China grabs Latin America, well ahead of Obama's outreach
In the past year, China has secured some $65 billion in regional deals. President Obama's current visit to Latin America is seen as a counteracting move.
President Obama's current visit to Latin America is widely seen as a move to counteract the rising influence of China, which is in the midst of an unprecedented energy grab in the oil- and mineral-rich region.Skip to next paragraph
From oil to refineries, China is capturing and integrating Latin America as much as it can, securing at least $65 billion in deals throughout the region since 2010. The deals are expected to eventually translate into at least a million barrels of crude oil and refined products per day and growing markets on both sides of the continent.
The grab is not only unprecedented but also a significant game-changer in China’s rise as a world power, especially because the US plans to increasingly meet its own energy demand with Latin American oil, setting the stage for a future competition between both countries.
“Latin America is very important for China. I think that it’s as important as Africa,” which in 2009 supplied roughly 30 percent of China’s oil imports, says Keun-Wook Paik, an expert in the Chinese overseas energy expansion at the London-based think tank Chatham House. Latin America supplied about 2.5 percent of China's oil imports in 2009.
Brazil’s cool reception to Mr. Obama this past weekend contrasts with China’s quiet but effective cash diplomacy in the region, home to the world’s second-biggest reserves after the Middle East. The Chinese yuan is contesting US hegemony by funding stadiums and dams and investing billions in strategic sectors.
A few examples:
- Earlier this month, Bridas Group, an Argentinean company half-owned by the mammoth China National Offshore Oil Corporation (CNOOC), finalized a deal to buy Exxon Mobil's oil refining and sales in Argentina, Uruguay, and Paraguay. CNOOC paid $3.1 billion for a 50 percent stake in Bridas earlier last year and the new entity paid another $7.1 billion to BP for its 60 percent stake in Pan American Energy.
- Last month, Chinese company Sinopec – Asia's biggest oil refiner – formalized a $7.1 billion contract to buy a 40 percent stake of the integrated Brazilian operations of Repsol, Spain’s biggest energy company.
- In 2010, China’s biggest energy companies signed deals to build refineries and pump oil in Venezuela, Cuba, and Brazil and to lease storage tanks in the Caribbean, in effect integrating the entire energy value chain to not only supply the homeland’s voracious appetite, but also the American continent.