28 May 2013, News Wires – Venezuelan state oil company PDVSA has signed an agreement to receive a $2 billion loan from US oil giant Chevron to finance a 16% increase in production capacity at the Petroboscan heavy crude joint venture in western Venezuela.
The widely expected and long-delayed deal follows similar financing arrangements for nearly $9 billion this year with joint venture partners that include Russian and Chinese companies.
“We will begin to receive these resources immediately. They will be used for infrastructure and management to boost production as soon as possible,” said Oil Minister Rafael Ramirez, who signed the agreement with Chevron Latin America President Ali Moshiri.
The funds will help boost capacity at Petroboscan to 127,000 barrels per day from 107,000 bpd by 2019. The loan has an interest rate of Libor plus 4.5 percentage points and is to be repaid in 2026, Reuters reported
The two sides negotiated the loan over two years. Its signing was delayed by last-minute changes requested by Venezuela and by former Venezuelan leader Hugo Chavez’s illness and death.
PDVSA in recent months has signed financing deals with other companies, including Russia’s Rosneft and China’s CNPC to boost output at joint venture agreements.
Oil services giant Schlumberger last week agreed to give PDVSA a $1 billion credit line to continue using its services amid growing debts from unpaid bills.
The agreements may help PDVSA avoid the heavy bond issuance of recent years even as it transfers billions of dollars to the government for social spending programs created by Chavez.
Chevron is a 40% partner in Petroboscan, with PDVSA holding the remaining 60%.
The US oil major is also a partner in the Carabobo 3 project in the Orinoco extra-heavy oil belt, considered one of the world’s largest crude deposits, in eastern Venezuela.
PDVSA hopes to boost output by 400,000 bpd this year to reach 3.3 million bpd by investing a record $25 billion, with focus on six new Orinoco belt projects.
Chavez for years used PDVSA to finance heavy social spending, building up his popular support but spurring criticism that the company was not investing enough in operations.