Venezuela secures $20 bn loan from China: Chavez

Venezuela secured a $20 billion loan from China and agreed to form a joint venture to pump crude oil from a block in the Orinoco Belt, President Hugo Chavez said as he promised to meet the Asian country’s energy needs.

Chavez said the $20 billion financing from China is separate from a $12 billion bilateral investment fund, without providing details. Venezuela currently sends China 460,000 barrels a day of crude oil to repay an $8 billion loan that finances infrastructure projects in the South American country.

“We agreed on a huge long-term financing plan,” Chavez said on state television. “This is a larger scope, a super heavy fund. China needs energy security and we’re here to provide them with all the oil they need.”

Venezuela, the largest oil producer in Latin America, is diversifying its export markets and seeking loans from Russia to Japan in a bid to boost oil output and finance social programs. Chavez expects $120 billion of investment to flow into the Orinoco Belt in Eastern Venezuela in the next seven years to add more than 1 million barrels a day of new production.

Venezuela state oil company Petroleos de Venezuela SA and China National Petroleum Corp. signed a joint-venture agreement in Caracas that will require a $20 billion investment to pump and refine heavy crude oil at the Junin 4 block of the Orinoco Belt.

PDVSA, as the company is known, will hold a 60 per cent stake in the block that is expected to eventually produce 400,000 barrels a day, Oil Minister Rafael Ramirez said on April 16. CNPC will have to pay the Venezuelan government as much as $1 billion to access the reserves, he said.

A Chinese delegation attended the signing ceremony yesterday in Caracas after Chinese President Hu Jintao canceled his planned visit to Venezuela and Chile following an earthquake that killed more than 1,400 people in China’s Qinghai province.

Hu is expected to reschedule his trip to Venezuela.

The two countries plan to build three electric plants powered by petroleum coke with a capacity of 300 megawatts each, Chavez said. Another thermoelectric plant will be built in Merida state to produce 500 megawatts, he said.

Bilateral trade between the two countries surged to $8.9 billion in 2008 from $85.5 million in 1999, according to Venezuela’s state bank, Bancoex.