How China’s Realpolitik Approach to Venezuela, Iran & Afghanistan Upends US’ Geopolitical Game from Sputnik News
China is dealing a blow to Washington’s sanctions strategy by stretching a helping hand to developing states labelled by the US as “pariahs” which have been subjected to tough restrictions. This shows that the world has reached a point of no return along with the accelerating decline of the US, says Asia Pacific commentator Thomas W. Pauken II.
The value of tough US sanctions against Venezuela’s oil sector will substantially decline if China steps in to fill the void, energy observers say, citing Bloomberg’s September report that China National Petroleum Corp (CNPC), once a major investor in Venezuela, is sending engineers and commercial staff to the South American state.
Venezuelan Oil Sector: China is Stepping In
Venezuela’s oil industry was subjected to crippling restrictions by the Trump administration. Trump started to tighten the screws on the country’s energy sector in 2017 by prohibiting the trading of Venezuelan bonds in US markets. Two years later, the US slapped sanctions on the country’s energy giant Petróleos de Venezuela, S.A. (PDVSA). The move came shortly after the US-backed attempted coup of 23 January 2019 aimed at toppling Venezuelan President Nicholas Maduro. Washington also went after key trading houses and individuals that propped up Venezuela’s oil exports.
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Eventually, Venezuela’s crude production slid from 1.013 million barrels per day in 2019 to as low as 337,000 bpd in June 2020. It then rebounded to 537,000 bpd in June 2021 but still lags behind production levels of over 2.5 million bpd under the late former president Hugo Chavez. To prevent the energy sector’s further demise, Maduro announced in March 2021 that he was ready to end the monopoly of state-owned PDVSA and open the oil industry up to foreign investment. The South American country possesses the world’s largest crude reserves, with 304 billion barrels. Still, oil experts suggested at the time that no matter how seductive Maduro’s proposal was, Western energy giants would wait until Joe Biden lifts sanctions on PDVSA, something that the US president is not rushing to do.
Meanwhile, Bloomberg reported on 1 September that CNPC is taking steps to boost oil production in Venezuela. While CNPC and PDVSA haven’t comment on the issue, some energy experts suggest that the Chinese company’s return to Venezuela doesn’t mean “the beginning of a gigantic production stage.” It’s more likely that CNPC would return to a production level of over 100,000 bpd in the South American state and export the crude back to China to help PDVSA repay its debt to Beijing, according to them. However, Oilprice.com believes that the Chinese energy ambitions in Venezuela are bigger, especially given Maduro’s proposal, soaring oil prices and Beijing’s Belt and Road push. The media outlet believes that Beijing could help Caracas revive its crude industry.
