04 March 2005

Chavez is India's passport to Latin America

4 March 2005
The Hindu

Chavez is India's passport to Latin America

By Siddharth Varadarajan

NEW DELHI, MARCH 3. Thousands of miles separate Venezuela and India but when Hugo Chavez, the charismatic Venezuelan President, arrives here on Friday on a State visit, the reality of a shared destiny will be only too apparent.

First, India, as one of the fastest growing economies in the world, needs to diversify its sources of energy. Venezuela, as one the world's largest producers of oil, is looking to develop markets in Asia in order to reduce its dependence on the United States, its biggest customer. In her confirmation hearings, Condoleeza Rice, the new U.S. Secretary of State, called the Chavez government a "negative influence." Mr. Chavez — whose democratically-elected government was brought back to office three years ago by popular demonstrations after U.S.-backed Army officers staged a brief coup — has said repeatedly that Washington is hell-bent on assassinating him. He repeated the charge again on Wednesday, saying in Uruguay, "If I'm killed, the U.S. can forget about getting even one drop of oil." On its part, the U.S. Senate Foreign Relations Committee has asked the General Accounting Office to examine contingency plans for the eventuality of Mr. Chavez stopping oil exports to the U.S. — which depends on Venezuela for 15 per cent of its daily oil consumption of 20 million barrels.

Second, India — and the Manmohan Singh Government in particular — is committed to the promotion of a multi-polar world. Venezuela, though not by itself a `pole' in the international system, is nevertheless spearheading an exciting project for the economic, social and political integration of Latin America. South America has suffered because of its dependence on the North, says Mr. Chavez, and needs to get its act together. In tandem with the Left-oriented President Lula of Brazil, Ricardo Lagos of Chile, Nestor Kirchner of Argentina, Fidel Castro of Cuba and now Tabare Vazquez of Uruguay, the Venezuelan President is working on a number of pan-Latin American economic projects.

On February 14 this year, Venezuela and Brazil announced a `strategic alliance' with more than 20 agreements for joint projects in the energy, petrochemical, agriculture, mining and communication sectors, including Telesur — the project for a joint Latin American television network to rival CNN. Needless to say, the new strategic alliance between Brasilia and Caracas fits in well with the promising India-Brazil-South Africa (IBSA) initiative.

Positive signals

In the run-up to Mr. Chavez's visit, senior ONGC Videsh Ltd. (OVL) officials visited Caracas for discussions with PDVSA, the Venezuelan state oil company. OVL has been looking to develop oil fields in Venezuela for some time and was disappointed when a $50 million deal struck in 2000 did not materialise because PDVSA backed out citing OPEC production quotas. This time, say Indian officials, the signals are positive and it is likely that OVL will soon be making its entry there. Reliance Industries already imports nearly seven million barrels of Venezuelan oil every year.

What has changed since 2000 is the sense of urgency with which Mr. Chavez has begun to leverage Venezuela's oil wealth in order to develop strategic autonomy. In Latin America, this has meant giving a push to integration with energy as one of the driving forces. PDVSA has already tied up with Petrobras of Brazil and Enarsa of Argentina but Mr. Chavez wants the whole of the continent to be linked by Petrosur, a pan-Latin network that will exclude the oil majors from the U.S. And internationally, this has involved aggressive networking with both the world's largest energy producers — such as Iran, Libya and Russia — and consumers such as China. Venezuela reaching out to India is, thus, very much part of this logic.

China, with large investible surpluses, has moved fast to capitalise on Venezuela's desire to diversify. When the Chinese Vice President, Zeng Qinghong, visited Caracas in January, he signed agreements allowing the China National Petroleum Corporation to develop oil and gas reserves in Venezuela, including in the Orinoco basin. In a rare but significant concession, Mr. Chavez has agreed to allow CNPC to continue producing orimulsion, a heavy crude.

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