September 23, 2008 / 10:19 AM / 9 years ago

"Maoist" Chavez eyes closer China energy ties

BEIJING (Reuters) - Venezuelan President Hugo Chavez on Tuesday unveiled early plans for two new refinery projects in China, kicking off a visit to the energy-hungry nation that could aggravate stormy ties with top oil user the United States.

Fiery leftist Chavez paid tribute to China's autocratic late leader Mao Zedong minutes after stepping onto Chinese soil, and said he hoped to build a joint tanker fleet and nearly double oil exports to the world's number two consumer next year.

"We are talking about three refineries, to bring our crude, which is heavy, and process it here in China," he told journalists beside his official plane.

"We are also working on a project to construct a joint Chinese-Venezuelan oil fleet."

China is cautious about handing out permits for refineries, which are highly sought after by foreign oil companies and crude-producing nations itching for access to its vast markets.

The two countries in May agreed to build a 400,000 barrels per day (bpd) plant in southern Guangdong province, the first such investment deal between Caracas and Beijing. It would be unprecedented for China to approve two more in the near future.

But Chavez does have large amounts of oil to offer in return, and the self-styled revolutionary and florid critic of Washington is keen to reduce his nation's traditional reliance on energy markets in the United States.

China's big energy appetite and Communist Party government make it an attractive alternative. Chavez has visited China five times over the last decade and often plays up political ties between the nations, which contrast with his ideological war against the "imperialist" regime in Washington.

"We are in the land of Mao Zedong and I pay tribute to him. I am a Maoist," he announced to journalists and a bemused-looking Chinese policeman on the airport's VIP red carpet, before recommending Bolshevik leader Vladimir Lenin's book 'Imperialism: The Highest Stage of Capitalism'.

China's current reformist leaders are respectful of Mao as the country's revolutionary founder but, now focused on capitalist-friendly policies, avoid praising his visions of farming communes and perpetual revolution.

Business Not Politics

Chavez's colorful rhetoric contrasts with the cautious, muted tone of Chinese diplomats who prefer to focus on the business side of the two nations' ties.

"Sino-Venezuelan relations have no ideological hue, are not aimed at any third party and do not affect Venezuela's ties with any other country," foreign ministry spokeswoman Jiang Yu told a regular news conference on Tuesday.

But the nature and value of the socialist nations' growing embrace may anyway spark concern in the United States, which gets around 10 percent of its oil from Venezuela.

Chavez earlier this month threatened to cut off supplies to the United States "if there were aggression against Venezuela" and warned that doing so would push crude prices above $200 a barrel. But Caracas would need to find a new buyer for exports that in the five months to May were near 1 million bpd.

Beijing lent Caracas $4 billion this year and the two have signed a deal to produce and upgrade the country's heavy oil that will cost around three times as much, or $12 billion.

China will launch Venezuela's first satellite this year and Chavez said in May he planned to buy Chinese military training planes, expanding recent arms purchases.

Jiang declined to comment on any deals that might be signed, but Chavez said more than 20 were drawn up, covering areas from food cooperation to telecoms and energy.

He added that Venezuela aims to increase oil exports to China to 500,000 bpd next year, from around 300,000, and hit 1 million bpd in four years.

If they can meet Chavez's target for China sales next year they would supply over 6 percent of the country's oil, but although imports have risen strongly this year customs data suggests that Caracas may have set itself a difficult goal.

Venezuelan crude imports over the first eight months climbed by more than 60 percent compared with a year earlier, but were still only 5.18 million tonnes, or 155,000 bpd. Export volumes were boosted by nearly 3 million tonnes of diesel and fuel oil.

Additional reporting by Ben Blanchard; Editing by Ramthan Hussain

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