China to invest in Venezuela

Nov 08, 2007 01:00 AM

China plans to put $ 4 bn into a Venezuelan fund, its single biggest investment overseas, as it explores for oil in the Faja del Orinoco region, which contains one of the richest petroleum deposits in the world.
With the addition of $ 2 bn from Venezuela, the fund will total $ 6 bn. That figure that may triple in 10 years, President Hugo Chavez of Venezuela said at a signing ceremony in Caracas with Zhang Xiaoqiang, the vice minister of the National Development and Reform Commission of China. Other accords promised China 500,000 bpd of Venezuelan oil and exploration rights to the block Junin 8, which is located in the Faja.

Chavez reiterated his intention to supply 1 mm bpd of crude to China by 2011 and to build three "large" refineries there as he seeks to reduce dependence on the United States. He said China and his country are aligned by the pursuit of local versions of socialism.
The agreements follow an earlier statement by Rafael Ramirez, the Venezuelan minister of energy and oil, that the two countries would create $ 10 bn in joint ventures. Ramirez said in September that the countries would build projects in Venezuela, refineries in China and a joint shipping line.

China National United Oil signed a contract to buy fuel oil from Petroleos de Venezuela, while PetroChina International signed an agreement with the Venezuelan company's shipping subsidiary, PDV Marina, to transport crude together in order to reduce reliance on private contractors, whose rates have climbed in recent years.
China National Petroleum, or CNPC, signed a memorandum of understanding to strengthen cooperation with Petroleos de Venezuela. CNPC has been certifying reserves in Junin 4, another block of the Faja.

Chinese companies previously invested $ 1.6 bn in Venezuela, and trade between the two countries exceeds $ 4 bn a year, Zhang said. In addition to those related to energy and public works, the two countries agreed to form joint ventures to make mobile phones and home appliances.
The agreements were signed by leaders of China Development Bank, China National United Oil, ZTE, the Bank of Economic and Social Development of Venezuela and Petroleos de Venezuela. China National Petroleum and the Venezuelan minister of basic industry and mining, Jose Khan, also took part in the event.

Source / International Herald Tribune
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