Venezuela and China Amend Oil-For-Loans Agreement

The amendment to the agreement, published in Venezuela`s Official Gazette, also removes a three-year payment period for one of the three tranches of the loan. The other two tranches remain at three years. The quoted report also contained several factual errors. She falsely implied that the changes to the deal were in response to falling oil prices and Venezuela`s inability to meet its payment obligations, noting: On October 10, Venezuela`s Official Gazette published amendments to the agreement that remove the minimum amount of oil repaid (previously 330,000 barrels per day) and allow the Venezuelan government to make contributions in local currency rather than U.S. dollars. and change the duration of one of the three loan tranches. On the 20th. In October 2014, the China and Latin America blog published an update on recent changes to the Venezuela-China fund agreement, which contains several inaccuracies. The following amended version contains corrections based on new information: Venezuela and China have amended an oil-for-credit deal to allow the OPEC country to pay faster for its oil supplies without substantially changing the terms of the bilateral agreement. Reporting by Brian Ellsworth in Caracas and Marianna Parraga in Houston; Edited by Chris Reese China`s strategy revolves around a pragmatic commitment to „non-interference“ that protects its substantial financial obligations by securing itself both politically and commercially. Chinese leaders courted Venezuelan opposition leaders in the 2012 presidential election and the 2015 legislative elections. Guaidó officials reportedly met with Chinese officials last week to discuss Venezuela`s outstanding $20 billion debt to China. China`s political banks hoped to avoid the failures of other creditors in Latin America by circumventing the need for political conditionality with commercial terms.

Beijing used loans for oil deals and bet that the production capacity of Venezuela`s state-owned oil company (PDVSA) was a sufficient guarantee of debt repayment. Michael Penfold is Full Professor of Political Economy and Governance at IESA Business and Public Policy School in Caracas and Global Fellow at the Wilson Center in Washington, D.C. Starting in 2015, as China became more cautious and concerned about its involvement in Venezuela, Russia, through its state-owned company Rosneft, provided about $6.5 billion in new funds to Venezuela`s state-owned oil company. Previously, the cornerstone of Russian-Venezuelan relations was military relations, with Venezuela buying more than $4 billion in Russian weapons and military equipment. Editor`s Note: This article has been updated to clarify the role of the China Development Bank. A higher benchmark price for oil would allow PDVSA to repay the loan with less supply, which may have been the motivation to eliminate the minimum of 330,000 barrels per day. But Moscow seems to be learning from China`s Venezuelan safety net by diversifying its strategic hand beyond the geopolitical map. With growing financial backlogs, vulnerable supply chains, U.S. legal disputes over citgo shares used as collateral, and U.S.

sanctions against Rosneft`s CEO, there are limits to the extent to which Rosneft can expand its financial exposure to Venezuela. Venezuela accounts for about half of China`s total funding in Latin America. Much of the more than $50 billion in loans that Chinese banks have pledged to Caracas since 2006 is tied to the country`s energy resources. Oil-for-credit commitments are partly responsible for the rapid growth of Venezuelan exports to China in recent years. In return, PDVSA provided 49.9% of its total shares in its United States. Citgo subsidiary as collateral for Rosneft to guarantee future payments. In addition, Rosneft increased its stake in the Orinoco Heavy Oil Belt joint venture and gained access to Venezuela`s largest gas reserves. Last month`s amendments remove minimum deliveries of 330,000 barrels per day and instead stipulate that Venezuela will only ship the amount due under the loan, allowing it to avoid late repayment of the balance. After Guaidó`s political rise, Russia drafted a UN resolution in which he expressed „concern over threats of the use of force“ against Venezuela.

Russia fired a rhetorical shot at the arc of US foreign policy, warning that „cynical and open interference in the internal affairs of a sovereign state“ must stop. .