China plans $5bn energy push in Venezuela

China will invest around $5 billion in energy projects in Venezuela by 2012 as part of a plan to boost Venezuela’s oil output, the nations’ energy minister told state television on Monday.

Venezuelan President Hugo Chavez just completed a visit to China to sign cooperation accords as part of an effort to reduce the South American nation’s dependence on U.S. energy markets.

Rafael Ramirez said China’s participation in Venezuela energy ventures would “require in first instance around $5 billion in investment.”

He added, “This is very important because it is investment that we are attracting from China to Venezuela as part of ... our increase in (oil) production, which by 2012 will be at 5.8 million barrels per day.”

Ramirez said this figure included investment in energy operations such as a joint venture to operate the Zumano fields in eastern Venezuela, and investment by China’s CNPC in the Junin 4 block of the Orinoco heavy crude belt.

Chinese energy company Sinopec will participate in the development of an oil block in the Gulf of Paria in eastern Venezuela, Ramirez said.

He said part of the $5 billion would go toward two oilfield agreements with CNPC that were signed earlier this year.

Venezuela, the world’s No. 5 oil exporter, is planning to boost oil production to 5.8 million barrels per day from current official production levels of 3.3 million bpd.

Market watchers say Venezuela is only producing around 2.5 million bpd and some say state oil company PDVSA never recovered from a grueling two-month strike launched in late 2002.

Chavez, a key leftist leader in Latin America who is openly confrontational with the United States, has repeatedly threatened to cut off exports to the U.S. if Washington moves against him.

He has aggressively courted energy-hungry China as part of his search for new buyers of Venezuelan crude. Venezuela currently provides around 12 percent of U.S. oil imports.

[Source: Financial Times, Reuters, Caracas, Ven, 28Aug06]

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