Sun 3 Sep 2006
Chávez says China deal ‘great wall’ against US
Posted by Dan Welch under Peakist , Geopolitics , China , Venezuela
· Venezuela to supply a million barrels of oil a day
· Beijing scrambling to feed energy-hungry economy
China and Venezuela, two of the biggest nations on Washington’s worry list, drew closer together yesterday with the signing of trade agreements that the Venezuelan president called a “Great Wall” against American hegemonism.
A million-barrel a day oil deal and a promise by China to back Venezuela’s bid to join the United Nations security council were the main fruits of a week of meetings in Beijing, ending with talks between Hugo Chávez and the Chinese prime minister, Wen Jiabao, yesterday.
The warming of relations reflects a shift in global diplomacy as China seeks energy resources to fuel its economy and Mr Chávez attempts to build alliances with nations threatened by US power, including Iran, Syria and North Korea.
China agreed to increase its imports of Venezuelan oil, refined fuels and a hydrocarbon called Orimulsion from the current 160,000 barrels a day to 500,000 by 2009 and a million by 2016.
This is crucial for China, which is the world’s second largest oil user after the US. From being a net exporter of oil little more than a decade ago, the world’s most populous and fastest growing economy is increasingly dependent on overseas supplies. It uses about 7.4m barrels a day, up half a million from last year.
It has strengthened ties with suppliers Iran and Sudan, and made deals with Canada. Venezuela looks set to become an increasingly important partner. Mr Chávez underlined the trend with a chart forecasting a sharp increase in the share of Venezuelan oil produced and refined by joint ventures with China in coming years.
As well as a joint refinery project, Venezuela’s state-run oil company, Petroleos de Venezuela, has announced in the past week that China will build 13 oil drilling platforms, supply 18 oil tankers and collaborate in the exploration of a new heavy oil field in the Orinoco Belt.
According to the Venezuelan media, China has also agreed to build houses for 20,000 people as a contribution towards Mr Chávez’s policy of reducing homelessness. Chinese state-controlled news agencies say Beijing will also help the South American nation build a fibre optic network, modernise a gold mine and develop railways and farm irrigation systems.
Mr Chávez visited the headquarters of China’s space programme, where a communications satellite for Venezuela is being built. “We are creating a strategic alliance with the strength of the Great Wall,” Mr Chávez told the Chinese president, Hu Jintao, on Thursday.
Aside from energy deals, the biggest success for Mr Chávez was a promise from China to support Venezuela’s bid to join the 15-member security council as South America’s representative. Washington prefers Ecuador, saying Mr Chávez would be disruptive. “The US government has employed every means to block my country from joining the security council,” Mr Chávez told reporters. “The American imperialists are trying to stop us.”
Mr Chávez sparked controversy during the visit when he weighed in on the war in Lebanon, saying Israeli leaders should be prosecuted for genocide. “Israel is doing the same thing as Hitler today,” he said. “We give our sympathy to the Arab people and condemn Israel.”
Jonathan Watts in Beijing
Saturday August 26, 2006
The Guardian
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September 3rd, 2006 at 3:16 pm
The Kraken awakes…
Kuwait-China energy ties backed
Tuesday, August 29, 2006
Kuwait City
Kuwait’s cabinet has approved a bill to endorse a pact for oil and gas co-operation with China, an official statement said.
‘The Council of Ministers discussed a draft law that endorses the co-operation agreement in the oil and gas sectors between the governments of Kuwait and China, and the Council decided to approve the draft,’ the statement said.The draft was sent to the Amir for ratification.
Kuwait is studying plans to build a multi-billion-dollar refinery and a petrochemical plant in Guangdong in south China with PetroChina.
Kuwait has said it welcomes Chinese firms seeking to invest in its oil sector.
It has said Chinese firms would be invited to participate in an $8.5 billion project involving multinationals to boost crude oil output from the country’s northern fields.
Reuters
September 3rd, 2006 at 3:30 pm
Oil-rich South America forces US free trade agenda on the back foot
In a sign of increasing resistance to US hegemony in South America, both Bolivia and Ecuador have moved towards nationalisation of their oil industries.
