China Development Bank will lend US$4 billion to Venezuela to increase oil production at ventures jointly held by Chinese companies and Petroleos de Venezuela SA, the state oil company, Bloomberg reported. The ventures will use the funding to increase production from the current 112,000 barrels a day to 1.1 million by 2014, said Venezuelan Oil Minister Rafael Ramirez. Nearly all of the 410,000 barrels per day that Venezuela sends to China is used to pay back US$32 billion in loans. Oil prices are agreed in the loan contracts, and PDVSA receives the margin if market prices are higher. “In the first tranche of the loan, we used a price of $50 a barrel and in the second tranche, the price was $40 a barrel. In this new tranche, the price we are using is $70 a barrel.” said Ramirez. “The market price is higher, so we’ll get more. For that reason, we are able to cover our costs.”
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