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Venezuela: China secures long-term oil supply, Chávez secures finance

"CHINA needs energy security and we're here to provide them with all the oil they need," said Venezuela's president Hugo Chávez last month. His country also needs cash. So a new oil-for-loans deal signed with Chinese state-owned China National Petroleum Corporation (CNPC) is a good fit

The agreement will see China's development bank loan Venezuela $20bn and CNPC take a minority stake in a $16bn project to develop the heavy-oil Junin 4 block, in the Orinoco basin. Production should amount to 400,000 barrels a day (b/d) by 2016. CNPC will also pay PdV, Venezuela's national oil company, which will hold 60% of the joint venture, a $0.9bn signature bonus. Chávez described the deal as a "super-heavy fund". It is also a long-term one, signalling once again China's ability to use its financial clout to secure the big contracts that guarantee its energy supplies. The agreement for Junin 4 will last for 25 years, giving Venezuela plenty of time to repay the loan through oil shipmen

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