By Carlos Camacho
CARACAS -- With the US sanctioning his regime harder than ever, embattled Venezuelan leader Nicolas Maduro really wants to get China involved. Thursday night, Maduro and representatives from China National Petroleum Corporation, signed an agreement to increase output from their joint venture Sinovensa to 165,000 bpd.
Sinovensa, the upgrading and blending facility for Orinoco extra heavy crude oil owned jointly by state oil company PDVSA (51%) and China National Petroleum Corporation (CNPC)(49%) in Eastern Venezuela currently pumps extra-heavy Orinoco crude and blends it with lighter oil to produce Venezuela's signature medium-grade blend Merey.
“Thank you forever, China, for all of the effort and for all of the cooperation”, Maduro said to Chinese ambassador Li Baorong, during a signing ceremony broadcast live on state television network Venezolana de Television (VTV).
The new deal came only a few days after the White House announced new, sweeping sanctions against the Maduro Regime, freezing their remaining assets in the U.S. and banning all negotiations with them.
“This is to ratify that China and Venezuela will keep on travelling a great road of prosperity and development”, Maduro added.
China has loanded Venezuela some $65 billion, according to the “debt clock” of the Inter-American Dialogue, and is repaying the debt with oil. However, every time the price of Venezuelan oil declines, Venezuela needs to send more barrels to China -- and when the deals were originally signed oil was over $100 a barrel. As Venezuela's oil production has collapsed from 3.5 million barrels per day (bpd) when Chavez came to power in 1998 to under 750,000 bpd last month, Maduro has been unable to send more barrels.
The collapse in Venezuela's oil production is the greatest decline of any oil producing country since the start of the millennium.
The bulk of Chinese financing arrived under Chavez, starting in 2007, including a single mega-loan of more than $20 billion that is unlike anything his successor has gotten from the Asian giant.
“The economic activity can’t stop, to the contrary, we need to increase economic activity,” said Maduro, who has presided over the most dramatic decline in Gross Domestic Product since records began, a loss of 52% over the last four years, and more acute than the loss of GDP during the Great Depression in the U.S. in the 1930s.
Venezuela, with the help of China, was now entering “a phase of active resistance” to face “the coercive, unilateral measures of criminal blockade by the government of the US,” claimed Maduro.
PDVSA said in a statement that a second phase of the project would take Sinovensa's capacity to 230,000 bpd.