Petroleos de Venezuela SA, the state-owned oil producer, said it signed a $4.02 billion loan agreement with China’s Development Bank Corp. to increase production at the Sinovensa heavy oil joint venture in the country’s Orinoco belt.
The accord was signed in Beijing by PDVSA President Rafael Ramirez, Sinovensa President Erwin Hernandez and CDBC Vice President Wang Yongshen, the Caracas-based company known as PDVSA said today in a statement on its website. Financing details weren’t provided.
Chinese companies, including China National Petroleum Corp., have agreements with PDVSA that aim to increase their portion of Venezuela’s production to as much as 1 million barrels a day by the end of 2019.
“A key variable to watch will be whether Ramirez, who has good relations with Venezuelan President Nicolas Maduro, has enough power and autonomy to tweak the policy framework or grant some degree of greater autonomy for PDVSA’s partners to manage joint venture operations,” Daniel Kerner, director of Latin America Research for Eurasia Group, said in a research note to clients today.
Proceeds from the China development bank loan will be used to almost triple oil production at Sinovensa to 330,000 barrels a day from 140,000 barrels per day, PDVSA said. The company holds a majority 64.25 percent stake in Sinovensa while CNPC owns the remaining 35.75 percent stake.
PDVSA’s business plan for 2013-2019 calls for the company to increase total Venezuelan production to 6 million barrels a day by the end of 2019, up from 2.910 million barrels at the end of 2012.
“PDVSA has committed to using these resources exclusively towards meeting production goals, and the Maduro administration is clearly concerned about stagnant production,” Kerner said.
PDVSA will allow joint ventures with CNPC and Chevron Corp. (CVX) to manage $6 billion in loans designed to boost output, a PDVSA official said May 17. The transactions will be signed by the end of June, said the person, who isn’t authorized to speak publicly.
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