Venezuela, China to Create Joint Venture to Supply New Refinery

[Judi Lynn]

Venezuela, China to Create Joint Venture to Supply New Refinery

By Steven Bodzin

May 10 (Bloomberg) -- Venezuela agreed with China, the world's fastest-growing major economy, to form a joint venture that will produce oil in Venezuela's Orinoco Belt to supply a new 400,000 barrel-a-day refinery they will build in China.

The venture between Petroleos de Venezuela SA and China National Petroleum Corp. will pump oil from an area called Junin 4, where CNPC has quantified reserves, President Hugo Chavez said at a signing ceremony in Caracas late yesterday.

China is securing long-term energy supply deals around the world to satisfy its growing needs. Chinese oil consumption will rise 5.3 percent this year, the International Energy Agency said Jan. 16. Demand rose 6.6 percent in 2006, according to the most recent BP Statistical Review.

``This isn't about an immediate advantage,'' said Pedro Benitez, a professor of political economy at Central University of Venezuela and oil consultant. ``It's more about the political economy of China. It's to maintain a commercial relationship.''

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