China’s global energy hunt continues with three major state-owned companies strengthening their relationship with Venezuela. The companies, namely China National Petroleum Corp. or CNPC, Sinopec (SNP) and CNOOC Ltd. (CEO) have signed six agreements and decided to invest $40 billion.
One agreement was signed between CNPC and PDVSA (Petroleos de Venezuela SA) for joint development of the Orinocobasin Junin 4 oil block at an approximate cost of $16 billion with 60% and 40% interests, respectively. The block is capable of producing 400,000 barrels of crude oil daily.
Agreements were also signed by Sinopec and CNOOC for various development projects in Venezuela. Sinopec agreed to join PDVSA in developing the Junin 1 and Junin 8 blocks, which could each produce up to 200,000 barrels a day of crude, and participate in building the 200,000 barrels per day Cabruta refinery to process Junin crude.
The Venezuelan oil ministry 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.
While the Chinese Government has been trying to acquire major oil-rich resources to cope with the country’s significantly increasing energy demand, Venezuelahas become one of the most important suppliers. Apart from direct investments, China has given several credit facilities to Venezuelafor oil deals, including a $20 billion loan in April.
Venezuela expects these investments to be completed by 2016. Recent major Chinese investments in other countries include the acquisition of BP plc’s (BP) 60% stake in Argentina’s Pan American Energy for $7.06 billion by CNOOC and Repsol’s (REP) 40% share in Brazilassets for $7.1 billion by Sinopec.
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