Venezuela Boosts Oil Sales to China

Venezuela has increased oil sales to China to 640,000 barrels a day, the Andean nation’s energy minister said.

“Before, we never sold a single barrel of petroleum to China and now we sell them 640,000 (bpd) … at a better price than … in the US market,” Rafael Ramirez said in an interview with El Correo del Orinoco newspaper.

Venezuela produces around 3 million bpd and exports more than two-thirds of its output, mainly to the US and China, the minister said.

Until 1999, when leftist Hugo Chavez became president, practically all of Venezuela’s oil exports went to the US, but the new government took steps to diversify through sales of crude to China, India, Japan and other nations, Ramirez pointed out.

Thanks to that approach, he said, “we are not subject to the problems of the US and European economy, nor to the devaluation of the dollar”.

Venezuela’s petroleum relationship with China also includes investment by Beijing in the Andean nation’s oil sector.

The Chinese government’s 2012 budget includes more than $4 billion for state-owned China National Petroleum Corporation to enter joint ventures in Venezuela’s oil-rich Orinoco Belt, Ramirez told the newspaper.

While Caracas estimates the Orinoco reserves at around 300 billion barrels of crude, a study by the US Geological Services says the area could hold as much 513 billion barrels of extractable crude.

Chavez, who has said he expects sales to China to reach 1 million bpd in the medium term, forecasts that Venezuelan oil production will climb to 4 million bpd next year.

The energy minister rejected claims by Chavez opponents that Venezuela’s sale of oil to cash-strapped Caribbean and Latin American nations on highly favorable terms is tantamount to “gifts”.

Outside audits of Venezuelan state oil giant PDVSA do not support the opposition allegations, Ramirez said.

“With our (oil-supply) agreements, which have a strong component of solidarity, above all with the smallest countries, we maintain the strategy of having a presence in our geopolitical space,” he added.

“The 11 countries of the eastern Caribbean don’t consume more than 10,000 barrels (of oil) per day,” Ramirez said. “What have we done? We have constituted 11 mixed enterprises in the Caribbean, a PDVSA company on each island.”

All exported Venezuelan oil “is sold at international prices”, he insisted, dismissing talk of discounts.

Via Venezuelanalysis