Chinese vicepresident visiting Venezuela, 2013
China is using ALBA, the leftist group of countries led by Venezuela, which essentially includes Cuba, Nicaragua and Bolivia as their entry door to Latin America. In Venezuela China has already managed a substantial control of the huge Orinoco heavy oil deposits, thanks to a $40 billion jumbo loan made to the Venezuelan government, money to be paid back in oil over the next 10-12 years. This loan has also allowed Chinese companies to obtain numerous contracts in the Venezuelan electricity, petrochemical and petroleum sectors. One of these companies is CAMC Engineering Company. Due to the political links existing among ALBA countries this company is also very active in Nicaragua, where it has signed a contract to build a 150,000 barrel per day refinery, to be financed by Venezuela at a cost of some $6-8 billion. Is this refinery economically and technically feasible? The following questions are pertinent:
· Can Venezuela supply the 150,000 barrels per day required by this refinery, given the alarming drop in Venezuelan oil production during the last 15 years?
· Is 150,000 barrels per day a proper size for a refinery essentially designed for Central American consumption? Can the countries of the region pay commercial prices? They have received subsidized oil from Venezuela and Mexico for many years. If no commercial prices are obtained, how can investment be recovered?
The Nicaraguan government has also signed an agreement with a Chinese company called HK Nicaragua Central Development Investment Company to build a $40 billion canal across the country to connect the two oceans. The following questions should be asked:
· Has this company had any experience in construction, especially in projects of this magnitude?
· Where will the money come from? $40 billion is not a sum that can be easily obtained
· Can the region sustain two canals, especially now that Panama has invested heavily in its canal, in order to allow the psassage of post-Panama ships?
· Will operating costs allow for a profitable operation of the canal?
· Would China use this project as political leverage to obtain special treatment from the Pnamanian government, as suggested by analysts such as Evan R. Ellis? See also http://www.manzellareport.com/index.php/world/694-what-s-really-behind-the-nicaragua-canal-project.