Chinese energy companies with operations in Venezuela have asked the government for guidance in how to protect their investments in the South American country now that the United States has effectively taken control of its oil industry.
The information comes from Bloomberg, which cited unnamed sources as saying CNPC had been the leader of the group to broach the subject with Beijing, which earlier this week slammed the U.S. federal government for bullying Venezuela.
“The United States’ brazen use of force against Venezuela and its demand for ‘America First’ when Venezuela disposes of its own oil resources are typical acts of bullying,” Chinese Foreign Ministry spokeswoman Mao Ning told media, as quoted by Channel News Asia. “These actions seriously violate international law, gravely infringe upon Venezuela’s sovereignty, and severely damage the rights of the Venezuelan people,” she added.
The Chinese reaction was to President Trump’s announcement that Venezuela will “turn over” between 30 and 50 million barrels of oil to the United States, which he claimed would be sold “at its market price, and that money will be controlled by me!”. The Venezuelan barrels could fetch up to $2 billion in proceeds, according to analysts.
China is the biggest buyer of Venezuelan oil and, consequently, it stands to lose the most from the redirection of Venezuelan crude to the United States. At the same time, the impact may not be as severe as some believe, because Iran and Russia also produce heavier crude grades, and China is the main destination of those.
In the past month or so, Chinese importers actually reduced their purchases of Venezuelan crude because the U.S. so-called quarantine on the country’s oil exports prompted a price jump that narrowed the discount to Brent crude by about $2 per barrel. Yet Chinese importers have built their inventories, which would serve as an additional cushion against any supply blow from U.S. foreign policy.
By Irina Slav for Oilprice.com
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