[ROCKMAN]

The new thread combines various aspects previously discussed under several other titles. It seems appropriate to look at a broader picture dealing with the acquisition of oil reserves in the ground as well as JV’s involving refinery and field development which will all effectively remove future oil production from the open market. New stories are popping up weekly as various entities are locking up future oil/product distribution in one manner or another.

Despite the political rhetoric Venezuela has been a significant source of crude for Gulf Coast refiners. On the surface this story may indicate more of this production coming to us down the road. OTOH the important details of such JV’s are seldom given. The key question here is what sort of “call”, if any, is tied to the Russian assistance. As explained before none of the future Vz oil production need be shipped to Russia even if they have the rights to it. But as long as Russia controls where the oil is exported to they have a valuable chip in the global old poker game. This one development may be eventually become very large...$28 billion large. From:

http://www.rigzone.com/news/oil_gas/a/1 ... nt_Venture

“State-energy monopoly Petroleos de Venezuela, or PdVSA, and Russian oil company Rosneft signed deals Thursday to boost production at a new joint venture in the vast Orinoco heavy oil belt. Russia will extend to Venezuela a $1.5 billion loan as well as a separate $1.1 billion bond. The projects are slated to produce 120,000 barrels a day by 2016 and aims to eventually reach 400,000. PdVSA will own 60% of Petrovictoria while Rosneft will control the rest. Rosneft also has a stake in another venture with PdVSA in Venezuela called Petromiranda as well as the heavy-oil upgrader Petromonagas. Among its three projects with Rosneft, PdVSA expects output to top 1 million barrels of oil a day, which will require north of $28 billion in investment.”

[Tanada]

Nationalized oil companies with the full backing of the power of government will always come out on top in this kind of situation. When the USA had the most resources to exploit private oil companies had a massive advantage, but these days in a declining resource situation competing against national oil companies the situation is reversed. Now the nationals can buy up whatever they want with the power of the printing press behind them where the private companies have much more limited funds.

[ROCKMAN]

Tanada - And what strikes me as potentially disruptive is when NOC's, like that of China and Saudi Arabia, join forces not just on the oil production side (like Russia and Vz) but the refining/marketing side. The old joke was: "So what choice do the Saudis have if they don't sell their oil to us...eat it? Now they are developing choices like selling the oil or refining it and selling products at a higher profit margin. Back in the 90's there were lots of rumors about the KSA wanting to push into refining but couldn't pull it off. But now they have the Chinese helping them which will give China greater leverage over the product market as well as a guaranteed source of crude they won't have to compete for in the open market. Having the "call" on such production may be a new concept for some and might not seem like a big deal. But I've seem very large companies like NG pipeliners/retailers collapse because they didn't have enough call on production to maintain their operations. Again, it's powerful leverage when a company/NOC need not own one bbl of oil production but can dictate to whom it's sold.

[Pops]

A topic near to my heart! I'll link to a couple old 1 or 2 page threads for those interested and quote myself, gotta ration brain cells nowadays. Both are from 9/10. (Here is the German report I mentioned, a hot topic at the time)

Bi-Lateral Agreements

So, on top of those factors already distorting Hubert's' nice bell shaped geologic production curve, now add in sovereign trade agreements. China of course has been the most visible and most important due to it's determined, planned growth. They have been trading American dollars for oil in long term government to government deals around the world since the '90s. From Russia to Brazil & Venezuela and even making deals closer to home here in Canada and the GOM. In addition to making deals, China is buying oil companies too, they own a stake in the French company Total and even tried to buy Unocal, they won the bidding in fact but US regulators wouldn't sign off.

I don't have a clue how much oil China has agreements to purchase, maybe it's a large amount or maybe it's not. But as the German report also allegedly pointed out, peak oil could very possibly bring about a move toward (or return to) command economies. China is the perfect poster child for why it will be advantageous and probably inevitable, for governments to become directly involved in securing supplies, both internally and externally.


So, while the US bought it's own PR and went on a binge, then came too and started staring at it's navel pondering why the 30 year campaign for Total Capitalism via financial deregulation wound up with markets not only not regulating themselves but very nearly causing a total failure of the economy, China has taken in our dirty laundry - and our dollars - and used them to buy up reserves of dwindling resource right from under our nose.

And all the while we are borrowing even more money to wage the last war and stand up puppet governments who'll play along as if they are democratic and we are just another oil customer. As we stagger blindly ahead, vowing to not negotiate a way of life that is arguably already gone, China sells us what we ask for and uses our money to position themselves for the coming change.

