The US shale revolution has reshaped the global energy industry. In the mid-2014, oil price has more than halved, and this made some petrostates suffer economic and political turmoil, like Venezuela、Nigeria and Russia…etc. China''s oil self-sufficiency ended in 1993, due to its rapid economic development、urbanization、motorization and expanding middle class population. Currently China depends on foreign imports for over fifty percent of the oil it consumes, and half of this imported oil is from the Middle East and North Africa. Due to these regions socio-political unrest and highly depends on a single chokepoint-the Strait of Malacca, China has many reasons to worry about its energy security. Since the last 1990s, Chinese State-Owned Enterprises(SOEs) started to seek oil abroad to secure its oil security by FDI、joint venture or loans-for-oil . Since 2011, Chinese SOEs are moving away from the riskier parts of the world towards more politically stable investment climates such as those in OECD member countries.
Shortly after becoming a net oil importer, China began to seek out trade and investment opportunities in Venezuela’s oil sector. The proven oil reserve in Venezuela is recognized as the largest the world, but its oil production has declined since its peak in the 1990s.When Hugo Chávez become president, Venezuela has increased public participation in the oil sector. Chávez used oil rents to develop social welfare program, instead of investing in Petróleos de Venezuela, S.A. (PDVSA) to increase production. The general strikes of 2002–2003 had brought the company operations to a halt.
It was only after Hugo Chávez took power, bilateral relationship became close. Moreover, since 2007 China has become Venezuela’s main source of foreign financing by loans-for-oil deals worth upwards more than 50 billion dollars. Since the mid-2014, oil price has been collapsing, Venezuela’s long-term wrong economic and political system and worsening economic and social problems have made Chinese face the high-risks of Venezuela sovereign default. Besides securing oil security and gaining oil rents, China also has its own strategy toward Latin America, and Venezuela remains a geopolitical prize worth competing for.