U.S.-Venezuela Oil Deal Threatens China’s Oil-Backed Loans
Brent Nears $96 as Iran Conflict Keeps Oil Market on Edge For decades, Venezuela has been one of China’s most important partners in Latin America and the largest recipient of Chinese government funds in Latin America, with Beijing lending Caracas tens of billions of dollars and acceptingoil as repayment.Chinese policy banks provided it with at least $60 billion in oil-backed financing through 2015, while broader estimates of Chinese lending and investment commitments exceed $100 billion.
Analysts estimate that Caracas still owes Chinese lenders at least $10 billion.
Recovering that money was never going to be easy, but Trump’s new arrangement for Venezuelan oil will make it even more challenging for Beijing because a sizable chunk of the country’s future oil production will now be under the control of U.S.-aligned interests.
Last week’smultibillion-dollar agreementwith North American Blue Energy Partners, or NABEP, to expand production and commercialize Venezuela’s enormous petroleum reserves includes fields previously operated or pursued by Chinese companies and a Russian firm.
oil tycoon Harry Sargeant and now controlled by Venezuelan businessman Alejandro Betancourt, says it plans to invest as much as $100 billion in Venezuelan oil infrastructure.
According to the White House andNABEP,the company has received 100-year rights over 17 fields in the Lake Maracaibo region and the Orinoco Belt.
Those fields contain an estimated 65 billion barrels of proven reserves (about one-fifth of Venezuela’s total).
government rights to a 35% stake in NABEP’s corporate parent and access to 20% of its production at cost.
Washington would also have the right of first refusal on the remaining output.
NABEP says the development could generate more than $200 billion in taxes and royalties for Venezuela over its first 25 years.
Related: High Oil Prices Speed Up China’s Shift Away From Crude The concessions transfer fields previously operated or pursued by Chinese companies to a U.S.-backed producer, cutting into the access Beijing spent two decades financing.
Several of the projects now included in the NABEP portfolio werepreviously operatedor targeted for development by Chinese companies, including China National Petroleum Corp., Sinopec and China Concord Resources.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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