April 18, 2010 at 9:12 pm #2700
Chvez Says China to Lend Venezuela $20 Billion
By SIMON ROMERO Published: April 18, 2010
CARACAS, Venezuela – President Hugo Chvez said over the weekend that China had agreed to extend $20 billion in loans to Venezuela, pointing to deepening ties between the two countries as China seeks to secure oil supplies here.
The announcement of the loans follows other financing agreements with China that have softened a sharp economic downturn in Venezuela, including a $12 billion bilateral investment fund. China’s ties with Venezuela have grown increasingly warm in recent years, marked by rising Venezuelan oil exports to China, the Chinese launching of a satellite for Venezuela and the sale of Chinese military aircraft to Venezuela.
If the loans materialize, they could give Mr. Chvez a much-needed cash infusion. Some financial analysts, including the American investment bank Morgan Stanley, have said that Venezuela could soon face a cash crunch as it grapples with low oil revenues and a dearth of foreign investment.
“All the oil that China needs for its growth and consolidation as a power is here,” Mr. Chvez said at a ceremony on Saturday announcing the loans.
Details about the new financing deal were sparse. Xinhua, the Chinese government’s news agency, said it involved “soft loans” channeled through the China Development Bank.
The linchpin of the loans appears to be China’s thirst for oil, with the China National Petroleum Corporation, or C.N.P.C., agreeing to form a venture with Venezuela’s national oil company to explore for oil in southern Venezuela. Eventually the companies could produce 400,000 barrels a day in the area. Venezuela’s energy minister, Rafael Ramrez, said C.N.P.C. would need to pay $1 billion to move the venture forward.
Venezuela, faced with a slump in oil production, has recently been seeking to reach similar deals with energy companies from Russia, India and Spain, as well as the Chevron Corporation from the United States. Mr. Ramrez also made a rare trip to Washington this month where he spoke about oil projects.
While the United States remains the top buyer of Venezuela’s oil, China is emerging as a new market. But the precise nature of energy relations between Venezuela and China remains something of a mystery. Venezuela claims it is exporting 460,000 barrels a day of oil to China, while Chinese government data show the country importing around 132,000 barrels a day.
Moreover, Venezuela’s government has announced dozens of oil-exploration and refining ventures with companies from an array of countries including Iran, Uruguay and China itself. But almost none have been completed during Mr. Chvez’s 11 years in power; the refurbishment of an oil refinery in Cuba is a rare exception to this record.
April 18, 2010 at 9:14 pm #5679
I wonder if any US Brain trust is catching that China is getting a Two-Fer on this loan? Given the Chinese/VZ Satellite, Military aircraft & cozy realtionship with Anti-US Dictator – it almost amounts to a forward observation base to US.
Article mentions Venezuela “could be facing a cash crunch from low oil prices” …….. its been crunched for some time now with prices sub-$85/Bbl but speculator help is underway even with crude inventory at 10 year highs.
Last item is kicker that shows Chavez is willing cut off his nose to make this work – the 460 MBD Venezuela exports does relate to 132 MBD Chinese imports ……. when you consider that Chavez has to keep 3 to 4 times the number of ships on the water for timely delivery of each crude shipment that would have gone to US that is only week from Venezuela!
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