The US has plenty of problems with Venezuela’s mentally troubled dictator Hugo Chavez. The most recent confrontation has been over Chavez financing guerrillas in neighboring Columbia.
While the two nations throw bricks at one another, China has slipped in a side door and cut a huge refinery deal with the Latin American country. Under the terms about 400,000 barrels a day will be produced in Venezuela’s Orinoco Belt. The new refinery there will be built by the Chinese.
According to Bloomberg "The venture between Petroleos de Venezuela SA and China National Petroleum Corp. will pump oil from an area called Junin 4."
At first pass, the deal might seem bad for the US, but the opposite may be true. If Venezuela and China can bring new supply and refinery facilities online, it cuts supply which the most populated country in the world would have to get somewhere else. That may serve to take some upward price pressure off of oil prices over time.
It is the first favor Venezuela has done the US since Chavez was elected.
Douglas A. McIntyre
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