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China Buying Up Latin American (And Russian) Oil
Submitted by Colin Chilcoat via OilPrice.com,
As the world’s number one energy consumer China is enjoying the low prices while they last. Never one to settle however, China is finding still more ways to take advantage of the dire straits gripping several oil producers.
China’s slowdown is real – preliminary data suggests 2014 will mark the weakest GDP growth in 24 years – but the country still has plenty of money to play with that is taking it places the World Bank and the International Monetary Fund (IMF) wouldn’t dare. Their reward? More oil of course. With tough conditions and greater access to raw commodities, China looks to turn the high risk into equal or greater returns.
In Russia, much has been made of the deepening energy ties with its neighbor to the south. With western financing no closer to a return and a hesitancy to dig deeper into its foreign exchange reserves, Russia turned to China for a bailout. China has obliged, agreeing to finance state-owned Rosneft’s debt in addition to opening a $24 billion currency swap program, which could expand further. For its part, China gains access to Russia’s tightly held upstream sector – in the form of the giant Vankor field – and fulfills its needs downstream with favorable long-term oil and gas deals. Further loans and infrastructure investments are likely moving forward – one of China’s biggest debt-rating agencies Dagong believes Russian debt is a safer investment than US government debt.

Source: EIA
Russia’s economic situation is by no means rosy, but the state of affairs in Venezuela is downright awful. Oil and gas revenues account for one quarter of the country’s GDP and approximately 95 percent of its export revenues. Not surprisingly, low oil prices have the country teetering on the brink of default. Since 2007, Venezuela has borrowed more than $50 billion from China – loans that prevent Venezuela from otherwise marketing about half of its current exports to the Asian nation, which total approximately 500,000 barrels per day (bpd).
While perhaps more cautious, China is ready to keep giving. On Wednesday, Venezuela and President Nicolas Maduro landed more than $20 billion in investment for economic, social, and oil-related projects. This arrangement precedes what Maduro hopes to be a more liquid $16 billion loan that could be more freely applied to its other debt obligations. Still, China sets the terms and it wants more oil in return – more than 100,000 bpd greater than current levels.
Elsewhere in South America, Ecuador has pinned its development hopes to the Chinese for better or worse. Since 2008, Ecuador has borrowed in excess of $11 billion – 2013 saw 61 percent of government spending needs met by Chinese money. President Rafael Correa just secured a further $7.5 billion in loans and credit lines, but he has little more oil to give – the country already sells about 90 percent of its crude oil to China. Once offshore, China remarkets two-thirds of this supply, much of which reaches the United States. It’s a familiar picture across Latin America.
In Argentina, Brazil, Peru, and the aforementioned countries, China is fronting the bill and staking claim to the raw goods. The country’s high-interest, inflexible lending draws parallels to the multibillion-dollar payday loan industry in the US. In this scenario, the lender is caught in a circle of debt with no real impetus for change. That circle may continue for some as China is pledging $250 billion in investment in the region over the next decade. The country’s oil-based financing is still an unproven gamble – and lower prices increase the default risk – but it’s shrewd move for what will soon be the world’s largest consumer of oil.
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And it's not just LatAm, China's imports of oil from Russia are up over 60% YoY - by a record 1.3 million metric tonnes...
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joyflation around the corner
Oil is money. The Dollar is not money.
Oh noes! China is buying all of our cheap oil!
It's the end!
Funny, China can't seem to drive the price up.
The China goes into countries with suitcases of money, literally...
The USA goes into countries with the FED/Debt, guns and bombs...
Do the math on the long term.
I think it is a deeper Chinese strategy:
-getting rid of the US$ and US "treasuries";
-buying something essential;
-creating partners/allies just by helping them get rid of the phony debt and the shackles of US$.
BTW how do you say "Fuck you!" in Chinese and Russian?
Funny, why would the Chinese want to drive oil prices up?
Maduro's opening to China
When fraud is the status quo, possession is 100% of the law.
It also helps if you are holding a ton of reserve paper that people actually accept as well...
Seems they've found a ready supply of greater fools to dump it on.
We can only guess how much they have left,much less than the
advertised figure for sure.
UCO, now is the time to buy!!!! Go Russia, go China and FUCK the zionist usa/israel!!!
Right on, brother.
Now is the time to link arms with your compatriots in the East and take a united stand against all of those icky things you don't like about the West. Can I contribute something towards shipping your gear overseas?
You can keep those things you love about the west, like billionaire banker bailouts, endless wars on terror, invasions of other countries, $18 trillion debt, flood of third world immigrants
oil price bottoms this week?
