China, Venezuela sign new round of energy agreements

China and Venezuela signed five agreements, one concerning refining and two touching on exploration and development of oil fields in the Orinoco Belt.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 30 -- China and Venezuela signed five agreements, one concerning refining and two touching on exploration and development of oil fields in the Orinoco Belt.

At the signing ceremony in Caracas, China National Offshore Oil Corp. (CNOOC) agreed to help the Venezuelan government assess oil reserves in the Boyaca 3 oil block in the Orinoco belt.

Venezuela’s state-owned Petroleos de Venezuela SA (PDVSA) and China Petroleum & Chemical Corp. (Sinopec) also signed an agreement to establish a mixed company to develop the Junin 8 Block.

CNPC and PDVSA agreed to set up a mixed company to develop a 400,000-b/d refinery in Cabruta that will refine oil from the Junin Block 8.

The two countries also signed an oil export agreement, which could see up to 560,000 b/d heading to China in 2010, as well as a deepwater technical advice agreement between CNOOC and PDVSA.

Analyst IHS Global Insight said the agreements indicate growing ties in the oil sector between the two countries, with Venezuela seeking to diversify exports away from the US and to secure finances to develop new oil reserves.

Global Insight also said China is keen to take advantage of the fall in crude oil prices and global demand over the past year to secure long-term supply deals from producer states like Venezuela as its own import dependence rises.

Earlier this year, Russia and Venezuela, during Venezuelan President Hugo Chavez's 2-day visit to Moscow, signed a similar package of energy agreements, including one to develop the Latin American country's Orinoco belt and its 235 billion bbl of heavy oil reserves (OGJ Online, Sept. 11, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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