WATCHING THE WORLD: Chavez blowing smoke

Aug. 28, 2006
Venezuela President Hugo Chavez toured Asia and Africa last week, in particular China, where he tried swapping oil for political favors.

Venezuela President Hugo Chavez toured Asia and Africa last week, in particular China, where he tried swapping oil for political favors. But the chances of his doing that are about as good as his lighting up a Cuban cigar at the White House.

Some analysts said Chavez offered to supply as much as 20% of China’s oil needs if Beijing backed Venezuela’s bid to join the UN Security Council. Others suggested that Chavez sees China as an emerging power quietly growing and challenging US dominance around the globe.

Energy cooperation is generally recognized as an important aspect of cooperation between China and Venezuela.

With oil production of 3 million b/d, Venezuela is a major supplier, and China is in a perpetual state of demand growth these days, with no end in sight.

Venezuelan exports

China’s oil imports from Venezuela have been on the rise, and they have boosted the Latin American country to 10th place among its suppliers. Venezuela expects to ascend even higher on that list, announcing that its exports to China will increase from the current 150,000 b/d to 200,000 b/d by yearend.

One Venezuelan official even said that his country hopes to export 300,000 b/d to China before yearend and 45% of all Venezuela’s oil and petrochemical products to China by 2012.

Additional reports say Venezuela has offered to export between 500,000 b/d and 1 million b/d of crude to China if the South American nation reaches its goal of producing 5.8 million bbl of crude by 2012.

To help get these amounts of crude to China, Chavez recently said that Venezuela plans to purchase its own fleet of oil supertankers “so that Venezuela does not depend on renting oil tankers.” He added that China would help build tankers in Venezuela.

But America buys Chinese

There’s not much doubt that China will buy as much oil as Venezuela will be able to sell or even help build the ships needed to carry it. But if Chavez thinks the Chinese are going to back his political ambitions-especially his anti-US ambitions-then he’s been smoking too many Cuban cigars.

China’s demand for energy is a result of its massive industrialization over the past several decades and its desire to reach world markets with its ever-increasing output of products, be they Black & Decker drills or Old Navy T-shirts.

As a result of those factors, China’s foreign trade volume neared $1 trillion in the first 7 months of this year, a year-on-year rise of 23.1%. That translates to a lot of jobs for Chinese workers, to say nothing of income for Chinese consumers. It also translates into a calculus of international political clout.

In particular, it means that, as China’s second biggest export market after the European Union, the US carries considerably more clout than Beijing’s 10th leading supplier of crude.