China cements oil, financial, security ties to Caracas

Spanish Market: Crude oil, Metals, Natural gas, Oil products
14/09/18

Chinese state-owned CNPC will raise its equity stake in the 130,000 b/d Sinovensa crude blending venture in Venezuela from 40pc to 49.9pc, one of 28 bilateral agreements signed today in Beijing.

The agreements, signed during Venezuelan president Nicolas Maduro's high-profile state visit,

expand bilateral oil, gas, mining, financial and security relations, signaling a warming of ties following a period of Chinese caution toward Caracas.

The agreements "demonstrate that China is committed decisively to strengthening its bilateral relations with the Maduro government and supporting the successful development of Chinese investments in Venezuela," a presidential palace official told Argus.

Venezuela's 1999 constitution allows PdV's partners to hold up to 49.9pc in upstream and downstream oil ventures.

A separate agreement assures the Maduro government a $5bn open-ended line of credit that PdV and CNPC will tap to expand crude production at the 15,000 b/d PetroZumano joint venture and the 400,000 b/d PetroUrica joint venture in the Orinoco oil belt's Junin 4 block, Venezuela's energy ministry said.

A Venezuelan finance ministry official added that the credit line could be doubled to $10bn as ongoing discussions between Venezuelan economy and finance minister Simon Zerpa and Chinese lenders yield additional financing deals favoring commodity extraction joint ventures with Chinese partners.

Not including the new credit, China has loaned Venezuela's government over $62bn in mostly oil-backed loans since 2007, of which some $23bn currently are outstanding.

During the Venezuelan visit, PdV signed a separate agreement with CNPC subsidiary CNODC that would open the door to new crude and gas exploration and development ventures, including offshore gas projects.

Venezuela's government also signed an agreement with Chinese mining company Yankuang Group to develop gold-mining ventures in Bolivar state.

Another agreement signed today with China Railway Engineering (CREC) aims to reinvigorate projects under way since 2010 to modernize state-owned iron producer Ferrominera Orinoco's mining, ore processing and railway transport systems as part of a broader plan to recover Venezuela's foundering state-owned steel industry.

Venezuelan and Chinese officials signed a memorandum of understanding to explore Venezuela's eventual adoption of the Chinese yuan as a reserve currency instead of the US dollar, a finance ministry official said.

A defense ministry official in Caracas told Argus that Venezuela and China "for the first time also signed a memorandum of understanding in which China has agreed in principle to deploy military forces to defend the constitutional stability of the Maduro government in the event of a hostile foreign military intervention or destabilizing internal commotions, including new assassination attempts against Maduro."

A local Chinese diplomat declined any comment on the nature of the agreements the Maduro government signed in Beijing, including specifically the bilateral security and defense memorandum mentioned by the Venezuelan defense ministry official.

Three deputies of Venezuela's opposition-controlled elected national assembly, which was stripped of its constitutional powers in early 2017 by the government-controlled supreme court, warned in separate contacts with Argus that the legislature will soon approve resolutions condemning the agreements signed in Beijing today.

The assembly's resolutions will also reiterate officially to China and other foreign powers that all loans and joint ventures initiated outside the constitution's parameters will be "disowned, repudiated and seized" by the government that eventually replaces Maduro.

The sweeping new bilateral accords suggest that Beijing has dismissed the opposition's warnings. Russia, which has extended some oil-backed credit with Caracas as well, appears similarly confident that the Maduro government will endure in spite of western sanctions and bleak economic conditions.

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

15/04/25

United Airlines to cut 3Q capacity on uncertainty

Houston, 15 April (Argus) — United Airlines plans to decrease the number of flights it operates in the third quarter because of lower passenger numbers and economic uncertainties. The US-based air carrier said that it will be removing four percentage points of scheduled domestic capacity in the third quarter of 2025 and expects to retire 21 aircraft earlier than previously planned. Global economic uncertainty prompted the company to provide two scenarios for for its financial results for 2025 — one based on the US economy remaining weaker but stable, and the other for the US entering a recession. In the stable scenario, assuming current fuel price outlooks, the company expects a $11.50-$13.50 per share profit. Under the recessionary scenario profits would be in the $7-9/share range. Despite the possibility of slower busines, the airline plans to expand its investments at Chicago O'Hare International Airport in Chicago, Illinois, with six additional gates and plans to expand at San Francisco's international airport as well. 1Q results In the first quarter domestic passenger load factor — a measurement of capacity utilization — declined by 3.4 percentage points to 80.3pc compared to the same quarter in 2024. United's revenue passenger miles (RPM) — a measurement of total miles flown by paying passengers — increased by 3.6pc to 59.5bn miles in the first quarter compared to the previous year. Available seat miles (ASM) — a measure of capacity — rose by 4.9pc to 75.2bn miles in the quarter. United's average fuel cost decreased by 12.2pc to $2.53/USG during the first quarter. The airline consumed 4.1pc more fuel in the quarter. Total operating expenses rose by 1.3pc to $12.6bn in the quarter while total operating revenue increased by 5.4pc to $13.2bn. The airline reported $387mn profit in the first quarter, up from a $124mn loss reported a year earlier. By Hunter Fite Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Pemex road fuel inventories down in March

