Venezuela’s oil sector policy calls for the country to continue diversifying its oil export markets, Oil Minister Rafael Ramirez said yesterday on state television during a meeting with oil workers and students in Anzoategui state.
“We are selling to China because it is the second-largest economy in the world and soon it will be the largest,” Ramirez said. “While the U.S. and Europe are in crisis, the Chinese economy continues to grow.”
The nation is exporting 640,000 barrels a day to China and 400,000 barrels a day to India, according to Ramirez, who also serves as president of the state oil company Petroleos de Venezuela SA. Future output growth from its Orinoco heavy-oil belt will be destined increasingly for Asia despite the longer voyages when compared to the proximity of the U.S. Gulf Coast.
“Over the long-term, China will be the key recipient of Venezuelan heavy oil, if the resources are seriously developed,” Thomas O’Donnell, an independent petroleum analyst, said in a telephone interview from Berlin.
The U.S. last year imported an average of 906,000 barrels of crude a day from Venezuela, a 35 percent decline from a four-decade high in 1997, according to the Energy Information Administration, the U.S. Energy Department’s statistical arm.
The U.S. and Venezuela maintain oil ties mainly due to geographic closeness and the configuration of U.S. refineries along the U.S. Gulf Coast that can process heavy and sour crudes from Venezuela.
The “old PDVSA” said that it wasn’t economic to send oil to China, Ramirez said. “But it is economic in tankers capable of transporting 2 million barrels, like we have now to send oil to China.”
In the U.S., demand for oil has plateaued for some years and at the same time it’s developing its shale resources, O’Donnell said. Now the new markets for any significant oil developments will be China, India and Asia in general, he said.
Former Venezuelan President Hugo Chavez threatened on numerous occasions to cut off oil supplies to the U.S. during his 14 year tenure. Chavez, who died from an unknown cancer in March, never severed oil ties with the U.S.
“There is a mandate in the U.S. that remains the same regardless to who is in the White House, and that mandate is against Venezuela,” Ramirez said. “It is not just over our oil but because of the example that we are demonstrating to the rest of the South American countries.”
Venezuela is sending more oil to China because it was dangerous for the nation to depend on the political decisions of the U.S. in regards to importing Venezuelan oil, he said.
“There is not this demand anymore in the U.S. for product and definitely not crude, so like the Saudis, there is a race for Venezuela to get to Asia and especially China,” Houston-based Oil Outlooks & Opinions LLC President Carl Larry said in a telephone interview. “PDVSA and Venezuela need to focus on up and coming countries that will be demanding more oil, especially China, but also India and maybe Japan.”
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