"In recent months, though, China’s voracious economy has brought it to Venezuela, and much of South America, in search of fuel."
How’s that for a money quote to grab your attention? It comes from an article in today’s NYT (China’s Oil Diplomacy in Latin America).
Give credit to the NY Times for being the first of the majors to recognize this for what it is: a naked grab for scarce commodities:
"BOGOTÁ, Colombia, Feb. 28 – Latin America is becoming a rich destination for China in its global quest for energy, with the Chinese quickly signing accords with Venezuela, investing in largely untapped markets like Peru and exploring possibilities in Bolivia and Colombia.
China’s sights are focused mostly on Venezuela, which ships more than 60 percent of its crude oil to the United States. With the largest oil reserves outside the Middle East, and a president who says that his country needs to diversify its energy business beyond the United States, Venezuela has emerged as an obvious contender for Beijing’s attention.
The Venezuelan leader, Hugo Chávez, accompanied by a delegation of 125 officials and businessmen, and Vice President Zeng Qinghong of China signed 19 cooperation agreements in Caracas late in January. They included long-range plans for Chinese stakes in oil and gas fields, most of them now considered marginal but which could become valuable with big investments.
Mr. Chávez has been engaged in a war of words with the Bush administration since the White House gave tacit support to a 2002 coup that briefly ousted him. Still, Venezuela is a major source for American oil companies, one of four main providers of imported crude oil to the United States, inexorably linking the two countries’ interests."
And China is not stopping with just one country:
China’s Latin American Oil Manuevers
|Brazil||joint operations in refining, pipelines and exploration gas pipeline|
|Bolivia||Shengli International Petroleum Development earmarked $1.5 billion investment fund|
|Ecuador||China National Petroleum and Sinopec oil blocks|
|Peru||China National Petroleum oil production; Also, memorandum of understanding for more exploration deals|
|Colombia||exploration and production|
As many people blame "speculators" for the rise in oil prices, I
once again need to remind people that China accounts for 40 percent of
global growth in oil demand over the past four years (Source: NYT,
DOE). I expect their demand to triple over the next 3 decades. At
present, China consumes 5.56 million barrels per day versus the United
States 20.4 million daily barrels. Of that amout, the US imports ~12
Expect this to be an ongoing story. Those pundits who blame high oil prices on "speculators" remind me of the CEOs who blame their low stock price on the "shorts:" Both groups are either fools, liars — or worse.
Morning Comment — Tuesday, February 2, 2005
subscription only electronic distribution
China’s Oil Diplomacy in Latin America
NYT, March 1, 2005
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