China agrees on financing project in exchange for Venezuelan oil
by Tamara Pearson
After a meeting on Monday afternoon, China’s various banks and state owned companies agreed on a total of $ 40 bn in financing for a range of petroleum, mineral, housing, and other ‘strategic’ projects in Venezuela. Venezuelan authorities including the vice-president and the minister for petroleum and mining met with the president of state owned Chinese financial company CITIC Group and the vice-president of its Development Bank to sign the bilateral agreements.
One of the key agreements reached with CITIC was its financing of the ‘Cristinas’ project in Venezuela, involving bauxite mining, for a sum of $ 10 bn.
Other agreements included joint work in the Junin area of the Orinoco oil belt, between CITIC and Venezuela’s PDVSA oil company, the construction of petroleum platforms, another joint petroleum development agreement, but this time with the Sinohidro company, as well as an agreement to form a joint company between PDVSA and China’s technology company, Sinotec.
Further, the two countries agreed that CITIC would assist with the elaboration of a mining map of Venezuela, as well as with certification, exploration, and geological protection of Venezuela’s mineral reserves.
China’s Industrial and Commercial Bank (ICVC) will also lend Venezuela $ 1.5 bn for the construction of 116 apartment buildings, jointly called the Fuerte Tiuna Housing Complex, for housing for those still living in refuges in Venezuela following the heavy rains in 2010. China’s Development Bank will also lend Venezuela $ 500 mm for the purchasing of petroleum oriented machinery.
All together the two countries signed fourteen agreements, as well as other memorandums and contracts, for a total of $ 40 bn in Chinese financing of Venezuelan projects, in exchange for Venezuela’s petroleum. Venezuela hopes to export 1 mm barrels of petroleum per day to China by 2015.
Venezuela’s economic minister Jorge Giordani said the financing was for “strategic projects aimed at boosting Venezuela’s economy”. Such financing is “part of a new bilateral relationship based on respect for sovereignty, complementariness, and strategic opportunity, in technology as well as in the resources of both nations,” said Giordani. Last November China and Venezuela also agreed to construct new electricity plants and to develop a joint antenna factory, among other accords.
The China-Venezuela High Level Joint Commission was established in 2001 to develop and coordinate the newly entered strategic relationship between the two countries, and since then the two countries have signed over 300 bilateral agreements.