Caracas woos China for oil, mining loans

A high-level Venezuelan delegation led by executive vice president Delcy Rodriguez is in Beijing negotiating fresh Chinese loans and investment commitments aimed at recuperating Venezuela's crude, gold and iron ore output.

The delegation includes economy and finance minister Simon Zerpa, who was recently named an external director of state-owned oil company PdV; energy minister and PdV chief executive Manuel Quevedo; crypto-currency regulator Joselit Ramirez; and Venezuela's ambassador to China Ivan Zerpa, who is Simon´s father.

Venezuela is "confident" that Beijing will approve a raft of agreements totaling up to $9bn in new loans and investment commitments in oil, gold and iron ore, a presidential palace official told Argus.

Despite China's reluctance in recent years to expand its exposure to Venezuela, the optimism emanating from Caracas may not be misplaced. China's deputy foreign ministry spokesperson Yu Dunhai gave assurances in Beijing today that China would provide additional financial support to Venezuela, but without providing any details.

A local Chinese diplomat confirmed that the Venezuelan delegation is presenting its Chinese hosts with a lengthy list of "interesting" oil, gold and iron ore proposals.

China has granted Caracas over $50bn in oil-backed loans since 2007, of which about $23bn remains outstanding, according to Venezuela's central bank.

Yu deplored "unfair" US financial sanctions against Venezuela, stressing that "China stands together with Venezuela on international issues."

The Venezuelan delegation met early today with Zhang Jianhua, chief executive of state-owned oil company CNPC, and He Linfeng, head of China's national development and reform commission (NDRC) and the bilateral Venezuela-China committee.

Additional meetings are scheduled to discuss gold and iron ore project financing and joint ventures with Yanguang Group chief executive Li Xiyong and China Railway Engineering head Li Changjin. China's ambassador to Venezuela Li Baurong is hosting the visit to Beijing.

Today's meeting with CNPC focused on raising production at three ventures with PdV in which CNPC holds 40pc stakes.

These include 140,000 b/d crude blending project Sinovensa, 400,000 b/d Orinoco venture PetroUrica and 15,000 b/d upstream concession Petrozumano in eastern Venezuela.

PdV wants to double Petrozumano's output to over 30,000 b/d and raise Sinovensa's production up to 270,000 b/d from about 140,000 b/d now, Venezuela's energy ministry said.

PdV is also looking to reactivate up to 500 light crude production wells in eastern Venezuela capable of producing a combined nearly 43,000 b/d, the ministry said.

Downstream, PdV and CNPC are discussing technical service agreements aimed at boosting the Venezuelan company's local refineries, which currently are operating at a fifth of their combined 1.3mn b/d nameplate capacity.

The Venezuelan delegation is also hoping to secure a deal to develop a long-promised deepwater crude and products terminal at the tip of the Araya peninsula in Sucre state, the palace official said.

The project would complement the main Jose terminal which handles most of PdV's waterborne trade. "Even if Jose terminal's current 1.5mn b/d loading capacity is doubled to 3mn b/d, the Araya deepwater terminal still would be vital to PdV's long-term plans to raise current Orinoco extra-heavy crude from about 900,000 b/d up to 5mn b/d over the next 10-15 years," an energy ministry official said.

The Araya port project, first proposed in 2002 by late president Hugo Chavez, would have over 20mn bl of crude and products storage space and the capacity to handle the world's largest tankers, according to the energy ministry.

China maintains its support for Venezuela's government and its commitment to CNPC's joint ventures with PdV, the Chinese diplomat said. But he was noncommittal about whether the Venezuelan delegation will finally secure major new Chinese deals. "Everything is possible, in good time, but China requires strong guarantees from Venezuela's government regarding the legal and constitutional security of Chinese loans and investments in Venezuela."