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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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Venezuela Can Wreck U.S.-Chinese Relations

When the New York Times earlier this month reported that President Trump had met with Venezuelan military officers unhappy with the country’s government to discuss a coup against Nicolas Maduro, some observers of the events in the South American country probably winced. The implications of a U.S. military intervention in Venezuela would be way too severe for comfort. In fact, it might aggravate an already regionally spreading crisis. Besides aggravating the crisis, any more severe blow to Venezuela might well put Washington at further odds with Beijing.

An international relations expert from the University of Kent recently wrote in a story for The Conversation that said, “If he makes good on these words, Trump’s coercive approach could have severe implications for a crisis that has grown increasingly regional in scope.”

Rubrick Biegon noted that this is not the first time Washington has taken such an uncompromising stance towards Caracas, recalling the George W. Bush administration’s involvement in an attempted regime change against Hugo Chavez in the early 2000s. The attempt ended up cementing Chavez’ grip on power, and the likelihood of this repeating now is equally high: Latin Americans, suffice to say, are not the greatest Trump fans in the world, and that goes double for Venezuela.

But there is another danger here as well if the Trump administration decides to go forward with military involvement: relations between the United States and China might be affected as well.

China is the most generous backer of Maduro’s government. Just this month, Beijing agreed to extend a US$5-billion lifeline to Caracas, with China’s Foreign Ministry spokesman saying in a statement, “The domestic situation is getting better and Venezuela’s government is actively promoting economic and financial reform.”

This is a pretty strong indication that Beijing would not look kindly to a forced regime change in Venezuela, not while it gets Venezuelan crude at a hefty discount, especially with the Iran sanctions due in less than two months. Related: Canada Boosts Oil Exports To The U.S.

In a certain sense, it’s all about oil, as are many conflicts. Some observers have argued that Washington’s hostility towards Caracas is motivated by the desire to take control of the world’s largest oil reserves, conveniently located in the States’ “backyard”. Indeed, despite numerous reports that President Trump is mulling over the suspension of Venezuelan oil imports, he has not yet made good on his word, partly because of the humanitarian implications of such a move, and partly because Venezuelan crude is still needed.

Meanwhile, China is pursuing its own energy security by expanding its presence in oil fields around the world. Venezuela is a natural focal point for such an expansion. During his visit in Beijing this month, President Maduro said that Venezuela will increase its crude oil exports to China to a million barrels daily, helped by the US$5 billion from China. What’s more, the head of CNPC will soon visit Venezuela to finalize the negotiations for the increased oil exports. At 1 million bpd, these would constitute almost everything that Venezuela is currently producing, which is 1.2 million bpd.

China has already spent US$65 billion on financial help for Caracas over the last ten years. Much of it has been repaid, but Caracas still owes some US$20 billion to its ally. Any attempt by Washington to force a regime change and cut China’s access to Venezuelan oil would provoke a quick reaction.

By Irina Slav for Oilprice.com

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  • Louis Spring on September 23 2018 said:
    Not a very persuasive argument. Maduro is over and China is supporting a vicious murderer who plundered his nations wealth. Keeping Maduro in power is a crime against the Venezuelan people.
  • Dan on September 23 2018 said:
    Bet that Chinese ship on its maiden voyage stays there for a while.
  • John Brown on September 28 2018 said:
    The majority of hungry Venezuelans would praise Trump if he cleaned out the murdering moron dictator Maduro, helped form a Democratic Government, & restored oil production. China has been helping Maduro keep his foot in the neck of the Venezuelan people & starve them. Once Maduro & his fanatics are cleaned out China will owe the Venezuelan people reparations & have no claim on funds they provided to oppress them.
  • carlos gonzalez on September 30 2018 said:
    Mexico petroleum industry PEMEX is out of control and Venezuela PDVSA will fallow that trend if keep doing business in that way with USA ..... China is just another costumer that actually want also to invest ... Here we have to think about the future, the next 50 years will come in an eye blink and for oil business leaders is better to think with a little Chines Wisdom and make friends around the world rather than enemies .... killing for oil, millions all ready death is anymore the answer ... come on the problem in Venezuela is about who control the oil but as the Chines people knows the only ones who control the oil in Venezuela are the Venezuelans peoples, those days - invasions for oil- is already understood by intelligent people all around the world.

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