Latin America is becoming a rich destination for China in its global quest for energy, with the Chinese quickly signing accords with Venezuela, investing in largely untapped markets like Peru and exploring possibilities in Bolivia and Colombia.
China's sights are focused mostly on Venezuela, which ships more than 60 percent of its crude oil to the United States. With the largest oil reserves outside the Middle East, and a president who says that his country needs to diversify its energy business beyond the United States, Venezuela has emerged as an obvious contender for Beijing's attention.
The Venezuelan leader, Hugo Chavez, accompanied by a delegation of 125 officials and businessmen, and Vice President Zeng Qinghong(曾慶紅) of China signed 19 cooperation agreements in Caracas late in January. They included long-range plans for Chinese stakes in oil and gas fields, most of them now considered marginal but which could become valuable with big investments.
Chavez has been engaged in a war of words with the Bush administration since the White House gave tacit support to a 2002 coup that briefly ousted him. Still, Venezuela is a major source for American oil companies, one of four main providers of imported crude oil to the United States, inexorably linking the two countries' interests.
Analysts and Venezuelan government officials say those ties will not be severed, as Venezuela is a relatively short tanker trip from the US and Venezuelan refineries have been adapted to process the nation's heavy, tarlike crude oil.
"The United States should not be concerned," Rafael Ramirez, Venezuela's energy minister, said in an interview, "because this expansion in no way means that we will be withdrawing from the North American market for political reasons."
In recent months, though, China's voracious economy has brought it to Venezuela, and much of South America, in search of fuel.
"The Chinese are entering without political expectations or demands," said Roger Tissot, an analyst who evaluates political and economic risks in leading oil-producing countries for the PFC Energy Group in Washington. "They just say, 'I'm coming here to invest,' and they can invest billions of dollars. And obviously, as a country with billions to invest, they are taken very seriously."
China's entry is worrisome to some American energy officials, especially because the US is becoming more dependent on foreign oil at a time when foreign reserves remain tight. It was the limited supplies that pushed a barrel of oil to US$55 in October, driving up retail prices and hurting economies. On Monday, crude oil for April delivery settled at US$51.75 in New York, up US$0.26.
The Senate Foreign Relations Committee, headed by Richard Lugar, a Republican, recently asked the government Accountability Office to examine contingency plans should Venezuelan oil stop flowing. Chinese interest in Venezuela, a senior committee aide said, underlines Washington's lack of attention toward Latin America.
"For years and years, the hemisphere has been a low priority for the US, and the Chinese are taking advantage of it," the aide said, speaking on condition of anonymity. "They're taking advantage of the fact that we don't care as much as we should about Latin America."
To be sure, China, the world's second-largest consumer of oil, has emerged as a leading competitor to the US in its search for oil, gas and minerals throughout the world -- notably Central Asia, the Middle East and Africa.
China has accounted for 40 percent of global growth in oil demand in the last four years, according to the US' Energy Department, and its consumption in 20 years is projected to rise to 12.8 million barrels a day from 5.56 million barrels now. Most of that oil will need to be imported. The US now uses 20.4 million barrels a day, nearly 12 million of it imported.
Aggressively seeking out potential deals, China tries to out-muscle the big international oil companies, always beholden to shareholders. Chinese companies, which have substantial government help, can dispense government aid to secure deals, take advantage of lower costs in China and draw on hefty credit lines from the government and Chinese financial institutions.
"These companies tend to make uneconomic bids, use Chinese state bilateral loans and financing, and spend wildly," Frank Verrastro, director and a senior fellow at the Center for Strategic and International Studies in Washington, told the Senate Energy Committee early in February.
"Chinese investors pursue market and strategic objectives, rather than commercial ones," he said.
China already operates two oil fields in Venezuela. Under accords signed in Beijing in December and Caracas in January, it would develop 15 declining oil fields in Zumano in eastern Venezuela, buy 120,000 barrels of fuel oil a month and build a plant in Venezuela to produce boiler fuel used in Chinese power plants.
Energy analysts say these deals, though mostly marginal, show that China is willing to wade in slowly, with larger ambitions in mind.
"These are steps you have to take to have a longer-term relationship," said Larry Goldstein, president of the Petroleum Industry Research Foundation in New York. "We don't know enough about whether they will lead to larger projects, but my sense is that they will."
Under the agreements, Venezuela has invited China to participate in much larger projects, like exploring for oil in the Orinoco belt, which has one of the world's great deposits of crude oil, and searching for natural gas offshore through ambitious projects intended to make Venezuela a world competitor in gas.
Analysts note that part of China's effort is to learn about Venezuelan technology, particularly the workings of its heavy-oil refineries. Much of the oil that will be exploited in the future will be tarlike, requiring an intricate and expensive refining process.
