Photo: Reuters/Minoru Iwasaki
The death of Venezuelan president Hugo Chavez has raised some concerns in China.This is because the loans-for-oil program made Venezuela the seventh largest crude oil supplier to energy hungry China.
Late last year, Venezuelan oil minister Rafael Ramirez said that his country wants to increase its daily oil exports to China 1 million barrels in 215, from 500,000 barrels now, according to China Daily.
This comes at a time when Chinese dependence on oil imports is rising. The NDRC said imports accounted for 58 per cent of China’s oil supply in 2012, up from 56 per cent in 2011, and 55 per cent in 2010.
Chavez’s death has naturally made Beijing uncomfortable since opposition leader Henrique Capriles has previously said that he would do away with Chavez’s loans for oil policies. He said Chavez’s deals cost Venezuela $6.7 billion annually.
Reuters reports that PDVSA, Venezuela’s state owned oil and gas company, “was not paid directly for 43 per cent of its barrels of crude and oil products, rising from 36.5 per cent in 2010 and 32 per cent in 2009”.
But in a Financial Times column, Eurasia Group’s Ian Bremmer writes that China doesn’t need to worry because Capriles is unlikely to beat out Nicolas Maduro who is expected to succeed Chavez. Moreover, he is unlikely to break a pre-existing agreement according to Bremmer and he is well aware that Venezuela needs rich allies.
Instead, Bremmer thinks this raises broader questions for Chinese foreign policy, specifically its “foreign investment strategy” as it tries to secure resources for itself.
“In the process of becoming more deeply involved in the politics of foreign countries, they are likely to discover that they have traded one form of risk and uncertainty for another,” he writes.
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