Chinese Petroleum Company Announces $2 Billion Investment in Peru

Chinese Petroleum Company Announces $2 Billion Investment in Peru

In yet another bid to expand its economic presence in South America, the China National Petroleum Corporation (CNPC) tells Reuters it is expecting to invest at least $2 billion in the economy of Perú over the next decade and potentially build a gas pipeline in the country.

CNPC Latin America head Gong Bencai told the news organization that the massive investments into Perú will begin shortly, and that the corporation is “looking for more opportunities in Perú, to acquire companies or to participate in the bidding of oil fields.” The investment has already begun, with the government of Perú approving $1 billion in “exploratory work” involving natural gas. 

Gong told Reuters that the company was also “very interested” in building a $4 billion gas pipeline in southern Perú. CNPC was not immediately going to begin working on the gas pipeline, he explained, but it was a distinct possibility that the company would begin the project.

The Peruvian projects are a product of a deal between the Chinese and Brazilian governments that gave CNPC control of its Peruvian subsidiary. In November 2013, Petrobras, Brazil’s national oil company, sold that subsidiary for $2.6 billion as part of a larger initiative to bring in revenue by consolidating its holdings. In addition to the corporation itself, Petrobras sold CNPC three oil and gas fields in Perú, controlled by its former subsidiary.

Last month, Chinese Foreign Minister Wang Yi went on a tour of four Latin American countries in an effort to strengthen ties in the region. The trip began in Havana, where Wang said that President Xi Jinping is planning a visit to the island in the near future. China is Cuba’s second-biggest trade partner after Venezuela. In addition to Cuba, the Chinese government announced in February an interest in working with the Community of Latin American and Caribbean States (CELAC) to expand trade opportunities, potentially establishing a forum for the Latin American community to discuss issues with China before the end of 2014. “China will maintain contacts with the CELAC on the mechanism and cooperative areas, and work for the formal establishment of the forum and the first ministerial meeting within this year,” said Chinese Foreign Ministry Hong Lei.

China has also expressed interest in investing in Argentina and Mexico. The relationship with Mexico, in particular, has been strained since former President Felipe Calderon hosted the Dalai Lama, which the Chinese government resented. The administration of President Enrique Peña-Nieto has been more open to establishing ties with China. Earlier this year, Foreign Minister José Antonio Meade announced plans to “export more tequila and pork to China and attract investment in industries including energy, infrastructure and tourism,” according to Bloomberg. Meade noted in an interview that “there’s space to seek better access for Mexican goods in the Chinese market” and vice versa: “China is very under-represented in terms of investment in Mexico.”