Read it here first: China's Latin American Oil Grab

Tuesday, March 01, 2005 | 11:33 AM

"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).

If you read it, you will recognize some of the issues. Last month, we discussed China's Oil Grab in  Russia and Venezuela. That comes on top of our May 16, 2004, discussion of Chinese Oil Demand.

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

Venezuela     Oil
Chile     Tin
Bolivia     Gas
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 million.

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. 

>

Sources:
Penobscot Princess
Morning Comment --- Tuesday, February 2, 2005
subscription only electronic distribution

China's Oil Diplomacy in Latin America
JUAN FORERO
NYT, March 1, 2005
http://www.nytimes.com/2005/03/01/business/worldbusiness/01oil.html

Tuesday, March 01, 2005 | 11:33 AM | Permalink | Comments (5)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

Comments

While I find your fundamental thesis to be sound and hence am hardly short fuels, neither am I long mercantilism.

How are these "grabs" any more than it is when Chevron signs a deal with Qatar or Angola?

Posted by: wcw | Mar 1, 2005 1:49:40 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner