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Venezuela, China sign oil deals

25 November 2011 11:28 (UTC +04:00)

Baku - APA-Economics. Venezuela’s President Hugo Chavez signed a series of oil deals with Beijing Thursday financed with $6 billion in Chinese loans payable in oil, Channel News Asia reported.

Chavez hailed the development as a "vital" next step in a decade-old strategic alliance with the Asian giant.

The goal of the joint projects is to boost oil production almost tenfold in Venezuela’s Orinoco Heavy Oil Belt, a region rich in hard-to-refine tar sands, officials said.

"Never before has Venezuela had such a fruitful and positive relationship with a great power like China," Chavez said in signing the agreements with a Chinese delegation led by Zhang Xiaoqianq, vice minister of China’s National Development and Reform Commission.

Chavez pledged to keep "pushing the relationship, which is vital for our development and independence."

Under the agreements, China will provide four billion dollars in loans to a Chinese-Venezuelan oil company operating in the Orinoco Belt, Sinovensa, to increase production from 118,000 barrels a day to 1.1 million barrels a day in 2014.

China will also extend another $1.5 billion to Venezuela’s state-owned oil company Petroleos de Venezuela for refining projects, and $500 million for drills and equipment.

Venezuela will pay off the loans by shipping 400,000 barrels of oil a day to China at market prices, currently about $100.41.

According to the government, Venezuela currently produces an average three million barrels a day, but the Organization of Petroleum Exporting Countries puts its actual output at 2.3 million barrels a day.

Beijing has extended at least $20 billion in credits to Venezuela over the past two years, and the two countries have a $12 billion dollar fund to finance joint projects.

Besides oil, the two countries signed cooperation agreements in agriculture, science and technology, industry and aerospace.

Chavez said trade between Venezuela and China would hit $17 billion dollars in 2011, and was projected to reach $20 billion in 2012.