Kind of like Jujutsu..
Naw, on second thought it's more like rolling a drunk.


EIA, China, Oil
Time 10/'04: China's Quest for Oil
CSM 2/'09: China, taking advantage of global recession, goes on a buying spree
Newsweek 5/'10: China Races to Secure Middle East Oil Deals

Nationalizing Oil

Most peak oil forecasts seem to assume a "Free Market" where supply can satisfy demand regardless of political boundaries, all that matters is how much is produced, how much is desired and what is the ability to pay. Most forecasts then do not account for what is the obvious fly in the ointment, national self interest.

The constraints of growing consumption in export land and bi-lateral production agreements are making producers much less free to simply sell to the highest bidder. State owned oil already accounts for 75% of oil production and with a majority of oil reserves found in countries ranked by Transparency International as "most corrupt" the potential for further nationalization is high. Out of 180 countries ranked, Iraq is number 176, Venezuela 162, Nigeria 130, and that number is probably going to increase.

Earlier this year the King of the Kingdom said KSA needs to leave some oil in the ground for future generations - that's the Export Land Idea of constraint. China entering an agreement with Iraq to develop the Rumalla oil field is the Bi-Lateral constraint. Russia revoked Shell's environmental permit forcing it to give up half it's percentage and giving Gazprom majority ownership - that's the nationalization constraint. Nationalization of course, allows countries the ability to proceed to either keep all their oil for their own use or to make bi-lateral agreements with other, friendly, countries.

I read that states already own most of the oil on land and the international oil companies (IOCs)have been pushed into the deep oceans - but the BP spill now gives the countries that want to use it a good excuse to make exploration and production even more expensive for those companies and of course less so for the national company. The IOCs still have the edge in technology and downstream infrastructure.

At what point along the spectrum of decline will the "free market" aspect of oil production effectively end?

At what point will the importing countries, "liberal democracy" or not, be forced to nationalize their energy infrastructure? Or will they only levi tariffs, windfall profits taxes and other trade barriers?

http://www.wikinvest.com/concept/Oil's_ ... Turbulence
http://www.reuters.com/article/idUSTRE6651ZI20100706
http://en.wikipedia.org/wiki/National_I ... il_Company
http://online.wsj.com/article/SB1000142 ... 90852.html
http://www.cfr.org/publication/12089/ve ... onomy.html

[ROCKMAN]

Pops – Great history you have there. I’ve been focused on Chinese reserve acquisition ever since the late 90’s I saw them pay $100+ million for a Venezuelan field making only 200 bopd. And then I saw a US company buy a similar field making about 100 bopd and in a few years increased it to 40,000 bopd.

But there was always going to be a limit to how much oil in the ground China could buy. IMHO the KSA will never sell reserves in the ground for cash or development capex…they have all they need. But then the Chinese come along and show them how to increase income selling the products and not the oil. All the KSA need do is pledge so much future oil production to the refinery JV’s. And it could result in a double whammy: not only is the oil sent to the refinery JV’s pulled out of the market but if switching to more downstream revenue delivers sufficient income the KSA could cut back on the rest of their oil exports. And by maintaining an adequate cash flow they leave more oil in the ground that should become more valuable in time.

Each refinery JV represents a rather small piece of the pie just as each field China owns a piece of is only a rather small portion of global production. But then start multiplying those numbers by dozens of examples and what you have is not a camel sticking its nose under a tent but a whole freaking herd. LOL

[ROCKMAN]

I briefly mentioned this before but going some details jumped out harder. From:

http://www.rigzone.com/news/oil_gas/a/1 ... GX_at_850M

“Malaysia's Petroliam Nasional Bhd. purchased 40% stakes in two offshore blocks in Brazil's Tubarao Martelo oil field. The proposed $850 million acquisition follows last year's $5.16 billion of Progress Energy Resources Corp.”

Malaysia isn’t in the news very often but:

“Malaysia has the third-largest oil-and-gas reserves in the Asia-Pacific region, but it is struggling to maintain its status as a net exporter of fossil fuels. With domestic oil demand outstripping production, which is declining as the country's oil fields mature, the interruption of oil shipments from Sudan due to a dispute between South Sudan and its northern neighbor has intensified Malaysia's search for overseas energy sources.”

So something of a “perfect storm”: depletion + ELM + geopolitical problems.

