Chinese oil major China National Petroleum Corporation (CNPC) made significant investments in place of Venezuela’s state-owned oil company Petroleos de Venezuela (PdV), which retreated from its international commitments following the death of the country’s President Hugo Chavez, says an analyst with research and consulting firm GlobalData.
In a move that will help to diversify the supply of refined products sourced by CNPC for its customers in the Pacific Rim, the company has signed significant deals in Costa Rica and Ecuador. Both projects, which include the largest single capital project in Costa Rica, were negotiated primarily by PdV.
Jeffrey Kerr, GlobalData’s managing analyst for Downstream Oil & Gas, said, “Despite PdV being an initial partner and key driving force behind the projects, representatives from the company were largely missing from the signing ceremonies, which suggests that it is scaling back from these investments following the president’s death earlier this year.“
CNPC now appears to be stepping up in PdV’s place to operate within the open market, meaning it will be able to buy and sell refined products, book profits and losses, and apply those earnings against much more fixed earnings from wholesale and retail sales back home.
”In Costa Rica, the Chinese oil major and Costa Rican state-owned oil company Recope signed a deal for a $1.5 billion upgrade of Recope’s 25 thousand-barrels-per-day (mbd) Porto Limon refinery. The upgrade, which includes an atmospheric distillation unit boost to 60 mbd, is due for completion in 2016.
Additionally, CNPC is teaming up with PetroEcuador to help build a 300-mbd Pacifico refinery in El Aromo on the Pacific Coast, to run locally produced crude oil. As well as participating jointly on future projects with PetroEcuador, the move will also allow CNPC to gain exploration and production rights for its own upstream business in Ecuador.
“By signing these deals, CNPC is significantly extending its reach into Latin America, enabling it to continue strengthening its foothold within the region over the coming years,” Kerr concluded. “CNPC already has production deals in place in Venezuela, so further crude oil processing just makes sense.”