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China and Venezuela to sign big oil deals

(Reuters)
Updated: 2007-03-25 09:37

CARACAS - Venezuela said on Saturday it was working on a raft of oil deals with China, giving impetus to President Hugo Chavez's attempts to break his country's dependence on oil exports to the United States.

The China National Petroleum Corp. will look to develop heavy crude oil production in the Orinoco Belt and cooperate with Venezuela in building three refineries in China and a "super-fleet" of crude tankers, the Information Ministry said.

"The United States as a power is on the way down, China is on the way up. China is the market of the future," Chavez was quoted as saying by an Information Ministry statement after meeting CNPC President Jiang Jiemin in Caracas.

China's economic expansion has turned it into the world's second-biggest oil consumer. OPEC member Venezuela was the fifth-biggest oil exporter to the United States in January. Analysts reckon it pumps about 2.7 million barrels per day.

Chavez has ambitious plans to lift oil exports to China to lessen its dependence on its arch-foe the United States, saying it hopes to send 1 million barrels per day to China by 2012.

This optimistic target follows an earlier goal of more than tripling oil exports to China of 160,000 bpd by 2009.

The Information Ministry said CNPC would sign on Monday a preliminary deal to take a 40 percent stake in various Venezuelan heavy crude projects.

CNPC is already working in the Junin 4 block but Chavez said the Chinese oil giant wanted to expand its Orinoco operations with "billions of dollars" of investment.

Chavez is pushing ahead with a nationalization of Venezuela's oil industry, stripping major US companies such as Exxon Mobil Corp., ConocoPhillips and Chevron Corp. of their majority stakes in heavy crude projects.

While sidelining such majors, Chavez is seeking to do more business with China, Russia and Iran, part of forming what he describes as a multipolar alliance against the United States.

He said the three proposed refineries in China would process 800,000 bpd of Venezuelan crude. The proposed new tanker fleet would not just run China-Venezuela routes but also operate in the Caribbean and take shipments to Africa, Chavez said.

Although Venezuela has signed many memorandums of understanding on commercial cooperation with countries in the developing world, many of the proposals have been very slow to turn into anything concrete.