“The International Energy Agency has forecast Malaysia will become a net oil importer by 2017. Petronas has scope to purchase significant overseas reserves with a capital-expenditure budget of $106 billion. The state-owned firm's exploration arm has qualified to bid for exploration blocks in Brazil in mid-May--the first such auctions to be held in four years.”

But apparently the govt hasn’t been shy about accepting and responding to their coming PO: “Petronas began acquiring energy assets in the early 1990s, mostly in developing countries. It has amassed hydrocarbon interests in more than 20 countries.” So the Asian country with the third largest reserves in the region has bought reserves in numerous foreign fields over the last 20 years. And future expectations: “Petronas's purchase of stakes in the two Tubarao Martelo blocks has reserves estimated at 145 billion barrels of oil.” Not sure how accurate that expectation may be, but whatever it is it will be that much oil removed from the open market. Oil that some assumed would be avalaible to US refiners given our proximaty.

[C8]

So what does this all mean for PO? If oil production is increasingly nationalized does this lead to a higher level of consumption than if the free market ruled? Does nationalization mean subsidies necessarily? Citizens will demand lower prices surely in many cases. Could nationalization lead to lower consumption? How?

[calhoun]

Yes, deals between countries does take oil off the open market, but it also takes an equal amount of demand off the open market, so the net effect on the world oil price is unaffected. The real importance of these deals is not their impact on the price of oil today but on the claim on oil in the future. In other words, countries like China are locking up resources at today's prices from countries that are foolish enough to let them do it. A few years ago China bought up huge rights to the Orinico for the equivalent of $50 per barrel (if I remember correctly).

But are these deals always good? There is a considerable amount of uncertainty in China's deal with Venezuela. The Orinoco is still an untested resource. To me, China's willingness to engage in these deals is just a reflection of how desperate they are. But, IMHO, it will not be sufficient -- China's future is very shaky.

[ROCKMAN]

C8 – I think you may be mixing some apples and oranges. First, the vast majority of oil reserves are already controlled by NOC’s. Consumption will be determined by demand vs. the ability to buy oil. I don’t think that dynamic would change whether the oil is bought in Texas or Saudi Arabia.

As far as subsidies goes go I also don’t see the link with nationalization. Venezuela subsidizes gasoline to an absurd level…$0.25/gallon last time I saw the number. That certainly allows for much greater consumption. But the US govt provides various energy subs to the citizens which should allow for at least a minimum of increased consumption. And if you want to consider the relatively low motor fuel taxes in the US compared to the rest of the world as a de facto sub our very much non-nationalized country provides a huge sub that has greatly increased our consumption levels.

Consumers can demand what they want. The govt will decide what they get. As far as what’s going on with regards to countries buying oil reserves in the ground and the various refinery JV’s it strikes me as the epitome of the free market. Free market has never meant everyone getting what they want at the price they want. As an example China and the KSA freely formed a JV to crack 400,000 bopd in that one new refinery. And they’ll be free to offer those products to the rest of the world. Or sell some of it to the KSA or some to China or all of it to China: free market forces at work the entire time. The trick is who makes that decision. If for whatever reason Apple doesn’t want to sell I Pads in France they don’t have to and if they want to build them all in China they can: that’s the free market.

Coercing countries to not buy Iranian oil is not the free market. Not allowing companies to export oil/NG produced from US govt leases is not the free market. Not allowing a pipeline to be built across the US/Canadian border is not the free market. Selling oil reserves in the ground to the highest bidder is free market. AFAIK the US govt was free to form a JV with the Saudis to build a refinery. The US govt has formed JV’s with numerous US weapon builders over the decades spending $trillions. The US recently formed a very expensive “JV” with a number of countries to “export democracy” to a couple of ME countries. Would have been nice to form some JV’s that would allow exporting oil and refined products to the US.

Whoa…such rambling for an early Saturday morning.

[ROCKMAN]

The Orinoco Belt untested? Serious development began over 35 years ago. Almost 700 wells drilled just the first 4 years. In the 80’s the Orinoco Belt was producing over 30 million bbls of oil per year. Current rate is over 400 million bbls per year. With well over 1 billion bbls of oil produced so far I don’t think I would classify the play as “untested”. They are just beginning to test the SAGD technology in the Belt so those economics are just being evaluated. Even if SAGD proves unsuccessful (IMHO not likely) and oil prices stay high billions of bbls of Orinoco heavy will be produced by conventional methods in the future,

And given they built refineries specifically to handle it and are currently importing over 350,000 bbls per day of Orinoco under a long term contract I don’t think the Chinese consider the play untested.