15/04/25

Pemex road fuel inventories down in March

Mexico City, 15 April (Argus) — Mexican state-owned Pemex's road fuel inventories fell by 17pc in March from a year earlier, driven by lower regular and premium gasoline stocks. Pemex's regular gasoline, premium gasoline and diesel inventories at its 81 port and inland terminals decreased to 8mn bl in March, down from 9.6mn bl in March 2024, according to a Pemex transparency response to an Argus request. The company stored on average 5,350 bl of gasoline and 3,800 bl of ultra-low sulphur diesel (ULSD) at its Olmeca terminal in Dos Bocas in March. In the past, the energy ministry published Mexico's total fuel inventories — Pemex and non-Pemex — with a delay of up to two months, but it has not updated the data since late 2023. Pemex increased its gasoline and diesel production in February by 5pc from the same month a year prior, but imports dropped sharply by 30pc year-over-year to roughly 362,000 b/d. Regular gasoline inventories fell by 19pc to 4.1mn bl in March from a year earlier, despite higher domestic output, likely because of lower imports. Diesel stocks dropped by 10pc to 2.8mn bl from the previous year, while premium gasoline inventories sank by 23pc to 1.1mn bl, tracking an increase in premium gasoline demand as well as lower imports. Jet fuel stocks down Meanwhile, jet fuel inventories fell by 12pc to 368,800 bl in March from the prior year, Pemex data requested by Argus show. Pemex's jet fuel production dropped by 21pc to roughly 34,000 b/d in February from the same month a year earlier, while domestic sales decreased by 4pc to about 95,000 b/d in the same period. Jet fuel imports also declined, falling by 4pc to 55,000 b/d in February from the previous year. Pemex's March gasoline and diesel inventories were just over nine days' worth of the company's sales so far in 2025. Its jet fuel inventories were just under four days' worth. Mexico's minimum fuel storage policy — in effect since July 2020 — requires fuel sellers to have at least five days' worth of sales on hand for gasoline and diesel, and three days' worth of sales for jet fuel. By Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

IEA slashes 2025 global refinery runs growth forecast

15/04/25

IEA slashes 2025 global refinery runs growth forecast

London, 15 April (Argus) — The IEA has sharply lowered its forecast for refinery run growth this year, citing escalating tensions in global trade. In its latest Oil Market Report (OMR) published today, the energy watchdog said it expects growth in global crude runs of 340,000 b/d, down by 40pc from its previous forecast of 570,000 b/d. The IEA sees total global crude runs averaging 83.2mn b/d this year. Increased throughput from non-OECD countries still drives this year's growth, with the IEA expecting an increase of 830,000 b/d to 47.6mn b/d. The IEA has not adjusted this figure, as stronger runs in China through the first quarter of this year and higher Russian forecasts have offset downgrades in other non-OECD countries. Chinese crude runs in January and February averaged 15.2mn b/d, around 470,000 b/d higher than the IEA's forecast, it said. The body raised its Russian forecasts from the second quarter as Ukrainian attacks on Russian infrastructure have slowed. The IEA forecasts OECD refinery runs will fall by 490,000 b/d this year because of refinery closures, resulting in a cut from its previous forecast of 100,000 b/d, to 35.6mn b/d. OECD Europe runs are forecast to fall by 310,000 b/d on the year to 10.9mn b/d. OECD crude runs rose by 200,000 b/d on the year in February, 40,000 b/d higher than the IEA expected. Throughput was particularly weak in the first quarter of 2024, when extreme cold cut US run rates. In Mexico, state-owned Pemex's 340,000 b/d Olmeca refinery has still not reached stable operations having started up in mid-2024. The refinery ran no crude in January because of crude quality constraints, the IEA said, and February output there was 7,000 b/d. The IEA estimates the refinery's second crude unit will come online in the fourth quarter. The IEA said refiners will add more than 1mn b/d of global capacity in 2026, but it forecast growths in crude runs of only 300,000 b/d for that year. Assuming all new and expanded refineries come into operation by then, producers will have to cut runs at older refineries, it said. Capacity additions will be largest in Asia-Pacific. The IEA expects China's 320,000 b/d Panjin refinery to come online in the second half of 2026, and for producers to add capacity of 480,000 b/d in India. It sees growth in crude runs as focused on the Mideast Gulf, and runs across the OECD falling. By Josh Michalowski Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

VG begins contracted LNG deliveries at Calcasieu Pass

15/04/25

VG begins contracted LNG deliveries at Calcasieu Pass

Houston, 15 April (Argus) — US LNG exporter Venture Global began deliveries of long-term contractual cargoes at its 12.4mn t/yr Calcasieu Pass terminal in Louisiana today after the facility started commercial operations, more than three years after producing its first LNG. "We are excited to reach this milestone and are grateful for our regulators and supply chain partners who have worked with our team to reach commercial operations as efficiently and safely as possible," said Venture Global chief executive Mike Sabel. But the long-delayed and highly contested start comes amid ongoing arbitration proceedings against Venture Global, which some customers including Shell, BP, Italian utility Edison and Spanish company Repsol argue was unjustified in deferring the contracted supplies (see offtakers table) . The LNG exporter originally sought to begin commercial operations in 2022 but cited impacts from Covid-19, two hurricanes and "major unforeseen manufacturing issues" related to one of the plant's heat recovery steam generators, equipment that helps power the facility. Because several of the plant's facilities, including the power island, were not officially placed in service with federal authorization, Venture Global maintained that the plant was not commercially operating — despite producing 444 cargoes totaling 28.2mn t of LNG (about 1.28 trillion cubic feet of natural gas) since its first in March 2022, according to Vortexa data. The start-up Tuesday comes on the final day before Venture Global could have lost control of the project. The company said in a December filing with the US Securities and Exchange Commission (SEC) that the agreement under which it had financed debt requires commercial operations to be completed by 1 June 2025. Should commercial operations have not begun 45 days prior to this date — which is Tuesday — then the agreement defaults, allowing "certain investors" to exercise control over the project. Before Tuesday, the company instead sold cargoes on the spot market for prices much higher than the terms of its offtake agreements. Calcasieu Pass produced its first LNG in January 2022 and exported its first cargo on 1 March 2022 — less than a week after Russia, then a key supplier of gas to Europe, invaded Ukraine. The facility produced its first LNG just 29 months after reaching a final investment decision (FID) on the project, compared with the industry average of four to five years. The timing of the project's start dovetailed with the war-driven volatility in the European gas market, helping Venture Global realize much larger profits than it would have under contracted volumes. The firm's liquefaction fees in 2023 and 2024 averaged $12.23/mn Btu and $7.28/mn Btu, respectively, compared with the average $1.97/mn Btu in its long-term deals, according to a company presentation in March. The lengthy commissioning process generated $19.6bn in revenue by the end of September 2024, Venture Global said in the December SEC filing. Shell estimated that Venture Global sold cargoes in 2023 at an average of $48.8mn per shipment, "raking in billions of dollars while shirking its contractual obligations", according to a filing with US energy regulator FERC in March 2024. Venture Global said in March that the customer arbitration cases are not likely to be resolved until after 2025. LNG facilities usually produce commissioning cargoes for a few months before beginning long-term contracts. But Venture Global has said its unique plant design, which uses a higher number of smaller, modular liquefaction trains compared with traditional trains, requires a longer start-up process. Calcasieu Pass LNG consists of 18 trains paired in nine blocks, and a similarly long commissioning period is expected at the first two phases of Venture Global's 27.2mn t/yr Plaquemines facility consisting of 36 trains. The company also has plans for an 18.1mn t/yr expansion at Plaquemines. An FID is expected in mid-2027, with first LNG production 18-24 months later. Venture Global estimated that its third LNG facility, the 28mn t/yr CP2 facility adjacent to Calcasieu Pass, could export up to 550 commissioning cargoes . The company expects to make an investment decision on the first phase of CP2 this year. By Tray Swanson Calcasieu Pass offtake deals Offtaker Volume, mn t/yr Contract length, yrs Shell 2.0 20 Galp 1.0 20 Sinopec 1.0 3 CNOOC 0.5 5 Edison 1.0 20 Repsol 1.0 20 PGNiG 1.5 20 BP 2.0 20 — US DOE Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

South Korea's March car output rises, exports dip

15/04/25

South Korea's March car output rises, exports dip

Singapore, 15 April (Argus) — South Korea's automotive output and domestic sales rose in March but exports dipped. The country has agreed to offer a wide range of support measures to offset the impact of the US' sweeping tariffs on its auto industry. The country's auto output in March edged up by 1.5pc on the year to almost 371,000 units, according to South Korea's trade and industry ministry (Motie). Domestic sales rose by 2.4pc on the year to around 149,500 units. Exports in March fell by 2.4pc on the year to almost 241,000 units, with auto export revenue at $6.24bn. The country earlier this month unveiled planned emergency measures to support its automobile industry , in response to the potentially lower export volumes given the US tariffs. The country will cut the special consumption tax on new car purchases, and push its public sector, public institutions and local governments to buy "business vehicles" within the first half of 2025. Domestic eco-friendly vehicle sales rose by 14pc on the year to almost 70,000 units while exports rose by 5.8pc to almost 69,000 units. Eco-friendly vehicles in South Korea refer to hybrids, battery electric vehicles, plug-in hybrids and hydrogen-fuelled vehicles. Hybrid domestic sales rose by 23pc on the year to about 49,500 units, while domestic BEV sales dipped by 7.5pc to around 18,700 units after rising sharply on the year in February . Hybrid exports were also up by almost 25pc to almost 42,000 units, while BEV exports fell sharply by 25pc on the year to about 20,800 units. By Joseph Ho South Korea's car exports in 2025 (units) South Korea's domestic car sales in 2025 (units) Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more