Bolivian President Evo Morales in May issued an ultimatum to foreign oil companies to negotiate new contracts or leave the country. The revised contracts are essentially service provision contracts to Bolivia’s national oil company (YPFB), with Morales stating that foreign companies should not be owners of Bolivia’s natural resources. He also announced that his country will not join Andean Free Trade Agreement (AFTA) negotiations with the United States as previously expected, and instead will seek agreements with other countries which prioritise the protection of national industries and human wellbeing.
http://www.carbonweb.org/showitem.asp?article=182&parent=175
September 4th, 2006 at 3:51 am
Evo Morales takes on the gas multinationals, challenges Brazil, and aligns his country with Venezuela and Cuba
AS POLITICAL theatre goes, it was pure agitprop. Evo Morales chose May 1st, his hundredth day in office as Bolivia’s president, to lead troops into his country’s biggest natural-gas field, operated by Brazil’s state-owned oil company, Petrobras. Wearing an oilworker’s hard hat, he read out a nine-point decree under which the Bolivian state proclaimed its control of the country’s oil and gas industry. “The plunder has ended,” Mr Morales, a socialist of indigenous descent, declared.
In the main square in La Paz, the capital, the president’s supporters turned their May Day demonstration into a celebration. The reaction of the companies affected—and their national governments—ranged from caution to wounded surprise. José Sérgio Gabrielli, Petrobras’s president, called the measures “unilateral and not friendly”—strong stuff from the normally conciliatory Brazilians. Spain’s Repsol YPF, the second-largest investor, complained that promised negotiations had not taken place, while the Spanish government expressed “deep concern”.
Bolivia’s reserves of natural gas are the largest in South America after Venezuela’s. The deposits were discovered after the oil industry was privatised a decade ago. Foreign companies, including France’s Total, and BP and BG Group of Britain, as well as Petrobras and Repsol, have invested some $5 billion in the country.
More is at stake in Bolivia than gas. Since his election in December with 54% of the vote, Mr Morales has talked like a revolutionary populist but given some signs of pragmatism. He has enjoyed good relations with social-democratic presidents in Brazil and Chile as well as with Cuba’s Fidel Castro and Venezuela’s populist leader, Hugo Chávez. Now he appears to have tilted away from moderation: the nationalisation decree came hours after he returned from Havana, where he signed a “people’s trade agreement” with Messrs Castro and Chávez.
The tone of the nationalisation decree is grandiloquent. “The state recovers title, possession and total and absolute control over these resources,” it begins. Yet it was not unexpected. It fulfils a campaign promise. The decree implements—but goes further than—a law approved last year after weeks of street protests led, among others, by Mr Morales and a referendum in 2004 in which 92% backed nationalisation of oil and gas. That law required the companies to cede production to YPFB, Bolivia’s former state energy monopoly, which would set its price and sell it.
The decree puts this into immediate effect. It also gives the companies 180 days to accept new contracts whose terms will be set after a government audit. In the interim, the state’s take from the two largest fields will rise to 82% from 50% (itself an increase from 18% a year ago). This boosts the government’s annual gas revenue by $320m to $780m.
Secondly, YPFB will take a majority stake not just in the main gas and oil production companies, but in refineries and pipelines. Previously, the foreign companies had 51%, with 49% split between private pension funds and the government, which used the dividends to pay a pension to older Bolivians. Those shares will be handed over to YPFB, potentially wrecking the pension system. (Since the funds have sold some of the shares, this provision may be unenforceable.) The extra shares needed for a majority stake will be “nationalised”—by unspecified means.
Bolivia needs outside capital and technology to develop its gas industry. Without new investment, by the end of next year it might struggle to fulfil its gas export contracts with Brazil and Argentina, says Carlos Alberto López, a consultant in La Paz. A recent landslide at one gasfield briefly cut exports, a sign that output is close to capacity.
Mr Morales seems to be gambling that the companies will not walk away. Bolivian gas accounts for almost 5% of total energy consumption in Brazil, its main market. That mutual dependence could lead to a deal on less draconian terms. One industry source calls the ceremony a “pantomime” to calm the radicals among Mr Morales’s supporters, and forecasts that the government will offer the companies a 50/50 revenue split.