[Pops]

So what does this all mean for PO? I

The main thing is the volume of exports doesn't meet the desire for imports and the price rises.

Many countries are dependent on oil and gas exported from the producing nations. The ELM predicts that as the population and consumption of oil exporting countries rises their exports fall. Additionally, long term bi-lateral agreements between importing and exporting countries, not just the obvious joint ventures but also other political arrangements such as US/KSA "Military Aid" in effect remove oil from the market as well because it is already spoken for.

IOW, it doesn't matter what global production is if the desire for imports exceeds available exports. Remember demand = desire + ability to pay.

Imagine there is 75Mb/d production with say, 30Mb/d available on the world export market but importing countries want 31Mb/d. What happens is they bid up the price of the entire 30Mb/d that is available until someone says 'uncle' because they can't pay. Demand winds up being equal to the 30Mb/d that's available. It's rationing by price.

According to all the experts, demand was forecast to be 100Mb/d by now - back in the day when the term "oil" meant oil instead of "refinery gains" etc lol. The reason oil prices are now at record highs is supply doesn't measure up to the desired volume but since demand and supply will always balance, someone must be priced out.

[C8]

thanks for the reply Rockman- I guess I was thinking of Chinese subsidies to its own people by keeping the local price of gas down to encourage economic growth, I believe this has happened before. Nations have sometimes viewed cheap oil as a fertilizer to be sprayed on the local economy. In essence, I would guess, the trade goes like this 1. poor Chinese work at low wages to make exports to US 2. US dollars are then used to subsidize local gas prices so middle class Chinese can afford to run cars- which grows the local economy- kind of a "poor to middle class" wealth transfer in China. Any case- the artificially low gas prices might cause more consumption than would normally happen.

The other situation exist in places like SA and other ME nations which subsidize local gas prices just to keep locals happy. Attempts to lift subsidies have met with powerful opposition and governments have backed down/or seem to fear backlash.

I guess my essential question is: when the government becomes the main gasoline supplier, doesn't that leave it open to greater pressure to keep prices down than what a private corp. would experience? Americans know we can't force Exxon to lower prices. If national govts. are buying and producing more oil- won't that oil be subject to more public pressure to be subsidized and this leads to greater consumption than if private businesses produced it?

I understand that increasing consumption in one place might raise world prices and lower consumption in other places- but maybe not proportionally, maybe people need to drive and just cut back on other purchases to pay for the increased gas costs.

[ROCKMAN]

C8 – I think I’ve read that China was beginning to cut some subs. Maybe a deliberate effort to slow the economy down some as well as get a little more focus on conservation. One thing I am sure of about Chinese policies: I’ll never be sure I know exactly why they are doing much of what they are doing. Trying not to poke fun at Hugo since he’s not around to defend himself but IMHO Vz cheap gasoline was done strictly to buy votes. It certainly did little to help the country’s economy which would be in the toilet even compared to other toilets in the world if it weren’t for their oil exports. As it is there’s not much to brag about beyond petroleum.

So yeah…with the govt circumventing the free market prices can be maintained artificially low. But at a price. The KSA may be keeping the natives happy by keeping energy (and water, food, etc) prices low but it also means they are more dependent upon imports paid for by exports that won’t always be there at the same level. Which, IMHO, is the big motivation for them moving downstream. They have to stretch their net income out as long as possible. And slipping my tinfoil hat on for them moment: maybe they think it might be more difficult for the US to “export democracy” to the Kingdome someday if there are a lot of Chinese refinery workers being kept company by a few division of the People’s Army. Hat off.

I think there was a time when many countries felt it was important to hold down domestic imported energy consumption for the sake of national security even if it meant holding the economy down. The US never really got serious IMHO in this regard despite speed limits and CAFÉ standards. China, in its bad old days, restricted energy imports. But I suspect the Chinese have changed that view: increasing energy imports even at high costs because the economic growth will be worth it. The Chinese can play this game with the US now thanks to their export income. And the US stays in it because we can create those petrodollars out of thin air. And the rest of the net energy importers: not so much.

