17 June 2015, News Wires – China is close to handing Venezuela a $5 billion loan in order for state player PDVSA to halt a decline in production, according to a report.
The 10-year credit facility is one half of a $10 billion package said to be forthcoming from China, Reuters reported.
“It is being discussed right now and will come within a few months,” Orlando Chacin, vice president of exploration & production at PDVSA told the news wire.
In January, President Nicolas Maduro did a two-week tour of half a dozen countries, including China, seeking financing in order to counter the slump in oil prices.
“We’re looking for resources,” he said at the time. “We’re dedicated, 24 hours a day every day, to looking…. so that the country can function.”
Although Maduro was seeking fresh funds from China on the tour, his hosts were simultaneously scrutinising the South Amercian country’s capacity to produce oil that has been tied to $50 billion in loans conceded since 2007.
China in the last few years has provided billions of dollars in loans that are repaid through oil and fuel shipments.
The most recent loan, a $4 billion credit line, was announced just six months ago during a visit to Venezuela by Chinese President Xi Jinping.
Venuelan crude output is officially set at 2.5 million barrels per day, although analysts say it is less, and 600,000 bpd are shipped to China to meet loan obligations.
Venezuela’s sovereign debt, including PDVSA bonds, is estimated at $66 billion, and the oil company is supposed to be investing at a rate of about $20 billion annually.