Energy

Venezuela pares China debt with $20b oil accord

(Agencies)
Updated: 2010-08-05 17:15

Venezuela, the largest oil producer in South America, is shipping 200,000 barrels a day of oil to China to repay $20 billion of debt borrowed from the Asian nation to finance power, agriculture and technology projects.

The OPEC member, planning to ramp up China shipments to 1 million barrels a day by 2012, is selling oil at market prices to repay the 10-year loan, Oil Minister Rafael Ramirez said Wednesday in an interview in Caracas. Shipments to repay the cash represent half Venezuela's daily crude exports to China.

"We're diversifying our export markets; our international policy is going in this direction," said Ramirez, also President of state oil company Petroleos de Venezuela SA. "We don't cut prices in any of our international agreements."

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Venezuela is tapping Asian nations that need crude to fuel growth in their fast-growing economies for cash. President Hugo Chavez is seeking funds to restructure the country's economy to provide more jobs for the poor and address power shortages.

China agreed to lend the Latin American nation $20 billion in April to finance development projects in return for future oil supplies. PDVSA, the state oil company, and China National Petroleum Corp (CNPC) also signed a separate $16.3 billion joint- venture agreement this year for a project that will pump 1 million barrels a day of oil for Asian refineries.