China Counters US’ Venezuela Embargo With a $3 Billion Oil Investment
Will build an oil blending facility allowing Venezuela to more easily sell its sour crude in Asia
Editor’s note: There are few refineries that can handle Venezuela’s very sour crude and most of them are in Texas (owned by the Koch brothers). When the Americans stopped buying, this created something of a problem for the Venezuelans whose customer base is much more limited than of other oil producers. The solution Venezuelans came up with is to blend its crude with lighter foreign (Nigerian) oil creating the heavy “Merey” blend that Chinese refineries are well equipped to deal with, but more blending capacity is needed.
The Venezuelan government has announced the expansion of Chinese investment in the country’s oil industry, with the aim of increasing production by 120,000 barrels per day.
The investment, which authorities say is worth US $3 billion, financed the construction of a new oil blending plant inaugurated last Thursday as the first part of the two-stage plan.
The “Jose” plant, which is located in Barcelona, Anzoátegui State, is to be run by the Sinovensa joint venture, which is 49 percent owned by China’s National Petroleum Corporation (CNPC) and 51 percent by Venezuela’s PDVSA state-run oil company.
The facility will blend extra-heavy grades from Venezuela’s Orinoco Oil Belt into the exportable Merey crude, which is popular in Asian markets.
Sinovensa currently produces 110,000 barrels per day (BPD), a figure which officials claim will increase to 165,000 BPD with the addition of the new blending plant. The second stage of the project is expected to increase this figure to 230,000 BPD, but no further details have been disclosed so far.
The news follows the conversion of the Petropiar extra-heavy crude upgrader plant into a blender facility earlier this month. Petropiar is projected to produce an additional 130,000 BPD of Merey crude, making the lighter blend Venezuela’s primary export.
It has also been reported that Caracas has signed a repair and maintenance contract with Shanghai-based contractors Wison Engineering Services.
According to Bloomberg, the servicing work on Venezuela’s refineries is due to take between six months and a year and will be paid for in oil products, including diesel. It is unknown which refineries will benefit from the maintenance.
The influx of Chinese funding comes only a week after Washington announced an embargo against all trade with Venezuelan state entities and associates. The escalation has been criticized by the international community, including most recently by UN High Commissioner for Human Rights Michelle Bachelet, who expressed concern over the “potentially severe impact on the human rights of the people of Venezuela.”
Washington has repeatedly threatened Beijing and Moscow to suspend their close relations with the Maduro administration, with US National Security Advisor John Bolton vowing secondary sanctions against Russian and Chinese companies that violate the embargo.
Beijing has dismissed the threat against its firms as “psychological terror” and “grave interference,” while Venezuelan Oil Minister Manuel Quevedo promised to “fight the blockade with everything [we have].”
Venezuela’s oil industry has collapsed in recent years, with output stabilizing around 750,000 BPD since April, well down from the average 1.3 million BPD produced in 2018.
A combination of problems – including mismanagement, underinvestment, and the 2017 US ban on new lending – were exacerbated in January when the White House announced an oil embargo and froze the country’s US-based CITGO refineries, limiting Venezuela’s access to diluents and other products needed to process crude oil.
In recent months, fuel shortages have hit parts of the country as PDVSA has struggled to satisfy the estimated 250,000 BPD of domestic demand, forcing the country to import more fuel.
Bloomberg reported this week that fuel imports during July were more than double those of June, continuing a recent upward trend.
According to shipping reports and data compiled by the wire service, Caracas imported 196,000 BPD in July, the highest figure since January. The fuel is believed to come principally from Russia’s state-run firm Rosneft firm via Greece and Malta.
[…] Will build an oil blending facility allowing Venezuela to more easily sell its sour crude in Asia […]
Are you all guys totally illiterate
Have you ever been in a real country side of Russia or in former Soviet Union, same for China or even much more fresh in the New Venezuela.
It is normal that if you sell or help somebody is fair that the other side
gives you something back.
Now when I passed my best age and I am retired I finally need some help and
promised assistance from some people I help a lot in the past.
Sincerely I can say that I was in the position to help many people and during that time I did not need help from others. I tell them than, It will come time when I will need your help than I will call you.
Now I call some people and ask for some painless help.
And what I received??? You can imagine!!!
So I give to the USA policy
1000% support against all world trade and mostly on the world trying to take
advantage of USA.
Let’s see what the indispensable and exceptional bully thinks of that counter move. America has already lost her illegal trade war with China, she’s now severely restricted with her aggressive antics in Venezuela, she’s gone down a blind alley and is in a dilemma in Iran, her options are getting more limited each day in Syria as the SAA move in on Idlib …..perhaps it’s time to pack for home !
China has come through in a very big way for Venezuela – as has Russia – so the US can just ‘sit on it and spin’….they have such an exaggerated view of themselves as hegemons that is is hilarious…Washington is making an ass of its delusional self!!!
In the meantime, China and Russia are making economies grow – Venezuela is not lost!
America’s self-styled Democracy Promotion propaganda is but a mask for the promotion of the American free market looting and pillage of targeted nations.
Lust for Profits, Not Love of Democracy: The Real Reason Washington Wants Maduro Gone
Every country who believes in sovereignty of nations must support, like China and Russia, the rights and independence of Venezuela. Today it may be Venezuela who is suffering from the outrageous and totally inhuman sanctions imposed by the rogue US regime, it may be another’ s turn if the rogue US regime is not stopped. The whole irony and hypocrisy about the sanction imposed by the rogue US regime is the allegations of human rights abuses by the Venezuela government. But the sanctions imposed is a worst abuse of human rights by the rogue US regime than anything on the Venezuelan people. The the rogue US regime’s bullying of other nations.
The US is cutting off it’s nose to spite it’s face.