The US will react aggressively to China’s assistance to the Venezuelan oil sector, claims Russian expert Vladimir Sudarev of the History and Politics Department of the Moscow International Relations University (MGIMO).
There is a claim that the Chinese would invest $250 million in Venezuela to increase oil production, according to Bloomberg citing Simon Zerpa, Venezuelan Minister of Economy and Finance, who has talks with Beijing.
He pointed out that the Chinese government has granted authorization for a US $5 billion special credit for direct investment in production and a loan from the China Development Bank worth over US $250 million to boost Venezuelan state oil company PDVSA’s oil output.
Surprised by the news, Sudarev commented that “in recent times China refrains from granting credits to the government of Nicolas Maduro, because China is pragmatic and rational.”
However, according to him, Chinese companies have settled in the Orinoco River basin, where the main oil reserves are concentrated.
“They have been investing there for a long time and it is clear that in a sense they are interested in supporting the failed Venezuelan state-owned company so that it regularly supplies oil to China. This is their pragmatic interest rather than supporting the Maduro government”, commented the expert.
Sudarev predicts that it will take some time for the PDVSA company to recover. It will not be able to immediately absorb those $250 million of Chinese loans and start production just as it did 10 years ago. The expert does not rule out that this may be money lost to China, although China is extremely cautious and avoids high-risk operations.
“Venezuela is one of the most important oil suppliers to China. China’s $250 million direct investment in the Venezuelan state-owned company will have a positive impact on the stabilization of Venezuela’s oil extraction and will ensure the supply of oil to China,” Chinese expert Liu Qian said.
In turn, the United States is trying to completely isolate Venezuela in the region, and in the world at large, making considerable efforts to do so. China categorically disagrees with the blockade on Venezuela. Main reason: oil.
“The US reacts very sensitively to the fact that China is conducting a real economic expansion in Latin America… China is not afraid of these conflicts, especially when it is on the threshold of a trade war with the United States. On the contrary, it is an opportunity to show their power, influence and confidence in their capabilities,” said Sudarev, referring to the irritation of the United States over China’s support for Venezuela’s oil sector.
The loan and another three or four financial agreements are expected to be officially signed between China and Venezuela in the coming weeks.