File photo of Chinese President Xi Jinping preparing to shake hands with Venezuelan President Nicolas Maduro before their meeting at the Great Hall of the People in Beijing, China, September 1, 2015. REUTERS/Parker Song/Pool
Bloomberg: Venezuela-China Relationship Sours as Sinopec Sues PDVSA
* Sinopec files lawsuit in the U.S. and requests for arbitration
* China has loaned about $50 billion to Venezuela in past decade
The relationship between China and Venezuela has seen better days.
China Petroleum & Chemical Corp., the state-controlled oil company, is suing Petroleos de Venezuela SA in U.S. courts for unpaid bills. Sinopec, as the Chinese company is known, also filed a request for arbitration against PDVSA at the International Chamber of Commerce, as it alleges damages of at least $23.7 million, according to court papers. The development comes almost three months after PetroChina Company Ltd advised its U.S. unit to avoid any involvement in future loans to PDVSA.
The lawsuit further illustrates how the relationship between the two long-time partners is turning bitter after delays in paying past loans and oil quality issues. It’s also evidence that Beijing might not always be there to bail out Venezuela, as it has done over and over in the past decade, Russ Dallen, a managing partner at Caracas Capital Markets, a Venezuela-based investment bank, said in a note to clients.
The court documents give some insight on what partners such as Sinopec deal with to help cash-strapped PDVSA to operate.
Read more ....
Update #1: Lawsuit shows China losing patience with Venezuela (Financial Times)
Update #2: China’s Sinopec sues Venezuelan oil firm as Beijing’s patience wanes over debt crisis (SCMP/AP)
WNU Editor: If there is one thing that the Chinese really hate .... it is when people who owe them money do not pay them. As to why did China and Russia lend tens of billions of dollars to Venezuela in the first place .... it made no sense to me then .... and today .... it is good to see all the smart people in Beijing and Moscow "swallowing crow" knowing that they really screwed-up on this one.
Update #3: More evidence on how screwed-up Venezuela really is .... Venezuela inflation reaches quadruple digits, hitting 1,369 percent (Reuters).
4 comments:
WNU Editor,
This all depends. The US has sanctions on place against Venezuela. The "smart" people in China and Russia have likely diagnosed the problem as US sanctions are crippling the Venezuelan economy and are making it difficult if not impossible for Venezuela to pay back the debt. In other words Venezuela is a good investment if only the Americans can be gotten out of the way.
In my considered opinion, the "smart" people in China and Russia have misdiagnosed the problem. The problem is the Venezuelan government and the economic system they have chosen.
Venezuela needs some "Ernesto Che Guevara Volunteer Work Brigade"
Who would sign up to help out?
Young Communist, Danny Glover, Fred (?), Jay (?), Anon(?), ...
"diagnosed the problem as US sanctions are crippling the Venezuelan economy "
1) Oil is fungible. You can sell it almost anywhere.
There are about 195 countries in the world. If a country like Venezuela can only sell to 194, then they are automatically in trouble?
China has a large appetite for oil. Venezuela cannot sell to them at a profit?
2) Certain countries like China have been wanting another reserve currency besides the dollar. Well this is a ready made test case and raison d'etre for an alternative reserve currency. China, Iran, Soros and others say they can do it. Why has not this cabal done it already?
Geez Louis A. Poster needs to come back to work. Team Troll team does not have a deep bench.
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The irony of one communist country suing another communist country in a United States court is amazing.
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