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

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 Project ID#39099 and the second, $5 billion loan disbursement is captured via Project ID#41089.

Additional details

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 Project ID#58677). FONDEN is responsible for Venezuela's contribution to the Fund, and BANDES manages the Fund. Tranche B (captured via Project ID#37528) was renewed twice: in 2012 for $4 billion (captured via Project ID#38163) and in 2015 for $5 billion (captured via Project ID#39099).

Number of official sources

3

Number of total sources

16