Archive for December 4th, 2010

The Math of the Chinese Investment in Venezuela’s Orinoco Oil Belt

December 4, 2010

According to a PDVSA official in the local newspapers, Chinese companies will invest US$ 40 billion in the Orinoco oil belt of Venezuela, between now and 2016.

Let’s do the math:

Since all projects by law have PDVSA holding a 60% stake as a minimum, this implies that PDVSA will have to invest US$ 60 billion in five years or US$12 billion per year in the Chinese projects alone.

Add to that all of the other projects and the math is trivial:

At current oil prices, it ain’t going to happen.

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