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Overview

CDB provides $5 billion loan for oil field development projects in September 2015 (Linked to Record ID#39099)

Commitments (Constant USD, 2023)$5,230,991,907
Commitment Year•2015Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Sep 1, 2015
Last repayment
Dec 29, 2024

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Policy Banks

  • China Development Bank (CDB)

Receiving agencies

Government Agencies

  • Government of Venezuela

Implementing agencies

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan desecription

CDB provides $5 billion loan for oil field development projects in September 2015

Interest type•UnknownMaturity•10 years

Collateral

The borrowing was collateralized with PDVSA income from daily oil sales to China National United Oil Corporation (ChinaOil), which was deposited in a collection (escrow) account at China Development Bank (CDB). Banco de Desarrollo Económico y Social de Venezuela (BANDES) opened and maintained a USD-denominated collection (escrow) account with CDB into which all proceeds from oil export sales -- under an offtake agreement (petroleum sales and purchase agreement) between PDVSA and ChinaOil -- were deposited for the purposes of (a) making regular debt service payments to CDB, and (b) maintaining a minimum cash collateral balance.

Narrative

Full Description

Project narrative

On April 20, 2015, Venezuelan President Nicolas Maduro announced that the Government of Venezuela had received $5 billion in financing from China. This was the first disbursement of a $10 billion, USD-denominated, oil-backed loan from China Development Bank. CDB specified that half of the $10 billion loan was required to be spent on several oil field development projects in the Orinoco Oil Belt. The first $5 billion disbursement, a renewal of Tranche B of the Joint Chinese-Venezuelan Fund (Fondo Estrategico Pesado de Financiamiento), carried a 5-year maturity (instead of the usual 3-year maturity). The loan agreement was signed in March 2015, and the first disbursement was deposited in a bank account that was accessible to the borrower in April 2015. At the time, it was reported that a second, "special" $5 billion loan disbursement would likely stipulate hiring Chinese companies to boost production in PDVSA's mature oil fields. That 10-year loan was originally expected to be signed in June 2015 and contracted by BANDES (Venezuela’s state-owned development bank). However, according to a filing with the U.S. Securities and Exchange Commission, it was not until September 2015 that the Chinese Government (almost certainly via CDB) provided the Government of Venezuela with another $5 billion loan disbursement (with a 10-year maturity) to finance oil projects and increase Venezuelan oil production within a few months. Under the terms of the loan agreement, the Government of Venezuela was allowed repay the loan via deliveries of oil and fuel by PDVSA. The first, $5 billion loan disbursement is captured via Record ID#39099 and the second, $5 billion loan disbursement is captured via Record ID#41089.

Staff comments

1. The China-Latin America Finance Database, which is co-produced by the Inter-American Dialogue and Boston University’s Global Development Policy Center, captures the first, $5 billion loan disbursement in April 2015. It does not captured the second, $5 billion loan disbursement in September 2015. 2. The oil-for-loans program between the Chinese Government and the Government of Venezuela involves the provision of debt that is collateralized against PDVSA income from daily oil sales to China National United Oil Corporation (ChinaOil). 3. This project is a sub-project of the China-Venezuela Joint Fund (Fondo Estrategico Pesado de Financiamiento), which consists of Tranche A, B, C, and the Long Term Facility (see Record ID#58677). FONDEN is responsible for Venezuela's contribution to the Fund, and BANDES manages the Fund. Tranche B (captured via Record ID#37528) was renewed twice: in 2012 for $4 billion (captured via Record ID#38163) and in 2015 for $5 billion (captured via Record ID#39099).