Venezuela: Oil and Politics Mix Well
Venezuela´s international agenda, made up mainly by agreements in the most diverse spectrum of social life, has oil as the backbone of the government´s strategy.

The Minister of Energy and Oil, Rafael Ramirez, recalled that national policy in this area is determined by the state, with an industry that engages in tasks and objectives subject to the plans of the Executive.

For many analysts, this behavior is new to the South American nation. Prior to the administration of President Hugo Chavez, oil programs were only market-oriented.

Now the setting up of deals combines mutual economic benefit with the objetives of international policy, a cocktail that strengthens the image of Venezuela abroad.

Executives of PDVSA indicated those actions help to diversify markets for national oil, as it takes into account the great potential it represents for economies with dynamic growth like those in some Asian countries.

The agreements signed with China, country considered second world consumer of crude with seven million barrels per day and an average annual expansion of its Gross Domestic Product (GDP) over nine per cent. The recent visit of President Hugo Chavez to the Asian giant, paved the way to sell crude to that market with a daily volume of up to 200 thousand barrels.

Perspectives point to an increase of that figure to half a million barrels in the medium term, besides the agreements signed for the transportation of fuel by both countries.

China will also participate in the construction of ships for the Venezuelan fleet that handles crude transportation, a key element of the oil policy.

Ramirez recalled that during the oil strike two years ago in Venezuela it became evident the need for a fleet of its own. To that end it is expected that by 2012 the country will be able to move up to 50 per cent of domestic oil production with national ships.

Economic benefits generated by these relations also come through the Chinese oil consortium CNPC engaged in the development of 19 fields of crude, as well as the zone surrounding the Orinoco riverwith an investment program valued in five billion dollars.

Caracas intends to create refining capacities abroad, and thus go beyond the simple marketing of crude, but also of by-products, with an aggregate value.

Venezuela also promotes actions to expand regional energy integration, supported in its ties with government members of the agreement Petrocaribe.

Over a dozen infrastructure projects are currently advanced by state-run Petroleos de Venezuela (PDVSA) through its subsidiary PDV Caribe, in a region that up to now lacked facilities of that kind for the convervation of crudes and by-products.

With that in mind it carries out works in order to create warehouse facilities for by-products such as diesel, gasoline, aviation fuel and liquid gas in Belize, Dominica, St.Vincent and the Grenadines, St. Kitts and Nevis, Antigua and Barbuda and Grenada.

The construction of processing plants in a small scale in Belize and Dominica are also under study. Petrocaribe has the purpose of coordinating and designing efficient energy policies to make the most of oil and its by-products, electricity, gas, together with the training of personnel and the development of infrastructure projects in this sector.

Meanwhile, in the domestic level, PDVSA investments respond first of all to the social projects promoted by the Executive, defined as a series of initiatives under the name "misiones" (missions). That is why, over the period 2003 to 2005, the oil company contributed around 10 billion dollars to the national budget for those initiatives.

Resources for all those actions come from the country´s policy of oil sovereinty, reflected in a major participation of the state in energy projects, as well as a tax burden established according to international standards.