1. China & Latin American Oil Panda or Dragon? China, Latin America & the United States: The New Triangle May 26, 2010 Woodrow Wilson Center Washington, DC Jeremy M. Martin Director, Energy Program Institute of the Americas

2. Why? China’s growing appetite for oil: The International Energy Agency (IEA) estimates that their demand will more than double by 2030 China’s oil imports as a percentage of total consumption have gone from just under 10% in 1995 to over 50% today China’s Latin American Expansion

3. How and What? As set forth by Beijing, overseas expansion follows three main tenets: 1)Material reserves 1)Production positions 1)Diversification of sources of supply

4. How and What? Cont’d Deep Pockets Perhaps most importantly in the recent uncertain economic period – they have cash. China’s unprecedented economic growth has provided important financial resources to support their Latin American interests Fiscal Footnote: It is also important to bear in mind that Chinese National Oil Companies aren’t just after short- term financial returns to shareholders Challenges Persist But we are now in an age of “Peak Access” – there are few easy targets and access to resources has become much more competitive Yet China’s global expansion has evolved and they’ve learned lessons such as the failed UNOCAL acquisition in the US and the tempestuous acquisition in Ecuador of EnCana’s oil assets

5. Chinese Dollar Diplomacy & Latin America’s Oil Patch PetroChina-Athabasca Oil Sands Corporation – Two Projects approximately $2 Billion Sinopec acquired $800 million stake in Orimex in 2006 &Sinochem Corp. spent $876 million for Emerald Energy assets CNPC-Recope 50-50 JV to upgrade only refinery – Cost of $1Billion **CNPC acquired Block 11 for oil & gas E&P in 2003 **CNPC & Sinopec purchased Encana’s assets and created Andes Petroleum in 2005 **Sinopec JV with Petroecuador valued at $1.1 Billion **CNPC and Argentina’s Pluspetrol formed a partnership to operate two blocks **Blocks 6/7 and 111/113 acquired for drilling and seismic studies CNOOC purchased a 50% stake in Bridas for roughly $3.1 Billion **PetroChina acquired Saudi Aramco 5 million barrel terminal on the island of St Eustatius **CNOOC acquired a 12.5% interest in 2C block & 12.75% interest in 3A block in Trinidad-& Tobago. **Framework agreement with Cuba targeting Gulf of Mexico fields **$20 Billion credit line from China Development Bank brings total Chinese commitment to Venezuela to about $28 Billion **CNPC-PDVSA JV’s for projects as part of the $8 Billion already disbursed **Total-CNPC plan to spend $7-10 Billion on 2 fields **China Development Bank $10 Billion loan to Brazil – oil for credit deal to further Petrobras capex in Pre-Salt offshore fields **Sinopec-Petrobras cooperation agreement - possible stakes in 2 offshore Petrobras blocks **Sinopec completed the GASENE pipeline project at a cost of 1.3 billion - Sinopec's largest overseas service contract

6. Final Points China is using all of the tools at its disposal – abundant cash, political influence and a global long-term outlook – to secure long-term oil supply around the world. And Latin America fits the strategic bill to diversify those efforts both geographically and resource wise But…China’s imports from Latin American nations like Venezuela, Ecuador and Brazil remain small compared to overall imports – and the distance often means that such deals are more costly. So we must be cautious not to over exaggerate the role of the Chinese in today’s oil sector in Latin America

7. China’s interests in Latin American Oil: Panda or Dragon?

8. Cheers y Abrazos?