Hugo Chavez would like nothing more than to sell all his oil to some customer other than the U.S.  That way he both gets his revenue and hurts his energy.  He seems to have found his customer - China.  As the report below describes, Venezuela, which has ramped up its China oil sales to 250 kb/d so far, is planning on 500 kb/d in 2009 and 1 mb/d by 2012.  Since the Venezuela currently is the fourth largest supplier to the U.S. at 1.1 mb/d and since exports from Mexico, our third largest supplier, are declining rapidly the U.S. will be increasingly dependent, it seems, on Middle East  and African oil.  But mostly the Middle East. 

It may be that global oil supplies are fungible, but as supplies peak and demand from China and other growing economies increases, one-to-one deals between a major supplier and a major exporter result in more oil being taken off the free market, which will put increasing pressure on the free market price of oil. 

I imagine that the U.S. civilian and military planners, who are both already concerned about the increasing cost of fuel, are now starting to become even more concerned about the increasing vulnerability of U.S. oil supplies to the vagaries of very long distance transportation.  Again, oil becomes more and more of a national security risk as time goes on.

Chavez sees 1 million-barrel oil exports to China

By CHRISTOPHER BODEEN, Associated Press Writer Wed Sep 24, 6:35 AM ET

BEIJING - Venezuelan President Hugo Chavez says his country’s oil exports to China could soar to 1 million barrels a day by 2012.

Chavez’s visit this week to Beijing has focused on trade and business ties, including refinery construction deals and China’s launch of a Venezuelan communications satellite.

Chavez was due to meet with top Chinese officials Wednesday, including President Hu Jintao and Communist Party No. 2 Wu Bangguo, speaker of the rubber stamp parliament.

In comments broadcast Tuesday on state television in Venezuela, Chavez said Venezuela’s oil exports to China would increase to almost 500,000 barrels a day next year. That figure could reach 1 million barrels a day within four years, he said.

The sides also plan to construct three oil refineries in China capable of processing Venezuela’s heavy sulfer-laden crude and build four oil tankers.

“While the world enters an energy crisis, we are investing,” Chavez said.

The outspoken U.S. critic regards China as a key link in his strategy of diversifying Venezuela’s oil sales away from the U.S., which still buys about half of Venezuela’s oil despite years of political tensions.

Venezuelan state oil company Petroleos de Venezuela SA, or PDVSA, has ramped up shipments to China to 250,000 barrels a day as of April.

Other plans call for building a refinery in Venezuela and launching a joint oil development project in the crude-rich Orinoco River belt and for China to build oil tankers for Venezuela.

Venezuela’s Presidential Office also issued a statement in praise of the upcoming launch of the VENESAT-1 satellite, that will transmit telephone, Internet, video conferencing and other signals throughout the region from the Caribbean to Paraguay on South America’s southern tip.

More than 100 Venezuelans have been trained in China to operate the satellite, the office said.

“We will have a tool allowing us to say that there are no borders, or places in our region we cannot reach,” the statement quoted Science and Technology Minister Nuris Orihuela, who was accompanying Chavez on his visit, as saying.

The satellite, also known as the Simon Bolivar after the Venezuelan-born South American independence hero, will be launched on Nov. 1 from western China’s Xichang launch site aboard a Chinese Long March 3B rocket.

Tags: peak oil energy investments

This entry was posted on Wednesday, September 24th, 2008 at 7:03 pm and is filed under China, India and the Pacific Rim, Global Politics of Oil, United States, Venezuela. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.