.

Japanese spokesperson Takachi Kondo also expressed enthusiasm for an expanded relationship between Venezuela and Japan. "President Chávez is very well-known to the Japanese people and with this visit surely we are going to boost our integration and extend the friendship between our two countries," said Kondo.

During the visit, Venezuela's state oil company PDVSA initiated joint projects with Japan's national oil, gas, and metals corporation JOGMEC and several private Japanese firms to extract and refine oil in Venezuela's Orinoco Oil Belt, which is estimated to have the world's second largest crude oil reserves.  

To help Venezuela refine more of its extra-heavy crude domestically, the Japanese firms Mitsubishi, Marubeni, and Itochu will finance the renovation of Venezuelan refineries, according to the Bolivarian News Agency. Also, Venezuela's state petro-chemical company PEQUIVEN will study the potential to expand production of oil-based fertilizers and plastics in team with Marubeni and Mitsubishi.   

Venezuelan Energy and Petroleum Minister Rafael Ramírez, who accompanied Chávez in Japan and signed the energy accords, said, "By entering into this [Orinoco] bloc, Japan automatically assures its supply for at least 25 years." 

Chávez said Venezuela could potentially export a million barrels per day to Japan, starting with 100,000 barrels per day this year. He also said Venezuela could begin to export natural gas to Japan within three years. 

Japan is among dozens of countries, including Argentina, Brazil, China, Italy, Iran, the United States, Russia and others whose state and private corporations have signed on as minority partners in Orinoco projects since PDVSA purchased the majority share of the Orinoco reserves in 2007. 

Chávez has made clear that by signing bi-lateral accords with all of these nations, he intends to multiply the nodes of global economic power and forge a "pluri-polar world" that is not dominated by the United States and U.S.-based financial institutions. 

"The center of gravity of the world is moving toward the East and toward the South, and here we are," Chávez said in Japan on Sunday. 

Chávez proposed the creation of a multi-billion dollar bi-national investment fund with Japan, similar to the funds Venezuela has already established with Russia, China, and Iran.  

He also said he will consider converting a portion of Venezuela's international currency reserves from the dollar to the yen. "Japan uses the yen in all its operations and in addition other nations who hold their reserves in yens, so Venezuela could also consider this for its international reserves," he said. 

Such a conversion would be consistent with Chávez's advocacy of an alternative international monetary standard to overcome what he calls "the dictatorship of the dollar." 

In addition to energy and financial accords, Japan and Venezuela established a series of joint commissions to plan Japan's future investments in Venezuelan railway lines, highways, and housing. 

Other trade-related items discussed were Venezuela's importation of Japanese medical technology and Japan's importation of Venezuelan fruits such as the coveted mango. 

Spokesperson Kondo also mentioned a possible accord involving the automobile industry. "Our country exports vehicles and machinery to Venezuela, and this South American country exports oil, aluminum, and cacao to our nation," Kondo told the press. 

Chávez's visit to Japan is the final leg of a week-long diplomatic tour during which Venezuela created a bi-national bank with Iran and proposed a new international currency backed by oil reserves during a summit of Arab and South American countries in Qatar.