Venezuela seeks Chinese oil investments

Venezuela’s vice president and oil ministers are visiting China with the mission of securing investments in the country’s energy industry, Bloomberg has reported, citing unnamed sources.

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The move to further strengthen ties with China comes as the Biden administration tries to forge a less hostile relationship with Caracas and has already drafted a proposal for sanction relief in case Venezuela fulfills some conditions.

“Should Venezuela take concrete actions toward restoring democracy, leading to free and fair elections, we are prepared to provide corresponding sanctions relief,” a spokesperson for the National Security Council said, as quoted by Reuters, in August.

Last year, the Biden administration granted a sanction waiver to Chevron so the company could return to Venezuela and resume its production activities there. The waiver was granted amid a global heavy crude crunch resulting from Western sanctions on Russia.

The U.S. supermajor is the only Western major authorized by the U.S. to operate and export oil from Venezuela under a special license issued in November 2022.

According to the Bloomberg report, VP Delcy Rodriguez and Oil Minister Pedro Telechia will discuss possible joint ventures with Chinese energy companies during their visit as a way of expanding China’s presence in Venezuelan oil further.

China is already Venezuela’s largest creditor, after pouring some $60 billion in oil-backed loans into the country since 2007.

Despite the loans, the country’s oil production has been decimated by underinvestment, mismanagement, and U.S. sanctions, falling to the lowest in 50 years last year, at 700,000 bpd. This year, production has improved and so have exports.

For the first half of 2023, Venezuelan oil exports were nearly 15% higher on average compared to the same period last year, and stood at an average of 670,000 bpd, according to the data and documents.

They continued rising in July but then fell sharply in August, due to PDVSA’s inability to maintain production at two heavy crude upgraders.