business & economy

A December trip to Beijing by Venezuelan President Hugo Chávez has resulted in some commercial agreements that are likely to affect Panama.

During that state visit, Chávez signed a petroleum agreement and put in an order for a Chinese telecommunications satellite.

The oil deal will secure Chinese financial and technical assistance for the exploitation of 15 different oil fields, including petroleum reserves in Venezuela’s remote and rugged western region. The Chinese will also help Venezuela to develop its chemical industry, which would be largely based on the processing of petroleum to make plastics and a variety of other products. Part of the payment for this agreement will be made in the form of Venezuelan oil exports to China.

Although there is talk about eventually building a pipeline from the Venezuelan oil fields across Colombia to Pacific ports in Colombia or Ecuador, such a facility would at the present time be vulnerable to sabotage because it would run across a war zone and present a tempting target for Colombian rebels who have long made a habit of attacking the country’s existing pipelines. Moreover, the necessary Pacific port facilities do not exist.

That leaves Panama’s interoceanic pipeline, which runs from Chiriqui Grande in Bocas del Toro province to Puerto Armuelles in Chiriqui province, as the most reasonable route for Venezuela to China oil shipments in the foreseeable future. That pipeline, which was built when the United States opened the oil field on Alaska’s north slope with a legal provision that its production could not be exported, was originally used to transport Alaskan oil to the US east coast. Later the law was changed and the oil companies found it more advantageous to export Alaska’s petroleum to Japan and supply the eastern United States with oil from Venezuela and other countries east of the Panama Canal, and thus for a number of years the pipeline was unused. Then new safety regulations that barred single-hulled oil tankers from US waters and other developments in the world oil market led to the pipeline’s refurbishment and reopening, but mainly to the expansion of the terminals and storage facilities at either end of the pipeline. Large-scale oil shipments from Venezuela to China, however, would dramatically increase the pipeline’s use.

(Only the smallest modern tankers fit through the Panama Canal. Very little crude oil transits through the waterway, although some petroleum distillates and other fuels like liquid propane gas are shipped through it.)

The Venezuelan and Panamanian governments (the latter part owner of the Bocas-Chiriqui pipeline) have been negotiating, talking in terms of pumping some 120,000 barrels of oil to China per month. Our pipeline has a capacity for 800,000 barrels per day, but its pumps were installed to move oil from the Pacific to the Atlantic (south to north) and they would need to be modified or reversed to send the fuel in the other direction.

The Torrijos and Chávez administrations, along with that of Álvaro Uribe in Colombia, are also exploring the possibility of an oil pipeline running from Venezuela to Panama. This would be in addition to the projected natural gas pipeline from Venezuela to Colombia, then under the Caribbean Sea to Panama.

Meanwhile, the telecommunications agreement would promote China’s space program and give Venezuela an alternative to doing business with US and European satellite companies, in which one of the principal supporters of the 2002 coup attempt against Chávez, Gustavo Cisneros, is a major player. Cisneros owns the Miami-based Univision Spanish-language cable/satellite network and a controlling interest in the Latin American part of DirecTV. A Venezuelan Foreign Ministry spokesman told the China Daily News that the decision to buy a telecom satellite from China was “a geopolitical option.” Earlier the Chávez administration had announced its intention to create a state-owned telecommunications corporation.

But if the Venezuelan government seeks to battle Cisneros et al on the orbital plane, where would it get the programming to compete, and in which markets? There is no word on that yet.

However, it would make a certain amount of political sense for the Venezuelans to challenge the almost unanimously anti-Chávez satellite news organizations by using the satellite to compete with CNN, Fox, Univision and the others. That probably could not be effectively done just from Venezuela, but such a project looks more viable when seen as an aspect of the growing Latin American alternative to regional integration on the US model. At the moment that alternative is most prominently expressed in the expansion of MERCOSUR.

If Chávez uses the satellite to mount an international media challenge it could mean some openings for Panamanians, whose mainstream corporate media all support the Venezuelan opposition. It could even mean a bid by Latin American and Caribbean news organizations and creative talents to carve out a niche in the North American market.



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Ecuador, Chile and the world shipping industry pan PanCanal container toll hike
Venezuela-China economic agreements may affect Panama
The proposed environmental crimes law
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