The recent death of Venezuela's president Hugo Chavez has prompted debate over the country's future but also anxiety among foreign companies operating there. Some have forecast a bleak outlook for China's investment in the country, but experts have downplayed the concerns, saying that the Sino-Venezuelan cooperation is mutually advantageous and will not stop.
International crude oil prices have also been relatively stable since the oil-rich nation's president passed away, boosting investors' confidence.
Delayed investment
Some foreign companies have been worrying about their investment outlook in Venezuela since Chavez's two-year battle with cancer entered its final stages earlier this year.
"Russian and Indian companies are withholding planned investments in Venezuelan oilfields," Bloomberg reported in January, citing eight oil company executives and consultants who wished to remain anonymous.
India's Reliance Industries has postponed by a few months an estimated $2 billion investment decision for four oilfields because it has not received geological data from Venezuelan state oil firm Petróleos de Venezuela (PDVSA), a person directly involved in the deal told Bloomberg.
Other Latin American countries that have benefited from Chavez's preferential energy policies also have concerns over what will happen under the next administration.
During his 14 years in office, Chavez focused on oil industry nationalization and deals with other Latin American countries to counter the Free Trade Area of the Americas plan proposed by the US.
Venezuela signed agreements with nine other Latin American countries over oil exports, co-exploration of crude oil, and communal utilization of energy. In return, Venezuela gained support from the other nations in sectors such as medicine, education and agricultural technical assistance.
Some foreign media reports have forecast difficulties in China's energy relationship with Venezuela following the death of Chavez.
The US-based United Press International (UPI) reported on March 6 that "China has reason to be anxious about energy ties to Venezuela."
Bloomberg quoted Laban Yu, an analyst with Jefferies Group in Hong Kong, as saying that the post-Chavez administration might move closer to the US, adding that a shift in the political atmosphere could dim Chinese companies' investment prospects in the country very quickly.
An energy expert who wished to remain anonymous told the Global Times Thursday that it was "unreasonable" for media reports to intentionally undermine the Sino-Venezuelan business relationship.
Jiang Yu, the former spokeswoman for the Chinese Ministry of Foreign Affairs, said as far back as 2008 that cooperation with China would not affect Venezuela's oil supply to other countries and that China would not intervene in the frosty relationship between the US and Venezuela.
A win-win solution
Chinese experts have offered reassurance over the outlook for investment in Venezuela.
"Chavez's chosen successor Nicolas Maduro is favored to win, and the previous policies are expected to be maintained during the new president's term of office," Wu Changsheng, director of the Latin American Research Center at the China Foundation for International Studies, told the Global Times Thursday.
Wu said that even if Venezuelan opposition leader Henrique Capriles should come to power, cooperation between China and Venezuela would still continue, as it is a win-win solution for both countries.
China's imports of crude oil from Venezuela reached an average of 460,000 barrels per day in December last year, accounting for 8.3 percent of China's total imports, the China National Petroleum Corporation (CNPC) said in a statement.
In the same statement, Venezuela's Oil Minister Rafael Ramirez was quoted as saying that exports from Venezuela to China will rise to 1 million barrels per day by 2015.
China's average daily oil imports reached 6.12 million barrels by the end of last year, according to the General Administration of Customs.
Venezuela has also benefited from China's investment.
Venezuela's Congress voted in May last year to double the amount the government can borrow from China under a deal that lets the nation pay off Chinese loans with oil. A deal was signed in 2008 to let Venezuela borrow as much as $4 billion from the China Development Bank at any given time, but the vote in May doubled that to $8 billion, Reuters reported.
Calls to the China Development Bank by the Global Times were not returned by press time Tuesday.
In the past 10 years, Venezuela's GDP has risen to about $300 billion. This represents substantial growth compared to the 1990s, when GDP was under $100 billion, said a press release from the Venezuelan Embassy in the US in December last year.
Nelson Merentes, president of Venezuela's Central Bank, said in the press release that the country is among the top five in terms of economic growth in Latin America, given that GDP grew 5.5 percent between January and September 2012.
Merentes noted the construction sector is one of the drivers of the Venezuelan economy. "China Development Bank's credit loans have played an important role in Venezuela's economic development," Wu said.
PDVSA to be privatized?
Another focus of international attention is whether PDVSA might be privatized.
Before 1976, oil exploration in Venezuela was controlled by foreign companies from Western developed countries, including the US and the UK.
PDVSA, which was founded in 1975 while the Venezuelan oil industry was being nationalized, became the largest state-owned oil and natural gas company in the country.
Chavez made considerable efforts to nationalize the PDVSA into a wholly state-owned company during his term of office.
US media group CNBC reported last week that PDVSA, which is burdened by debts, could possibly become a major purchasing target for foreign companies, including Exxon Mobil Corporation.
A Chinese expert said that even if the new president of Venezuela alters the country's oil strategy and privatizes the oil industry, Chinese companies would also have good opportunities in the process.
"Chinese oil companies have strong international competitiveness to join in market-oriented operations," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times Thursday.
Construction of an oil refinery set up by PetroChina and PDVSA costing 58.6 billion yuan ($9.4 billion) started in May 2012, and will have an annual capacity of 20 million tons if completed in 2014, Zhang Ping, head of the National Development and Reform Commission, said at a conference in Beijing last year.
"Given the country's huge oil reserves, Venezuela will still be an important investment target for Chinese companies, no matter who comes to power," Lin noted.
Venezuela took over from Saudi Arabia in 2010 as the country with the world's largest proven reserves of crude oil, according to the Organization of Petroleum Exporting Countries.
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