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China Offers Largest Credit to Venezuela

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Merida, April 18th 2010 (Venezuelanalysis.com) – Yesterday government representatives from Venezuela and China signed seven agreements in Caracas, six energy based ones and one around petroleum. China also offered US$20 billion in financing, the largest offer it has made in the last fifty years.

Chinese president Hu Jintao’s planned visit to Venezuela was cancelled due to the recent tragic earthquake in China, but Jintao and Venezuelan President Hugo Chavez talked by telephone and Chavez also met for two hours with a delegation from China.

The two governments agreed to exploit the Junin 4 section of the Orinoco Oil Belt together and as part of this they established a joint company between state owned Petroleos de Venezuela (PDVSA) and state owned China National Petroleum Corporation (CNPC), to carry out the initiative. They also established some economic and tax conditions.

Further, the two governments signed six agreements to strengthen Venezuela’s national electric system through training, technical assistance and technology transference from China as well as the construction of a thermoelectric plant of 500 megawatts capacity in Merida state. This will involve cooperation between the Chinese company CAMC Engineering and Venezuela’s national electric company.

The governments also agreed on a plan to construct three more electricity plants in the north and two in the east, each with a capacity of 300 megawatts. These agreements follow over 6 months of electricity shortages in Venezuela due to both an extended drought and consumption surpassing supply.

After the meeting Chavez told the press, “The China-Venezuela relationship extends from the subsoil to outer space, that is, it goes from the search for petroleum to the Simon Bolivar Satellite.”

In 2008, China built and launched Venezuela’s first telecommunications satellite, and Venezuelan students are studying aerospace engineering in Chinese universities.

Chavez also announced that China was offering US$ 20 billion in financing, a sum he claimed was the largest credit China had granted in its recent history. He said such an agreement was a long term one and based on principles of scientific planning and common interest. The money will go towards infrastructure, agriculture, energy, petroleum, steel, and gas projects in Venezuela with technological assistance by Chinese technicians.

President Chavez emphasised that such credit was a “new kind of cooperation” that could serve as an example to other countries who are still under the “yoke of international credit organisations that grant financing under unfavourable and undignified conditions for the beneficiaries.”

Venezuela will also maintain its supply of petroleum to China and will look at suppling it with gas and iron. According to RNV, Venezuela currently supplies China with 460,000 barrels of oil daily. This is up from 200,000 barrels in 2006.

Zhang Guobao, the Chinese energy minister said, “China and Venezuela both have the confidence and interest in tightening our cooperation. The documents that were signed today are extremely important.”

Chavez concluded saying, “China and Venezuela have just one project and one vision: a new world, a world of justice, a world of equality, a world of progress.”

Since 2003, annual trade between the two countries has increased from less than a half a billion dollars to approximately $5 billion in 2008. The Venezuelan government sees such increased trade and cooperation as a way of decreasing the region’s dependence on the US.

Published on Apr 19th 2010 at 11.08am