China and Venezuela Finalize Plans for a Joint Oil Fund

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Researched by Industrial Info Resources (Sugar Land, Texas). According to Venezuela’s President Hugo Chavez, China is to be part of a joint fund with Venezuela designed to finance $6 billion for heavy crude oil exploration and production projects.

During Chavez’s last visit to China, he secured a number of deals and signed agreements with China to strengthen the relationship between the two countries as part of Chavez’s governmental efforts to create a “multi-polar” world to offset the U.S hegemony. Moreover, the Venezuelan government stated at that time that it would create joint ventures with Chinese oil companies to produce and export crude from Venezuela's Orinoco basin as part of a larger energy cooperation plan. For details, view related September 8, 2006, news article - Venezuelan Projects to Increase Oil Production and Exports to China.

China’s Minister of Development and Reform, Ma Kai, sent a letter to Venezuela’s Minister of Planning, Jorge Giordani, the fund approval on the part of the Chinese Government. On March 27 2007, China and Venezuela signed a memorandum of understanding in which they showed an agreement on the $6 billion refining E&P joint fund. China will grant $4 billion and Venezuela the remaining $2 billion.

China and Venezuela’s joint fund consolidation is to be reflected in a near future 800,000 b/d production of Orinico heavy crude oil which will result in a Venezuelan oil sales increase. Moreover, China’s involvement in Venezuela’s exploration and production projects will help the Asian country gain more access to Latin American energy supplies so as to fuel its booming economy.

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