China and Venezuela concluded two large oil investment deals ahead of the Venezuelan President’s visit to China this weekend.
Venezuela's Oil Minister Rafael Ramirez announced on his Twitter account earlier this week that China has agreed to invest US$14 billion in an oilfield in Venezuela’s Orinoco Belt.
“In a meeting with Sinopec, we agreed to develop the Junin 1 field in the Orinoco Oil Belt,” Ramirez said, referring to China’s state-owned oil company.
“Development of the Junin 1 field requires an investment outlay of $14 billion for production of 200,000 barrels per day of oil,” he added.
On Wednesday, Ramirez used his Twitter account to announce another US$28 billion oil development deal.
“We agreed with CNPC to develop a new project in the Junin 10 block … to produce 220,000 barrels per day with investment of $14 billion,” Ramirez said, Reuters and the Wall Street Journal reported.
The second announcement was later confirmed by a spokesperson at Venezula’s state-owned energy company Petróleos de Venezuela (PdVSA), according to the Wall Street Journal. Reuters noted that CNPC already holds stakes in two other oil development projects in the Orinoco belt region. The same report said that PdVSA had begun developing Junin 10 by itself after deals with France's Total and Norway's Statoil fell through.
Ramirez was in China this week as part of a larger delegation ahead of Venezuelan President Nicolás Maduro’s state visit to China this Saturday. It will be Maduro’s first state visit since assuming the presidency following the death of his predecessor and mentor Hugo Chávez in March of this year.
Some initially believed Maduro would seek to improve Venezuela’s ties with the U.S., which had been badly strained during Chávez’s tenure as president. These expectations appear to have been misplaced as the two countries have maintained frosty relations under Maduro’s presidency.
The US$28 billion in oil deals seems to cement Maduro’s intent to continue Chávez’s legacy of courting China as a way to counterbalance U.S. influence in the Latin American country. Under Chávez Sino-Venezuelan ties blossomed.
According to the Wall Street Journal, China has loaned some US$40 billion in Venezuela in recent years. These loans are often repaid in oil and natural resources. Already, China receives 600,000 barrels of Venezuelan oil every day. Venezuela recently surpassed Iran to become China’s third largest oil supplier.
Maduro played an integral role in facilitating the expansion of ties with China, serving as Venezuela’s Foreign Minister from 2006 until the beginning of this year. During that time he developed close relations with many Chinese officials through visits such as a three-day trip to Beijing in November 2007. Although this will be Maduro’s first journey to China as president, his Vice President, Jorge Arreaza, met with Chinese President Xi Jinping in Beijing in July. As Vice President, Xi traveled to Caracas in 2009 as part of a broader tour of Latin America.
Besides the oil deals concluded this week, China Development Bank finalized a deal to loan Venezuela US$5 billion for development, and the Export-Import Bank of China agreed to loan a state-owned Venezuelan company US$390 million for a new port.
Zachary Keck is Associate Editor of The Diplomat. You can find him on Twitter @ZacharyKeck.