BEIJING (Dow Jones Newswires), Dec. 3, 2010
China's three main state-owned oil companies have strengthened their ties to Venezuela's energy sector, signing six agreements and increasing their investments to a planned $40 billion dollars.
The deals are the latest of a string of multi-billion dollar South American ventures signed by Chinese companies in recent months, aimed at acquiring major chunks of the continent's rich resources and at helping fuel China's economic boom.
Among the agreements signed was one by China National Petroleum Corp., President Jiang Jiemin and Venezuela Oil Minister Rafael Ramirez, for the joint development of the Orinoco basin Junin 4 oil block, the Chinese company said Friday in its in-house newspaper. It said the agreement had been signed Wednesday.
The cost of developing Junin 4, capable of producing 400,000 barrels of crude daily, could be as much as $16 billion, with the block developed as a 60:40 joint venture by state-owned Petroleos de Venezuela SA and CNPC, the two companies said in April when they agreed to a preliminary pact.
Agreements were also signed with China Petrochemical Corp., known as Sinopec Group, and China National Offshore Petroleum Corp., known as Cnooc Group, Venezuela's Ministry of Energy and Petroleum said in a posting on its website.
Sinopec agreed to work with PdVSA in developing the Junin 1 and Junin 8 blocks, which could each produce up to 200,000 barrels a day of crude, and to participate in building the 200,000-barrel-a-day Cabruta refinery to process Junin crude, it said.
Cnooc signed an agreement to join the Marical Sucre natural gas project, which could produce 1.2 million cubic feet of gas and 37,000 barrels of condensate daily, the ministry said.
Apart from direct investments by the companies in specific projects, China has bankrolled Venezuela with a series of credit-for-oil deals, including a $20 billion loan in April.
That credit, half in dollars and half in Chinese yuan, is being used for a range of infrastructure projects, and is to be repaid by future oil deliveries.
"Venezuela has become one of the most important suppliers of crude oil and refined oil projects to China...we have become the third-largest supplier of hydrocarbons to the Asian country," Energy Minister Ramirez was quoted as saying in the website posting.
The Chinese companies had, in all, agreed to invest "at least" $40 billion in Venezuela's oil and gas sectors by 2016, the ministry said.
Officials from Cnooc and Sinopec were not available for comment on the agreements.
Some of the agreements stem back to December 2009, when a raft of preliminary pacts were announced in Caracas.
One project that hasn't been mentioned in announcements this week was a plan initialed last year for Cnooc to help in the development of Venezuala's eastern Boyaca 3 heavy oil block.
On Nov. 28, Cnooc and its Argentina partner Bridas agreed to pay BP $7.06 billion dollars for its 60% stake in the South America-based Pan American Energy.
That deal came two months after Sinopec paid Spain's Repsol $7.1 billion for a 40% share of its assets in Brazil.
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