In return, China is offering the Venezuelans a US$700 million line of credit to build housing, aid that helps Chavez in his goal of lifting his compatriots out of poverty. The recent trip also yielded plans to invest in telecommunications and farming.
"It's a country that permits you to get more out of agreements than just energy accords," Bernardo Alvarez, Venezuela's ambassador to the US, said of China.
Venezuela, with a view to exports to China, says it is exploring plans to rebuild a Panamanian pipeline to pump crude oil to the Pacific, where it would be loaded onto supertankers that are too big to use the Panama Canal.
Another proposal, with neighboring Colombia, would lead to the construction of a pipeline across Colombia to carry Venezuelan hydrocarbons, which would then be shipped to Asia from Colombia's Pacific ports.
Chavez has promoted these plans in three visits to China. In the most recent, in December, he unveiled a statue of Simon Bolivar in Beijing. Trade between the two countries could rise to US$3 billion this year from US$1.2 billion, Chavez said, celebrating their links as a way for Venezuela to break free of dependence on the American market.
"We have been producing and exporting oil for more than 100 years," Chavez told Chinese businessmen in December. "But these have been 100 years of domination by the United States. Now we are free, and place this oil at the disposal of the great Chinese fatherland."
China, though, is not just interested in Venezuela. Much of Latin America has become crucial to China's need for raw materials and markets, with trade at US$32.85 billion in the first 10 months of last year, about 50 percent more than in 2003. Mining, analysts say, is among China's priorities, whether it is oil in Venezuela, tin in Chile or gas in Bolivia.
Chinese involvement in Latin America is "growing by leaps and bounds," said Eduardo Gamarra, director of the Latin America and Caribbean Center at Florida International University, adding, "It's driven by the need for privileged access to raw material and privileged access to hydrocarbons."
In Brazil, the state-owned Petrobras and China National Offshore Oil have been studying the viability of joint operations in refining, pipelines and exploration in their two countries and in other parts of the world. This comes after a US$1 billion Brazilian agreement with another Chinese company, Sinopec, to build a gas pipeline that will cross Brazil.
In Bolivia, Shengli International Petroleum Development has opened an office in the gas-rich eastern region and announced plans to invest up to US$1.5 billion, though it is awaiting a new hydrocarbons law being drafted before committing itself to deals.
In Ecuador, China National Petroleum and Sinopec have been looking at oil blocks that the government is trying to develop.
In Peru, the Chinese vice president signed a memorandum of understanding in January that could lead to more exploration deals. Currently, a subsidiary of China National Petroleum produces oil.
The Colombian state oil company has been discussing exploration and production with the Chinese. Part of the lure is in new, more beneficial terms for oil companies and an improving security situation.
Eating at a breakfast shop the other day, I turned to an old man sitting at the table next to mine. “Hey, did you hear that the Legislative Yuan passed a bill to give everyone NT$10,000 [US$340]?” I said, pointing to a newspaper headline. The old man cursed, then said: “Yeah, the Chinese Nationalist Party [KMT] canceled the NT$100 billion subsidy for Taiwan Power Co and announced they would give everyone NT$10,000 instead. “Nice. Now they are saying that if electricity prices go up, we can just use that cash to pay for it,” he said. “I have no time for drivel like
A failure by the Chinese Communist Party (CCP) to respond to Israel’s brilliant 12-day (June 12-23) bombing and special operations war against Iran, topped by US President Donald Trump’s ordering the June 21 bombing of Iranian deep underground nuclear weapons fuel processing sites, has been noted by some as demonstrating a profound lack of resolve, even “impotence,” by China. However, this would be a dangerous underestimation of CCP ambitions and its broader and more profound military response to the Trump Administration — a challenge that includes an acceleration of its strategies to assist nuclear proxy states, and developing a wide array
Young supporters of former Taiwan People’s Party (TPP) chairman Ko Wen-je (柯文哲) were detained for posting the names and photographs of judges and prosecutors believed to be overseeing the Core Pacific City redevelopment corruption case. The supporters should be held responsible for their actions. As for Ko’s successor, TPP Chairman Huang Kuo-chang (黃國昌), he should reflect on whether his own comments are provocative and whether his statements might be misunderstood. Huang needs to apologize to the public and the judiciary. In the article, “Why does sorry seem to be the hardest word?” the late political commentator Nan Fang Shuo (南方朔) wrote
Chinese Minister of Foreign Affairs Wang Yi (王毅) reportedly told the EU’s top diplomat that China does not want Russia to lose in Ukraine, because the US could shift its focus to countering Beijing. Wang made the comment while meeting with EU High Representative for Foreign Affairs and Security Policy Kaja Kallas on July 2 at the 13th China-EU High-Level Strategic Dialogue in Brussels, the South China Morning Post and CNN reported. Although contrary to China’s claim of neutrality in the Russia-Ukraine conflict, such a frank remark suggests Beijing might prefer a protracted war to keep the US from focusing on
RSS