CARACAS (Reuters) – Venezuela will receive $250 million from the China Development Bank to boost oil production, the South American country’s Finance Ministry said in a statement on Tuesday.
Further details on the terms of the deal were not immediately available. Venezuelan state oil company PDVSA [PDVSA.UL] did not respond to a request for comment.
The South American country previously accepted a $5 billion loan from China, which became Venezuela’s principal financier over the last decade but has recently cooled on Venezuela amid its economic meltdown and sharply declining oil production.
“We have clinched an authorization for direct investment from the China Development Bank, to increase PDVSA’s production, of more than $250 million and we are already moving forward specific financing as part of the special $5 billion credit that the Chinese government has given to Venezuela for direct investment in production,” the statement quoted Finance Minister Simon Zerpa as saying.
Venezuela’s oil production has sunk to a roughly 30-year low due to a mix of underinvestment, theft, a brain drain, and lack of equipment, helping push up global oil prices and piling misery on Venezuela’s recession-hit economy.
Over a decade, China plowed more than $50 billion into Venezuela’s coffers through oil-for-loan agreements that helped Beijing secure energy supplies for its fast-growing economy while bolstering an anti-Washington ally in Latin America.
But the flow of cash halted nearly three years ago when Venezuela asked for a change of payment terms amid falling oil prices and declining crude output that pushed its state-led economy into a hyperinflationary collapse.