Chávez, China cooperate on oil, but for different reasons
The Venezuelan president touts Beijing's $4 billion investment as another punch in his bid to undermine US clout. China is more pragmatic.
Caracas, Venezuela; and Beijing
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A new oil exploration deal between the two countries – China's largest single investment in an overseas energy project to date – makes US officials nervous. But with Chinese and Venezuelan goals in such stark contrast, say most observers, Washington has little cause to fear a new anti-American axis stretching from the Pacific to the Caribbean.
Venezuelan President Hugo Chávez has cast the $6 billion deal as another punch in his campaign against US political and economic hegemony in world affairs.
Beijing takes a more practical view of the deal. "Wherever there is oil there are Chinese," says Jiang Shixue, deputy director of the Institute for Latin American Studies at the China Academy of Social Sciences, a government-run think tank in Beijing. "China wants more oil and it is going all over the world" to find it.
More oil to China = less for US?
Under the November agreement, China will pay $4 billion into a $6 billion fund to develop Venezuela's oil industry, in return for the rights to explore for oil in Venezuela's Orinoco region, potentially among the world's richest deposits.
The deal is set to be renewed after three years.
Venezuela also announced its intention to supply 1 million barrels of crude a day (bpd) to China by 2011, up from the current government figures of 350,000 bpd, and to construct three refineries in China.
As relations between Caracas and Washington soured further last year, US officials are understood to have voiced their reservations about the agreement – before it was signed – to Chinese authorities.
Venezuela is currently one of the United States's top five oil suppliers. But if Mr. Chávez can diversify Venezuelan crude exports with new markets, some observers suggest that that might encourage him to take an ever harder line against his longtime foe and its corporations.
Last summer, Chávez demanded that six foreign oil companies cede majority ownership to Petroleos de Venezuela, PDVSA, the state oil company.
"He is hoping to get [from China] the kind of financial support and expertise [he loses] when he chases out Conoco," says William Ratliff, an expert on China's influence in Latin America at Stanford University's Hoover Institution. "Certainly Venezuela has in mind that relations with China – and Russia and Iran – make it less dependent on major international companies."