Venezuela will sign on Wednesday a new $4 billion loan agreement with China that will go to finance oil projects in the hydrocarbons-rich South American country, according to Venezuelan Oil Minister Rafael Ramirez.
The two countries, which are holding a summit of high-level officials in Caracas, will also renew a separate $4 billion tranche of an existing bilateral development fund, Ramirez told reporters Tuesday.
Venezuela has increasingly turned to the Asian giant for credit lines in recent years to finance projects ranging from housing to mining to agriculture in the South American country. In return, Venezuela is repaying the loans with shipments of crude oil, which currently amount to more than 400,000 barrels a day, according to the Venezuelan Oil Ministry.
Opposition lawmakers in Venezuela have recently stepped up their criticism of President Hugo Chavez’s rising dependence on China, saying that accords between the two countries are opaque and violate constitutional laws that prohibit using oil as guarantees for loans.
Neither country has formally published details on the loan-for-oil agreements but documents reviewed by The Wall Street Journal earlier this month showed that China appears to be paying roughly market prices for the oil, despite speculation that Venezuela was selling its crude to the Asian country at steep discounts.
The two countries currently have around $32 billion in loan deals of which $20.8 billion was disbursed as of mid-April, the documents showed. Chavez has relied on oil revenue through state energy monopoly Petroleos de Venezuela to finance large scale social projects and is expected to boost spending in the run up to next year’s presidential elections.
