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China replaces Saudi in Caribbean oil deal
Kingston, Jamaica (UPI) Jan 7, 2009 China has taken over from Saudi Arabia the lease of a giant crude oil storage facility in the Caribbean that gives Beijing unprecedented access to fuel and oil markets in the Americas, including the United States and Canada, officials said. The acquisition by PetroChina, the publicly listed arm of the China National Petroleum Corp., was the second oil-related regional Chinese deal to emerge within a week. Earlier Canada announced a $1.7 billion PetroChina investment in its tar-sands exploration and development project that gives China access to Canadian markets. Saudi Arabia's abandonment of the storage facility was on the cards after the OPEC leader was offered virtually free storage for crude oil in Japan. The 5 million-barrel storage is located in the NuStar Energy LP Statia terminal on the Dutch Caribbean island of St. Eustatius, a strategically located hub for oil tankers traversing the waters between North, Central and South America and the Caribbean. Analysts said China's long-term strategy was immediately clear with its entry into the St. Eustatius terminal, which can handle some of the largest oil tankers and is within easy reach of other transport and refining centers in the region. Industry sources said as with most Chinese moves PetroChina would initially work its way into the ship fuel market before expanding activities in other oil trades. The plan will bring together several Chinese acquisitions and oil deals in Latin America, particularly Venezuela. China has set eyes on other refining acquisitions, including some in the United States. Analysts said PetroChina's storage deal could also be in response to the scheduled expansion of the Panama Canal that will allow larger ships with greater fuel and oil cargoes to pass through. The 5 million-barrel storage facility taken over by PetroChina is a substantial addition to its portfolio and a major part of the total storage available at the Statia Terminals, believed to be about 13 million barrels. Saudi Arabia had held the storage since 1995 but had not used it much recently. In more recent market trends cited in energy trade figures, the Americas' dependence on Saudi oil dropped significantly as importers switched to Canadian and Brazilian crude oil. The trend is set to continue as Brazil speeds through exploitation of its huge oil discoveries offshore. China is also building energy links with Venezuela and is expected to expand its refining operations in the region, and possibly directly in Venezuela, as part of its strategy to raise its regional profile. Analysts said the Chinese would also seek to forge closer links in the Americas to secure greater supplies for fuel oils in Chinese industry and shipping.
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