CHINA Petrochemical Corp, the nation's second-largest oil producer, is in talks to drill in Venezuela, where ConocoPhillips and Exxon Mobil Corp pulled out after President Hugo Chavez seized their assets.
The company is seeking "heavy oil" projects, said Tong Peixin, a spokesman for unit Sinopec International Petroleum Exploration & Production Corp, a reference to tarry deposits in an Orinoco River basin area known as the Faja and to fields lying off the Caribbean coast that may hold 316 billion barrels. China Petrochemical is known as Sinopec Group.
China has strengthened links with Venezuela as part of efforts to secure energy supplies for the world's fastest-growing major economy. The countries signed US$11 billion in energy and transportation accords last August when Chavez visited China.
"This shows China is really eager to develop projects in countries like Venezuela, even though there are potential risks, given unstable social conditions," Rachel Tsang, head of oil and gas research at Nomura International (Hong Kong) Ltd, told Bloomberg News yesterday.
Weeks of street demonstrations followed Chavez's May 27 decision not to renew Radio Caracas Television's broadcast license, silencing newscasts long critical of his government and prompting international criticism.
Beijing-based China Petrochemical was among seven foreign oil companies to sign agreements with Petroleos de Venezuela SA on Tuesday, the Shanghai Securities News reported.
Zhang Zheng, a Beijing-based spokesman for Sinopec Group, declined to comment.
ConocoPhillips and Exxon will quit their Venezuelan projects after the failure of talks with Chavez's government, oil minister Rafael Ramirez said earlier this week. Chevron Corp, Statoil ASA, Total SA and BP Plc agreed to terms with Venezuela and will continue heavy-oil operations.
Sinopec Group will take 32 percent of the Posa exploration project in the eastern part of the Gulf of Paria, off Venezuela's northwest coast near Trinidad.
Petroleos de Venezuela will own 60 percent, and Venezuelan construction company Inelectra eight percent, the oil ministry in Caracas said this week.
Ramirez plans to submit plans for a new joint venture with China to the country's legislature to produce upgraded crude oil.