Chinese state-owned CNPC will raise its equity stake in the 130,000 b/d Sinovensa crude blending venture in Venezuela from 40pc to 49.9pc, one of 28 bilateral agreements signed today in Beijing.
The agreements, signed during Venezuelan president Nicolas Maduro's high-profile state visit,
expand bilateral oil, gas, mining, financial and security relations, signaling a warming of ties following a period of Chinese caution toward Caracas.
The agreements "demonstrate that China is committed decisively to strengthening its bilateral relations with the Maduro government and supporting the successful development of Chinese investments in Venezuela," a presidential palace official told Argus.
Venezuela's 1999 constitution allows PdV's partners to hold up to 49.9pc in upstream and downstream oil ventures.
A separate agreement assures the Maduro government a $5bn open-ended line of credit that PdV and CNPC will tap to expand crude production at the 15,000 b/d PetroZumano joint venture and the 400,000 b/d PetroUrica joint venture in the Orinoco oil belt's Junin 4 block, Venezuela's energy ministry said.
A Venezuelan finance ministry official added that the credit line could be doubled to $10bn as ongoing discussions between Venezuelan economy and finance minister Simon Zerpa and Chinese lenders yield additional financing deals favoring commodity extraction joint ventures with Chinese partners.
Not including the new credit, China has loaned Venezuela's government over $62bn in mostly oil-backed loans since 2007, of which some $23bn currently are outstanding.
During the Venezuelan visit, PdV signed a separate agreement with CNPC subsidiary CNODC that would open the door to new crude and gas exploration and development ventures, including offshore gas projects.
Venezuela's government also signed an agreement with Chinese mining company Yankuang Group to develop gold-mining ventures in Bolivar state.
Another agreement signed today with China Railway Engineering (CREC) aims to reinvigorate projects under way since 2010 to modernize state-owned iron producer Ferrominera Orinoco's mining, ore processing and railway transport systems as part of a broader plan to recover Venezuela's foundering state-owned steel industry.
Venezuelan and Chinese officials signed a memorandum of understanding to explore Venezuela's eventual adoption of the Chinese yuan as a reserve currency instead of the US dollar, a finance ministry official said.
A defense ministry official in Caracas told Argus that Venezuela and China "for the first time also signed a memorandum of understanding in which China has agreed in principle to deploy military forces to defend the constitutional stability of the Maduro government in the event of a hostile foreign military intervention or destabilizing internal commotions, including new assassination attempts against Maduro."
A local Chinese diplomat declined any comment on the nature of the agreements the Maduro government signed in Beijing, including specifically the bilateral security and defense memorandum mentioned by the Venezuelan defense ministry official.
Three deputies of Venezuela's opposition-controlled elected national assembly, which was stripped of its constitutional powers in early 2017 by the government-controlled supreme court, warned in separate contacts with Argus that the legislature will soon approve resolutions condemning the agreements signed in Beijing today.
The assembly's resolutions will also reiterate officially to China and other foreign powers that all loans and joint ventures initiated outside the constitution's parameters will be "disowned, repudiated and seized" by the government that eventually replaces Maduro.
The sweeping new bilateral accords suggest that Beijing has dismissed the opposition's warnings. Russia, which has extended some oil-backed credit with Caracas as well, appears similarly confident that the Maduro government will endure in spite of western sanctions and bleak economic conditions.
