China Trying to Control Latin American Oil

China Trying to Control Latin American Oil

Phil Brennan, NewsMax.com
Wednesday, March 2, 2005

Desperate to find new sources of fuel to power it's huge economic engine, China is looking south - and north - of the U.S. border for petroleum.

Writing in the New York Times, Juan Ferero reports that "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."

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He adds that the emphasis is on Venezuela, now in the process of becoming a Soviet-style communist dictatorship under President Hugo Chavez, a Castro clone and puppet.

"We have been producing and exporting oil for more than 100 years," Ferero says Chávez told Chinese businessmen in December. "But these have been 100 years of domination by the United States. Now we are free, and place this oil at the disposal of the great Chinese fatherland."

Given this fact, it is scant comfort that, as Ferero reports, "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."

Ferero notes that China "now operates two oil fields in Venezuela and under accords signed in Beijing in December and Caracas in January, it would develop 15 declining oil fields in Zumano in eastern Venezuela, buy 120,000 barrels of fuel oil a month and build a plant in Venezuela to produce boiler fuel used in Chinese power plants."

According to the Times, Sen. Richard G. Lugar, (R-Ind) Chairman of The Senate Foreign Relations Committee, recognizing the threat loss of Venezuelan would constitute recently asked the Government accountability Office to examine contingency plans should Venezuelan oil stop flowing. Chinese interest in Venezuela, a senior committee aide added underlines Washington's lack of attention toward Latin America.

"For years and years, the hemisphere has been a low priority for the U.S., and the Chinese are taking advantage of it," the aide said, speaking on condition of anonymity. "They're taking advantage of the fact that we don't care as much as we should about Latin America."

Roger Tissot, an analyst who evaluates political and economic risks in leading oil-producing countries for the PFC Energy Group in Washington told the Times "The Chinese are entering [the Latin American oil market] without political expectations or demands. They just say, 'I'm coming here to invest,' and they can invest billions of dollars. And obviously, as a country with billions to invest, they are taken very seriously." The Times reports:

In Brazil, the state-owned Petrobras and China National Offshore Oil have been studying the viability of joint operations in refining, pipelines and exploration in their two countries and in other parts of the world. This comes after a $1 billion Brazilian agreement with another Chinese company, Sinopec, to build a gas pipeline that will cross Brazil.

In Bolivia, Shengli International Petroleum Development has opened an office in the gas-rich eastern region and announced plans to invest up to $1.5 billion, though it is awaiting a new hydrocarbons law being drafted before committing itself to deals.

In Ecuador, China National Petroleum and Sinopec have been looking at oil blocks that the government is trying to develop.

In Peru, the Chinese vice president signed a memorandum of understanding in January that could lead to more exploration deals. Currently, a subsidiary of China National Petroleum produces oil.

Ferero concludes "China's entry is worrisome to some American energy officials, especially because the United States is becoming more dependent on foreign oil at a time when foreign reserves remain tight."

Chinese involvement in Latin America is "growing by leaps and bounds," Eduardo Gamarra, director of the Latin America and Caribbean Center at Florida International University told the Times, adding, "It's driven by the need for privileged access to raw material and privileged access to hydrocarbons."

There's nothing new about China's thirst for oil as Alice Hobart noted in her 1933 book "Oil For The Lamps of China." Writing in the McNair Papers in October 2003 Bernard D. Cole recalled that "one thread that runs through [Hobart's] work is Chinese dependence on foreign sources of energy supplies, which remains the case today."

Cole wrote that China's deputy director of the State Economic and Trade Commission (SETC) had estimated that "China will have to rely on international markets for 50 percent of its oil supply in 2020."

Cole continued "Maintaining the rate of economic growth to which the Chinese people have become accustomed is key to sustaining the legitimacy of the current political system in China as its ideological basis." He also predicts that China will need to import 8 million barrels a day by 2020, enev though it's the world's fifth largest oil producer.

Their unquenchable thirst for oil has led China to negotiate oil contracts in Canada as well, as NewsMax.com reported last December Oil Thirsty China Threatens U.S. Hold On Canadian Oil, and to scour the areas south of our borders for more sources of black gold.

China, the world's second-largest consumer of oil, has become The United States' number one competitor in its quest for oil, gas and minerals throughout the world - notably Central Asia, the Middle East and Africa. And they have turned their eye on Latin America.

Last year, NewsMax.com warned that this neglect of the nations south of our borders was leading to serious trouble for the U.S. - China Filling U.S. Vacuum in Latin America. That trouble has now materialized.

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