Venezuelan President Hugo Chávez’s socialist revolution, which has seized billions of dollars in assets from western oil companies in the name of national sovereignty, is gradually giving control of its industry to China, a country that plays an increasingly dominating role in decisions about development in the country.

Experts consulted and documents obtained by El Nuevo Herald break down Venezuela’s growing dependence on China’s financing and executive capacity, and how the Chávez administration’s hunger for resources has led it to grant concessions to Beijing that are unfavorable to the South American oil country.

Extending the red carpet to Beijing has allowed Chávez’s government to obtain nearly $80 billion in financing and direct foreign investment. Yet the leader of the Bolivarian Revolution is sacrificing sovereignty along the way, heavily mortgaging the industry under significantly more unfavorable terms than it is able to obtain in international markets, analysts said.

Ironically, these agreements, which translate into a revenue loss of billions of dollars, take place at a time when Venezuela should have no need to seek financing abroad.

In recent years, Caracas has been enjoying an unprecedented oil bonanza, with a price per barrel that increased from $12, when Chávez assumed power in 1998, to $95 now.

The oil industry plays an increasingly important role in Venezuela. Years of persecution of the private sector by Chávez’s government have turned oil, previously the largest economic engine in the nation, into the only one actually working.

NEW JOINT VENTURES

Yet, even more worrisome for the future of the nation’s industry is the loss of sovereignty as China assumes a more significant role in the strategic decisions of this sector, especially through the new joint ventures in which the Asian country helps develop the Orinoco’s strategic oil strip.

“In appearance, PDVSA [Venezuela’s Petroleum] is the owner of everything, but it actually owns nothing,” said Evan Ellis, professor at the Center for Hemispheric Defense Studies in Washington, referring to the projects to which Chinese enterprises are linked.

“In all these places, decisions on how and when these projects are done, whether it is convenient to invest in a bridge at Puerto Cabello, are being made under the authorization of Chinese banks that are giving instructions to PDVSA, questioning whether it makes sense to invest here or there,” he said.

Some of these areas granted to China used to belong to foreign companies that the Venezuelan government pushed out of the country.

Documents obtained by El Nuevo Herald reveal details of a series of negotiations carried early this year between the Venezuelan government, China International Trust and Investment Corporation, and the Industrial and Commercial Bank of China Ltd. to acquire a 10 percent share in Petropiar, a Venezuelan mixed enterprise with assets confiscated from ConocoPhillips.

These assets are part of a billionaire claim that the oil company has filed in international courts against Venezuela. According to the documents, Venezuela was demanding a “non-negotiable” sum of $944 million for the 10 percent share, which places the value of the company at $9.44 billion.

“What we have here is a clear example of stealing from Pedro to give to Pablo,” said Vanessa Neumann, senior researcher at the Foreign Policy Research Institute in New York.