China will invest around $5 billion in energy projects in Venezuela by 2012 as part of a plan to boost Venezuela's oil output, the South American country's energy minister told state television on Monday.
Venezuelan President Hugo Chavez just completed a visit to China to sign cooperation accords as part of an effort to reduce Venezuela's dependence on U.S. energy markets.
Rafael Ramirez said China's participation in Venezuela energy ventures would require in first instance around $5 billion in investment.
This is very important because it is investment that we are attracting from China to Venezuela as part of ... our increase in (oil) production, which by 2012 will be at 5.8 million barrels per day.
He said Venezuela is seeking to become a steady and stable provider of oil to China, an effort that the United States has watched nervously as political relations between Caracas and Washington remain tense.
Venezuela today is currently providing 150,000 barrels per day of oil and products to China, and we have made a joint plan ... to reach by 2010 up to 500,000 barrels per day, he said.
Ramirez said the $5 billion from China included investment in a joint venture to operate the Zumano fields in eastern Venezuela and investment by China's CNPC in the Junin 4 block of the Orinoco heavy crude belt.
Venezuelan state oil company PDVSA is planning total investment of $56 billion by 2012 as part of an expansion plan that includes increasing natural gas production, boosting refining capacity and launching a wide-scale development of the Orinoco heavy crude belt.
Chinese energy company Sinopec will participate in the development of an oil block in the Gulf of Paria in eastern Venezuela, Ramirez said.
He added that Venezuela will work to revamp China's refining capacity so that it can process Venezuelan crude, which tends to be heavier and higher in sulfur content than crude from other countries.
These projects, especially the ones in the (Orinoco) Belt, we are linking to efforts to develop refining capacity ... in China, for crude that has our characteristics, Ramirez said.
China will also help Venezuela build 18 new oil tankers by 2012 to boost Venezuela's shipping capacity to carry crude oil to China.
Ramirez has also announced plans for a joint venture with China that would build 24 oil drilling platforms, 12 of which are to be assembled in Venezuela.
Venezuela, the world's No. 5 oil exporter, says it is currently producing 3.3 million bpd, but market-watchers say the nation has been able to pump only around 2.5 million bpd following a grueling two-month walkout at PDVSA launched in late 2002.
Chavez, a key leftist leader in Latin America who has openly confronted the United States, has repeatedly threatened to cut off exports to the U.S. if Washington moves against him.
He has aggressively courted energy-hungry China as part of his search for new buyers of Venezuelan crude. Venezuela currently provides around 12 percent of United States oil imports.