This is the reason the DC US ended their economic war (sanctions/embargo) against Cuba: They want to remove them from the equation as they are forced to make bolder moves against the Latin nations, especially Venezuela. And Cuba also has oil and gas reserves, that the DC US empire needs to secure before China does.
The gold and oil rich Venezuelans might want to beef up their English skills, especially, "Don't shoot."
The banksters need to repay us.
"Talk softly about gold and oil, and carry a big stick to steal it with."
"Hands up, don't LOOT!"
I laugh every time I hear about how China is immune to any Western retaliaton for them doing whatever the hell they want to do. The Chinese economy can be made to grind to a halt in 30 days with just two submarines. All a Western Power would have to do is block the Straight of Malaaca by sinking one tanker and "poof" the oil imports China desperately needs would evaporate. And no, they wouldn't be able to depend on Russia to make up all the difference....especially when the pipelines needed to do so still aren't even built yet. "Sell my Treasuries and tank my currency? OK, then I'll shut off your oil and raise you one". We'd need to supply the S. Koreans, Japan, etc. with some oil to make up for the inconvenience to them but that's doable. And all that could be accomplished without putting an entire fleet at risk. Oh how I want to see how this movie ends some day if the U.S. ever elects a President that doesn't squat to pee.
Malacca Strait:
805km long, down to 2.8km wide near Singapore
uh, pretty wide.
And sure we can't sail around for extra shipping costs?
Seems like you could sail around Indonesia.
LMAO!!! Do you realize the ships could go around Indonesia? It might take an extra half a day, but I doubt it would shut China down. China could send a sub and sink a tanker near the Suez Canal. That would force all shipping to go around Africa and shut down EU
and missiles into the locks of the Panama Canal, if push comes to shove.
China would not hesitate to remove any obstacle with a mininuke & make the strait litte bit wider and deeper.
look at WTC 9/11, your politicians used nukes in the city, why shouldn't China use nutes somewhere in ocean.
What an Idea. How about that.
China creates Fiat out of Thin Air, then buys real assets, resources in Foreign Lands... Instead of QE, Operation Twist, and Fiat Created by TBTJ to gamble on Derivatives.
Who'd a Thunk!!
The Russophiles around here better read this article very carefully. What is it saying?
1) China is cutting below-market oil deals everywhere in exchange for high interest loans to its cash-flow-distressed "partners".
2) China is then selling that below market oil to the United States and thus vacuuming up the profit margin and freezing the actual producers out of the profits from their own ordinary markets.
3) China is muscling in on direct ownership of Russian oil fields (upstream assets) as the price for doing business on downstream assets (pipelines and delivery contracts).
These are the people who "have Putin's back" in his fight against the US/EU consortium.
Game over for North American producers. Goes for Canada twice as much. Bank of Canada actually admitted publicly that Canada's economy will suffer in 2015.
A stark contrast to the rainbows and unicorns bull shit up til now. Short all things Canada, the bitch is ready to blow.
More fairytales in your demented mind. Where does it say China is reselling the oil? They are a huge net importer of oil. The will use any and all oil that they buy. That merely shuts the US and their Saudi allies out of the chinese market.
Earth plus Labor plus Machines equals all economics.
Money allows division of labor, thus more goods can be produced due to efficiencies.
Division of labor is enabled because money allows trading of unlike items. For example a painter can trade his/her painting for a Big Mac and have some left over money, to then by more goods. The painter is not going to tear off a little piece of their painting to buy the hamburger.
China's money is fairly efficient because their state banks direct it into channels i.e. production. Their labor is becoming efficient as the West transplants factories and know-how. Their money supply is fairly efficient as it is not all private bank credit. In fact, the private bank credit portion of their economy is a bit of a problem, especially causing bubbles, which they are trying to reign in.
Directing long term contracts to then own energy and access to "earth" is just being smart.
Then, the valuation of their money, or how people perceive it grows, as both today's and future needs are likely to be met.
Much of the Wests money supply is vectoring into rents and Oligarchy.
The highest form of money is law based fiat. Gold and Silver are also fiat when used for money - they are stamped by the state, giving it the imprimateur of law.
Private money powers, the parasites, are not going to easily jump to China. Chinese are nationalists - and racists. They believe the Han tribes are superior.
Will the parasites breed into the population and change their race? They follow a blood line religion, so the East is yet another impediment to their dreams of world control.
At these prices I wouldn`t be surprised if China is buying and just pumping it into any empty wells they have, think of it as a strategic reserve.