China's Entry into a Venezuelan-Brazilian Oil Deal

A faltering deal between Venezuelan state-run oil company Petroleos de Venezuela (PDVSA) and Brazilian energy company Petroleos Brasileiros (Petrobras) over the Abreu e Lima refinery received a boost when the China Development Bank agreed to provide loan guarantees for 75 percent of PDVSA's commitment. Heralded by both sides when the Petrobras-PDVSA deal was originally struck in October 2009, PDVSA's repeated delays in finding financing for its share of the refinery had turned it into a source of political tension between Brazil and Venezuela. It is unclear why China decided to enter into the deal, but taken in the context of Chinese-Brazilian competition over energy resources, it would be logical for China to move to forward the Abreu e Lima agreement as a way of tying Brazil to Venezuela, hobbling Brasilia's ability to compete elsewhere.