The Long View on Oil-to-China

chinese oilOver on Global Barrel, Tom O’Donnell makes the case that the Venezuela-China oil relationship has now reached a kind of critical mass that will keep it going far into the future, regardless of the politics on either side of the Pacific.

Soon, Venezuelan oil will not be shipped to China simply to fulfill financial-and-contractual obligations, but also for locked-in infrastructural reasons. All indications are that the Chinese side is actively fulfilling the obligations it entered into ca. five years ago (esp. December 2007) to build oil tankers, pipelines and refineries in China in order to import and process Venezuelan heavy crude. Billions are being invested and tens-of-thousands of Chinese workers are being employed.

All the activity on the receiving end contrasts with the snail’s pace of upstream development in the Orinoco Belt – so far – but the incentives to clear the multiple bottlenecks on the sending end seem likely to overwhelm opposition.

The interesting bit here is that as the Shale revolution moves North America towards energy independence on a much more compressed time scale than seemed imaginable even 5 years ago  (North Dakota, for instance, now produces 50% more oil than Ecuador), Chávez’s determination to develop the Chinese energy relationship early might well be remembered as the best decision of his presidency.

Pura carambola, claro, but still…