Pdvsa signs USD 6 billion loans with China
The agreements signed with Pdvsa also include the expansion of oil fields developed in the Orinoco Belt
State-run oil holding Petróleos de Venezuela (Pdvsa) signed new lines of credit with China amounting to USD 6 billion, which are aimed at strengthening oil industry operations and purchasing equipment.
In the framework of the Tenth Meeting of the China-Venezuela Joint Committee, Rafael Ramírez, Venezuela's Minister of Energy and Petroleum, said that China had agreed to a new USD 4 billion loan, with an eight-year term, at the London Interbank Offered Rate (Libor) plus 5%. Ramírez, who is also the president of Pdvsa, said that the funds would be used to develop joint projects in the Orinoco Oil Belt, because the government's goal is to increase oil production in the area to 1.1 million bpd by 2014.
In addition to this loan agreement, China Development Bank granted two other loans amounting to USD 2 billion. One of the credits, totaling USD 1.5 billion, will be used to fund refining projects. A USD 500 million letter of credit will be used to purchase Chinese equipment, "including oil drills and other equipment needed for oil operations," Ramírez said.
The agreements signed with Pdvsa also include the expansion of oil fields developed in the Orinoco Belt.
Pdvsa's president stressed that in addition to the Junín 4 blocks, Chinese companies will develop the Junín 1, Junín 8, Boyacá 4 and MP3 blocks, which is the area that had been granted to Chinese-Venezuelan joint venture Sinovensa. "Sinovensa is already producing 112,000 barrels a day and we want to expand oil output to 330,000 bpd by 2016."
In the Tenth Meeting of the China-Venezuela Joint Committee, the government also signed another loan agreement with China Development Bank.
Venezuela signed the renewal of the Heavy Fund for a total of USD 4 billion. Ramírez said that the original conditions of the loan were kept unchanged. He reiterated that Venezuela only ships 410,000 bpd to China in order to pay off loans.
Translated by Gerardo Cárdenas
Cristian Fonseca, a businessman in La Candelaria district downtown Caracas, was doing the accounts in his small shop office on Sunday December 21, 2008. The Christmas shopping season kept him working late hours into the night. It was around 11 p.m. and his phone rang. A friend broke the bad news to him over the telephone.