[sparky]

.
from IEA May report
http://omrpublic.iea.org/currentissues/fullpub.pdf

On the ex FSU chapter

"A New Supermajor: How the TNK-BP Acquisition Could Affect Trade Flows"
"Rosneft’s acquisition of TNK‐BP on 21 March creates the largest publicly listed oil producer in the world in terms of production volume,
with forecast output of around 4.1 mb/d in 2013, or 37% of Russia’s total and almost 5% of global oil output.
Rosneft also now accounts for around a third of Russia’s refining capacity, which is itself the source of around 7% of world refinery throughput.
BP retains about a 20% share in the company and CEO Bob Dudley will gain a seat on Rosneft’s Board.

Then on re paying in crude the loan made by Glencore and Vittol , two of the most powerful world trading house ,
the article go on the diversion and rationalisation of the pipe network toward China
and the diversion of central asia toward East bound delivery

" This would likely occur until Rosneft unwinds its long‐term contracts to European customers out of Baltic and Black Sea ports,
which would allow more Western Siberian crudes to head to China to the detriment of European customers.

[ROCKMAN]

sparky – That Russia/China connection may be another big story not given much attention in the US. Just see bits and pieces while trying to connect the fuzzy dots. Besides oil there a bit of chatter about the two working on a major NG pipeline deal potentially delivering a huge supply to China.

And there’s the very obvious eastern Siberian oil reserves including the huge Sakhalin Island development. The SI fields are less than half the distance to the Chinese border as it is from the Canadian oil sands fields to the Texas refineries. Despite various political tensions between the two countries I suspect economic advantage will rule the day. And this could create big economic disadvantage for many other countries especially in the EU.

[ROCKMAN]

And not only do we have to contend with China removing some of “our” future oil imports from the open market with their refinery moves now the Canadians are trying it...with their own oil they were supposed to sell to us. And taking some of our Eagle Ford oil too! Boy...when you can’t trust folks who look and talk (kinda) like you who can you?

http://www.downstreamtoday.com/news/art ... a_id=39593

“Texas-based Valero Energy Corp. (VLO) will invest as much as C$200 million in its Quebec refinery if Enbridge Inc. (ENB, ENB.T) proceeds with its plan to reverse its Line 9 pipeline. In a presentation to analysts, Valero has committed to take "substantial volume" of light crude from Enbridge's Line 9, which, subject to regulatory approval, will be reversed to bring oil from western North America to Montreal. Valero plans to overhaul its handling capacity at the refinery, including increased tankage and new crude-carrying ships, in order to increase access to North American crude. That will provide it with a competitive advantage over Atlantic basin refineries that rely on high-priced imports.

Valero is expanding the 265,000-barrel-a-day refinery's ability to receive western crude by rail and will import up to 50,000 barrels a day from Texas's prolific Eagle Ford tight oil play.”

50,000 bbls/day OF OUR EAGLE FORD OIL! The hell you say? LOL

"I believe that within a year or two, our Quebec refinery will be a North American-supplied refinery where today it is a foreign-supplied refinery," Mr. Klesse said in a presentation."

NORTH AMERICAN SUPPLIED REFINERY??? But that’s OUR oil…not the North Americans’ oil. Whoever they heck they are.

[ROCKMAN]

This didn’t seem too newsworthy at first but then read: “In the past, companies…have frequently offset shrinking reserves by purchasing smaller companies…But that option is fading as interest from state-backed companies from…Asian countries, whose priority is to guarantee secure energy supplies rather than shareholder returns, make assets…increasingly unaffordable.”

From: http://www.rigzone.com/news/oil_gas/a/1 ... n_Gas_Deal

“Royal Dutch Shell PLC attempt to gain a foothold in massive new gas discoveries off Africa's East Coast failed. The Anglo-Dutch energy company has pulled back from talks …because the asking price had risen too high. This follows Shell's defeat last year in a bidding war which was eventually acquired by Thai oil company PTT Exploration & Production PCL.”

If I recall correctly the Thai company has a refinery deal and pipeline deal with China involving that production.

“Shell's move is indicative of a broader trend in the industry. Western oil companies are under increasing pressure to find more oil and gas to replenish declining reserves. Last year Shell had one of the worst records, replacing just 44% of the oil and gas it produced during the period with new resources. "We don't see from our perspective that the price expectations are realistic," in Mozambique, said Shell.”

IOW it looks like China’s strategic plans regarding long term energy supplies is defeating the pubcos short term tactical plans. Or put more bluntly: A 10 year plan is whipping the butt of the quarter based plan of the pubcos. Shell et al can’t make economic decisions based on production that far out. They need to see the shorter tern ROR. China doesn’t have this burden to nearly the same degree.

