Saturday, August 26, 2006

Left Behind

Outflanked in South America. Bloomberg (08.25.06):
"China National Petroleum Corp., the nation's largest oil company, will cooperate with Venezuela to develop 19 oil-producing areas in the Latin American nation, President Hugo Chavez said." China, Venezuela to Jointly Develop 19 Oil Areas, Chavez Says
"Chavez, who completes his five-day trip to China tomorrow, signed 28 accords with China valued at at least $11 billion, including agreements on energy and transportation, as the South American country seeks to lessen its dependence on the U.S. "China will invest $2 billion in the country's oil industry and another $10 billion to help Venezuela build a [622-mile] railroad, Chavez said today." "Venezuela's July exports of oil to China jumped almost fourfold to [155,601 barrels a day], making it the nation's seventh largest supplier, China's customs office said today." This includes crude and fuel oil. This is a bigger pain in the ass for China then it may seem. Venezuela's oil "is heavy in metals and sulfur", and "China's refineries aren't equipped to process the oil. Transportation costs are also a big issue. "Venezuela can send oil to the U.S. gulf coast in four to five days, while shipment to China can take as long as 40 days." On the other hand, "Venezuela is already exploring constructing pipelines across Colombia or Panama to shorten shipping times since most large tankers can't use the Panama Canal due to size restrictions." FYI, Venezuela is the US' fourth largest supplier of petroleum, clocking in at around 1,300,000 barrels a day as of June, 2006.


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