China, Russia and Iran look to tighten their grip in the Latin America Oil Industry as Venezuela’s oil industry hits rock bottom amid strict U.S sanctions. A region that for decades has been under U.S. hegemony.
While Russia and Iran have, to an extent, gained a foothold in Venezuela by providing crucial support to the embattled Maduro regime, it is China that stands to benefit the most if it can secure a close relationship with the socialist authoritarian regime.
Venezuela is endowed with tremendous oil wealth with the pariah South American country possessing the world’s largest petroleum reserves of 304 billion barrels. The growing desperation within Caracas, caused by the petrostate’s near-collapse, has created an opportunity for China to exploit Venezuela’s vast hydrocarbon resources.
China-Strengthening its Grasp on Oil Supply
Meanwhile, this could not occur at a more crucial moment for China with the country overtaking the U.S. to become the world’s largest refiner and the largest importer of crude oil. China’s endless thirst for petroleum, which is a crucial source of energy for its growing economy, is forcing Beijing to look at obtaining greater access to oil supplies around the globe. China’s state enterprises have shown a willingness to circumvent U.S. sanctions to receive crude oil imports from Venezuela and Iran.
However, growing pressure to obtain additional crude oil supplies saw Chinese logistics firm China Concord Petroleum Co, known as CCPC, emerge as a leading player in circumventing U.S. sanctions to supply Venezuelan crude oil to East Asian refiners. Meanwhile, the firm during April and May 2021, charted vessels by CCPC carried more than a fifth of Venezuela’s oil exports during those months.
CCPC has so far, acquired at least 14 petroleum tankers to transport Venezuelan and Iranian crude despite Washington’s sanctions against both pariah states. By July 2021, Venezuela’s oil exports grew for a second straight month reaching 713,097 barrels per day with most of that crude oil destined for China.
However, after abandoning directly extracting Venezuelan crude oil in August 2019 as a response to the stricter sanctions applied by the Trump administration, Beijing is now focusing on expanding its presence in the OPEC member.
China Venezuela Partnership to Prolong the Authoritarian Regime
Allegedly, state controlled China National Petroleum Corp, is sending staff to Venezuela in preparation for investing in operations as Venezuela’s President, President Maduro finalizes legislation aimed at facilitating greater private control of energy projects. That legislation, the authoritarian leader hopes will attract the foreign investment urgently required to rebuild Venezuela’s shattered petroleum industry. Thereby, allowing Caracas – Venezuela’s largest capital, to reconstruct Venezuela’s failing economy.
Moreover, CNPC is also in negotiations with PDVSA regarding ramping up production at five joint ventures it has with Venezuela’s national oil company.
In the meanwhile, any investment by Beijing in Venezuela will provide the socialist Maduro regime with a financial lifeline that will allow PDVSA to expand petroleum production thereby bolstering the Venezuelan government’s ability to resist U.S. sanctions.
However, that will only prolong the existence of an autocratic regime that has proven nearly impermeable, despite cracks appearing in recent months, to U.S. sanctions for over a decade.
It is also worth considering that Beijing, by ramping up Venezuelan oil operations, is improving its prospects of recovering an estimated outstanding $19 billion in oil backed loans.
This will further solidify China’s status as one of the world’s superpowers.
READ ALSO: FAO underscores nexus between biodiversity and climate crisis