And there’s this: India's government has allowed state-run ONGC Videsh Ltd. to buy a minority stake from ConocoPhillips in an oil field in Kazakhstan for $5.5 billion. The deal now needs the Kazakh government's permission to go through.

BUT: the Kazakh government will likely veto the sale in favor of a Chinese buyer as the country looks to strengthen its energy-sector relations with China. If the deal falls through, it would be a major setback to India's plans to acquire hydrocarbon assets overseas to secure energy supplies. The country meets 75% of its energy needs through imports.

So even some NOC’s are getting beat out by other NOC’s (like China). Makes one wonder how any publicly traded oil can handle such competition.

[Tanada]

The PRC is flush with cash, first from the American and EU consumers buying their goods and secondly from owning US Debt that pays them a nice chunk of interest income year in and year out. Like a Monarchy of the middle ages the powers in charge of the PRC are looking to the next generation, not the next election cycle. This lets them plan and carry out strategic decisions, not just tactical decisions like the quarterly statement driven wall street style planning. Japanese companies used to get talked about because they run on a ten year plan cycle instead of a three yearly quarters cycle like American companies. The PRC is looking much further ahead than even the Japanese, and they are kicking our can all over as a result.

[ROCKMAN]

Good news…bad news

Increased US oil production has reduced the amount of Nigerian oil we import. From

http://www.google.com/#sclient=psy-ab&q ... 98&bih=941

Good news: Nigeria is suffering from reduced demand for its oil from North America. The U.S. had long been one of the main customers of oil from Nigeria. But a recent rise in domestic crude attributable to shale drilling has reduced the reliance on imported oil. Exports of Nigerian oil to the U.S. have fallen to their lowest levels in decades, disquieting political elites in a country where oil export is the mainstay of the economy. Exports of Nigerian oil to the U.S. almost halved between 2011 and 2012. In the late 2000s, Nigeria regularly shipped around one million barrels a day of crude to the U.S., but last year that number was just 405,000 barrels a day. "Nigeria is repositioning its exports in the light of this emergent threat," and has so far been able to find alternative markets for its crude, said Yakubu.

Bad news: Nigeria is desperate for a new “friend” to help develop their assets as well as buy their crude. And China is very friendly these days. From: http://www.downstreamtoday.com/news/art ... a_id=39336

“Foreign Investors yesterday promised to bring massive investment worth over $100 billion to Nigeria. They informed the Deputy Governor that the purpose of the team's visit was to bring massive investment to the country. This is expected to add value to the transformation agenda of the oil and gas infrastructure. This would be done in partnership with APEC Logic Investment Limited, an Australian funding investment partner and SINOPEC, one of the largest oil and gas corporations in China.”

If you recall China is also planning to help Nigeria build three new refineries. Similar to the plan they have with Saudi Arabia and other countries, this allows the exporters to capture more of the profit from a bbl of oil as well as reduce the amount of oil in the free market, hopefully increasing the value of their remaining exports.

Those dang unintended consequences I suppose.

[ROCKMAN]

Interesting how many in the US think of Brazil, with their huge DW oil discoveries, as a big potential supplier of energy as well as other commodities to our economy. Yet Brazil to write off almost $900 million in African debt. From http://www.bbc.co.uk/news/world-latin-america-22669331

“The move is seen as an effort to boost economic ties between the world's seventh largest economy and the African continent. Official data in Brazil show that its trade with Africa has increased fivefold in the past decade. The debt announcement was made during the third visit in three months to Africa by Brazil's President Rousseff. He said: “To maintain a special relationship with Africa is strategic for Brazil's foreign policy."

Brazil has been increasingly expanding its economic ties with resource-rich Africa as part of the so-called South-South cooperation. Trade between the two blocks went from $5bn in 2000 to $26.5bn in 2012. Brazilian companies invest heavily in oil and mining in Africa, and have taken on big infrastructure projects. Latin America's economic powerhouse has also opened 19 new embassies in Africa in the last decade.”

So the Chinese have some completion in Africa. OTOH China has announced plans to help Brazil expand its refining infrastructure. At times it just seems like there’s this big party going on around the globe and the US invitation has gotten lost in the mail. OTOH it seems our invitations to provide military efforts seem to make it to us by FedEx…postage due. As an old comedian once said: "Sometimes I feel like a pair of brown shoes in a world full of tuxedos".