By Carlos Camacho
CARACAS -- China will augment its already significant oil and financial presence in Venezuela, with the Asian giant and the oil-rich yet embattled Latin American nation discussing new ventures in the Orinoco oil belt, the largest concentration of crude oil known to man.
Wednesday, a “high level” Chinese-Venezuelan commission met in Caracas, in which the parties “agreed to an expansion of commercial relations between both nations”, state oil company PDVSA informed Thursday.
Increasing the share of China in Sinovensa, an Orinoco belt-based joint venture was the key matter discussed by the delegation, according to a PDVSA press release. CNPC has a 40% stake and PDVSA holds the remainder of Sinovensa. By law, PDVSA can’t hold less than 50% in any oil venture.
Venezuela’s oil industry has been hit by a double whammy: a decline in production almost by half, a trend which started when Hugo Chavez first took over in 1999 has coincided with a sharp drop in oil prices that began in 2014 and shows no sign of abating. In 1998 Venezuela was producing around 3.8 million barrels a day, while production today is reported by OPEC to be around 2 million b/d.
ENTER THE DRAGON
As it is, Venezuela is China’s most prominent client state in the Western Hemisphere: China has lent Venezuela $62.2 billion, more than any other of the 13 nations with which China has cooperation relations in the region -- even more than regional giants Argentina and Brazil (two of the largest economies in the planet). Venezuela has received more than half of every dollar China (either as a sovereign state or through state-owned commercial and/or cooperation banks) has invested or lent in the region since 2005, back when Hugo Chavez was President.
However, in spite’s of China disproportionate efforts, Venezuela’s oil production and GDP have done nothing but contract in recent years, while Venezuela's foreign debt (both with it and with other parties) piles up.
Early in the Maduro administration, China went 15 months without lending Venezuela any funds, but the financing resumed in 2016. However, it has never reached the amounts achieved under Maduro’s mentor and predecessor Hugo Chavez.
The projects reviewed by China and Venezuela include “strategic agreements of cooperation in oil matters and other spaces of opportunity that are profiling between both countries”, Pdvsa said in a press release.
Venezuela’s Vice President for Planning and Knowledge, Ricardo Menendez, and Oil Minister Eulogio Del Pino headed the local representation, while Ye Xiandeng, President of China National Petroleum Corporation America, represented for the Asian giant.
Menendez estimated that, in oil alone, China has investments “in the order of $9 billion. So, they are reviewing the oil fields in which they have a participation, as well as profiling new projects,” he was quoted as saying. An increase of 42,000 barrels/day was also discussed.