Yet this brinkmanship, if such it be, could backfire. Several companies may go to international arbitration to enforce their contracts. In that case, Mr Morales could turn to Mr Chávez. YPFB is being advised by lawyers and technicians from Petróleos de Venezuela (PDVSA). But Venezuela’s president fired most of his state oil company’s most experienced staff after a strike three years ago, and the company’s output at home is falling steadily.
Mining and forestry will be the next to face higher taxes, officials said. But Mr Morales is grasping for more than control over natural resources. Despite granting wage increases to teachers and doctors, he is starting to lose the support of the middle class. In one poll, his approval rating has fallen from 80% to 68% since he took office. Nationalisation will restore his popularity ahead of elections on July 2nd for a constituent assembly.
Ostensibly, this is to write a new constitution to give more power to the impoverished indigenous majority. But Mr Morales’s dream, says Carlos Toranzo, a political scientist, is to emulate Mr Chávez, who used a similar assembly in 1999 to seize control of all state institutions. Under agreements signed in January, Venezuelan and Cuban officials are advising on voter registration ahead of the assembly elections. That mimics a much-questioned registration drive which helped Mr Chávez defeat a 2004 recall referendum.
Already, Mr Morales has clashed with the judiciary. He accused Eduardo Rodríguez, a former head of the supreme court, of treason for allowing the armed forces to transfer Chinese-made missiles to the United States while acting as the country’s caretaker president last year.
Even if he wants to follow Mr Chávez towards elected autocracy, he may be thwarted. To change Bolivia’s constitution a two-thirds majority is required, and he may fall short. The outcome will be “more like reform than revolution,” predicts Walter Guevara, a political consultant.
Venezuela 1, Brazil 0
The nationalisation—and especially the circumstances in which it was done—reverberated around South America. It looked like a victory for the regional plans of Mr Chávez, and a defeat for those of Brazil’s president, Luiz Inácio Lula da Silva. In Havana, Mr Morales signed an agreement under which Bolivia joins Cuba and Venezuela as the third member of the Bolivarian Alternative for the Americas (known by the acronym ALBA, which means “dawn” in Spanish). This alliance is supposed to be an alternative to a Free Trade Area of the Americas favoured by the United States. “Only in Cuba and Venezuela do we find unconditional support,” gushed Mr Morales.
Under trade preferences which expire in December, Bolivia exports some $160m a year to the United States. Those exports support 100,000 jobs, many in textile firms and two-thirds of them in El Alto, a restive satellite city overlooking La Paz. Bolivia has not asked for the preferences to be extended and the United States has not offered to do so. The alternative Mr Morales has chosen involves barter trade by governments. Mr Chávez has offered to buy all of Bolivia’s soya crop (its second-biggest export) in return for all the diesel the country imports.
Mr Chávez constantly trumpets his support for regional integration. What he means by that is an anti-American political alliance, under his leadership and based primarily on the control and distribution of energy. Last month, he said that Venezuela would pull out of the five-country Andean Community because two of its members, Colombia and Peru, have signed free-trade agreements with the United States. Bolivia, which is also a member, may now also leave.
Mr Chávez’s strategy clashes with Brazil’s. It yearns to be the leader of a South America united by trade and co-operation between the Andean Community and Mercosur, the four-country block based on Brazil and Argentina. At Brazil’s invitation, Venezuela is negotiating full membership of Mercosur. Yet Mr Chávez is stirring up trouble in that group too. If Mercosur “had to die” for something better to emerge, so be it, he said at a meeting with two of its presidents last month.
Lula’s response to Mr Morales’s decree was conciliatory. After an emergency cabinet meeting, he said Bolivia was within its sovereign rights. He invited Mr Morales, together with Mr Chávez and Argentina’s president, Néstor Kirchner, to emergency talks on May 4th. But Bolivia’s alliance with Venezuela, and its bullying of Petrobras, amount to a clear snub to Brazil.
Mr Morales may yet revert to a more pragmatic course. But his alliance with Mr Chávez and Mr Castro, even more than the nationalisation, sends a worrying signal that Bolivia may be moving backwards towards statist nationalism. If that is so, all the precedents suggest that while its government may get richer, its people are likely to grow even poorer.
http://www.economist.com/research/backgrounders/displaystory.cfm?story_id=6888567#top