Venezuela's Chavez to visit Japan next month

Venezuelan president Hugo Chavez will call in on Japan in early April, aiming to firm up agreements signed this week concerning his country's oil and gas industry.

Mar 20th, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 20 -- Venezuelan president Hugo Chavez, as part of a forthcoming state visit through East Asia, will call in on Japan in early April, aiming to firm up agreements signed this week concerning his country's oil and gas industry.

"The president would like to visit here during his Asian tour planned for early April," said Venezuelan energy minister Rafael Ramirez who met in Tokyo with Japanese Prime Minister Taro Aso.

A source at Japan's foreign ministry said the talks between Aso and Chavez would concern economic matters predominantly, including Japanese investments in Venezuela, primarily its oil and gas industry.

The announcement of Chavez's visit came as Ramirez and Japanese trade minister Toshihiro Nikai signed a "Protocol of Understanding in the Sphere of Energy," aimed at joint work on a variety of oil and gas projects.

The Japanese foreign ministry quoted Ramirez as saying he "would like to see Japanese companies take more active roles in oil and liquefied natural gas development projects in Venezuela," and the Japanese were equally clear in stating their interests in working with Venezuela.

"We are seeking investment, expansion, and operational opportunities in the oil refining and petrochemical sectors," said Nikai. "We hope to strengthen our economic relationship based on reciprocity, using Japanese technology and Venezuela's abundant natural resources."

Orinoco interest
Nikai defined his country's interests more narrowly, saying: "A tender for energy blocks in the Orinoco basin, expected to be held in June or later this year, is a prime target, while upstream natural gas is also on Japan's list."

Shin Hosaka, director of the oil and gas division at Japan's foreign ministry, echoed Hosaka's remarks, saying: "Orinoco oil and natural-gas reserves in Venezuela are our main interests."

The protocol clearly serves both sides as Japan imports some 90% of its oil from the Middle East and aims to diversify its suppliers, while state-owned Petroleos de Venezuela SA wants funding to develop projects in the Orinoco and aims to diversify its markets.

On Mar. 18, prior to his visit to Japan, Ramirez said the Venezuelan government expects "an intense expansion of production" in the Orinoco belt, "which probably has the largest accumulation of hydrocarbons in the world."

To develop the Orinoco belt oil, Ramirez said Venezuela seeks the cooperation of 27 international companies to deal with "enormous environmental challenges." Four Japanese firms are said to be among the companies considering investment in the heavy oil projects.

In addition to the Orinoco belt, Japan has shown considerable interest in Venezuela's natural gas industry, with several Japanese firms, including Itochu, Mitsubishi, and Mitsui, already stakeholders in PDVSA's Mariscal Sucre LNG project.

The Marisal Sucre project is one of three major developments PDVSA is developing, each of which will consist of a separate liquefaction train at the Gran Mariscal de Ayacucho (Cigma) natural gas complex in Guiria (OGJ Online, Feb. 13, 2009).

The oil and gas developments being eyed by Japan and Venezuela build on earlier agreements and financing between them.

In February 2007, with financial backing from the state-owned Japan Bank for International Cooperation, Japanese trading houses Marubeni Corp. and Mitsui & Co. signed a $3.5 billion, 15-year contract to purchase crude and oil products from PDVSA.

Hosaka credited that agreement as being a key to this week's developments, saying of the JBIC-backed loan: "This has really helped build relationships between the two countries." Last autumn, Venezuela sent Japan its first installment of the loan's repayment—2 million bbl of crude oil.

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