Dec 06
26
Chavez In Contol
With Hugo Chavez re-elected, he can now move to execute on his major promise – build out the oil pipeline infrastructure within South America.
This will enable him to create true independance from the USA, where the bulk of Venezuela's exports currently go.
That in turn is made possible by the current high price of oil. (Venezuela's oil reserves are massive, but they are not of the same quality as those in Saudi Arabia, and so have a much higher cost of refinement).
Once the pipeline is in place enabling Venezeulan oil to be able to be cheaply transported to South American deep water ports, it can then be easily shipped to China. The only thing missing in this equation is for the price of that oil to be calculated in Euros rather than in dollars.
The pipeline plan would be twofold. Firstly, by supplying his
southern neighbours, his grand vision of an economically independent
South America would take a giant step toward reality. The price paid by
other nation states in the region would be at a substantial discount to
world market prices, and deals already struck with Argentina and
Uruguay amongst others would point to swap deals. Presently, Argentina
is supplying Venezuela with cereals, beef and dairy products in
exchange for Hugo’s black gold. Future swap deals with participating
countries would not be a shock to any observer in the region.
Secondly,
a pipeline running horizontally across the continent would open up
Pacific trade routes for Venezuelan oil. This is backed up by Chavez’s
July 2006 state visit to China, when he signed trade agreements with
the eastern giant and proposed upping oil shipments to China eightfold
by the year 2012. With oil piping directly to Colombian or Ecuadorean
deepwater ports, this could easily be achieved, and to say that China
is becoming an important market may be the understatement of the 21st
century. Interestingly, if Chavez does bump up shipments to China from
the presently modest 150,000 barrels per day (bpd) to the proposed 12
million bpd, this would close in on Venezuela’s current US shipments of
15.4m bpd.