President Chavez receives loans from Asia, and pays them back in oil
Beijing (AsiaNews/Agencies) - Venezuelan president Hugo Chavez yesterday announced that he has received 4 billion dollars in financing from China, in execution of a 2007 agreement that provides for repayment in oil. Chavez wants to reduce ties with the United States, traditionally Venezuela's primary oil customer, and as he opens to the Chinese, he is continuing with nationalisation to the detriment of other foreign companies.
The loan money will be used for public works. Chavez has spoken of it as a significant development, saying on television that "this is the first time that the People's Republic of China, in its half century of existence, has signed an agreement like this one".
In reality, the state oil company PDVSA, the counterparty to the loan, now has "debts" of 20 billion dollars, up from 3 billion in 2006. In 2007, the company obtained 3.5 billion dollars of financing from a group of Japanese banks, also to be repaid in oil.
In 2006, Venezuela nationalised its oil reserves, with a law that requires foreign companies to give the PDVSA at least 60% of the revenue from their activities there. Yesterday, it agreed to about 1.8 billion dollars in total damages for the French company Total, the Norwegian Statoil, and the Italian ENI. ENI will receive 700 million for its plant in Dacion. Meanwhile, there is controversy with the United States company Exxon Mobil: it has been offered 1.2 billion dollars, but is asking for 12. A decision is expected from an international tribunal connected to the World Bank. This "displacement" of oil from the West to Asia is held to be one of the reasons for recent price increases. (PB)