China has agreed to lend Venezuela $5 billion, the third tranche of the China-Venezuela Fund, Venezuela’s Oil Minister and Economy Vice President Rafael Ramirez told reporters during a press conference in Caracas today. The funds will mostly be used to finance large infrastructure projects, Ramirez said.
Venezuela is seeking external financing as it combats shortages of goods and medicines and 56 percent inflation in a country with the world’s biggest oil reserves. China has emerged as a strategic source of financing, lending the OPEC-member more than $40 billion since 2008, not including today’s deal.
Venezuela also signed a memorandum of understanding with Russia’s state-run OAO Rosneft, the world’s largest publicly traded oil company by output and reserves, for $2 billion in financing for oil projects in Venezuela. Funds for the projects were approved by Russian President Vladimir Putin, Ramirez said.
Petroleos de Venezuela SA, the state oil producer, has procured $10 billion in financing from partners from Chevron Corp. (CVX) to Repsol SA (REP) to increase oil production at traditional fields in Venezuela. The company is seeking additional financing from partners that participate in projects in the Orinoco Heavy Oil Belt as it looks to increase heavy oil production to as much as 4 million barrels a day by the end of 2019, Ramirez said.
PDVSA, as the Caracas-based state oil company is known, signed a $420 million financing deal with France’s Perenco for the Petrowarao oil joint venture. Funds from the loan will be at Libor plus 4.5 percent and allow the companies to drill more than 27 wells and increase production to 24,000 barrels a day in Venezuela, Ramirez said.
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