Venezuela Enlists Iran To Steer Oil To China

http://news.ft.com/cms/s/3221ed52-7...

Venezuela Enlists Iran To Steer Oil To China
Andy Webb-Vidal in Caracas
January 31 2005

Venezuela has enrolled Iran to help it accelerate a strategy to steer its oil exports to China and away from its traditional market of the US.

A team of traders from Petróleos de Venezuela (PDVSA), the state-owned oil company, is to be trained in London by Iranian advisers in how to best place oil in Asian markets, according to industry sources.

The action is part of efforts by Venezuela, the world’s fifth-largest oil exporter, to strengthen ties with China at the expense of the US, with whom relations are strained again after two-years of calm.

Iran is Venezuela’s closest ally in the Organisation of Petroleum Exporting Countries, which at the weekend agreed to keep output quotas unchanged in the short term to support oil prices.

Iran is also, as US vice-president Dick Cheney said recently, "right at the top of the list of potential trouble spots" identified by the Bush administration. Venezuela’s asking for help from Iran may be read as provocative by some in Washington.

President Hugo Chávez on Saturday signed accords with Zeng Qinghong, China’s vice-president, to allow the China National Petroleum Corporation to develop oil and gas reserves in Venezuela. "China has come here as a sister nation to extend a friendly hand to the neediest in Latin America," Mr Chávez said.

In recent weeks Venezuela has begun selling crude and fuel oil to China, in some cases, according to people familiar with the deals, at a discount price to offset shipping costs and render the trade feasible.

"Sending oil to China might not be economically viable, but Chávez’s motives are not always economic," said a diplomat in Caracas.

Venezuela is in talks with Panama to find ways to transport oil to the Pacific Ocean. That would allow it to send oil to Asia more cheaply.

Mr Chávez, who has been in power for six years, complains that Washington is the centre of an "empire" bent on world domination.

He has threatened to cut off oil supplies to the US on several occasions in response to what he asserts are persistent attempts by Washington to meddle in Venezuela’s domestic affairs.

Venezuela at the weekend settled an intense, two-week diplomatic dispute with the US-backed government of Colombia after what it claims was a recent US-assisted "kidnapping" in Caracas of a Colombian rebel wanted by Bogotá.

The decision to send oil to China coincides with intensifying concerns in Washington about Venezuela.

The US Government Accountability Office, Congress’s nonpartisan investigative agency, this month began a study to examine the risk of potential oil supply interruptions from Venezuela.

Ali Rodríguez, Venezuela’s foreign minister, recently said his country was not seeking to deny oil to the US, but only diversifying its markets.