By Dan Molinski
Of DOW JONES NEWSWIRES
CARACAS (Dow Jones)--Oil-rich Venezuela will send resource-hungry China 100,000 barrels a day of crude oil for the next 10 years to pay for a $20 billion loan agreed to over the weekend, Venezuela Oil Minister Rafael Ramirez said Thursday.
Ramirez, who is also the president of state-run Petroleos de Venezuela, or PDVSA, didn't indicate any specific price for the oil that may have been agreed to by the two nations. The average price for Venezuela's basket of crude oil and refined products began this week at about $75 a barrel.
The oil minister's comments to reporters come after President Hugo Chavez on Saturday night announced the $20 billion oil-for-credit arrangement with China, a country with which Venezuela has been fostering strong relations.
The loan is being provided by state-owned China Development Bank, and reports Wednesday out of Venezuela indicated it would be paid out this year. Half will be paid in dollars and half in Chinese yuan.
Venezuela says it will use the loan for highways and other infrastructure projects as well as investments in the energy sector.
This isn't the first oil-for-credit deal between Venezuela and China. In recent years, the two set up a $12 billion development fund for Venezuela, of which $8 billion came from China and $4 billion from Venezuela. Most of that has already been spent, mostly on infrastructure that includes a railroad project.
Venezuela says it ships about 460,000 barrels of oil a day to China and hopes in the coming years to push that up toward one million barrels a day. That would be slightly more than what Venezuela ships to each day to the U.S., its current top customer for crude.
Imports figures from the Chinese government vary from those of the Venezuelan government. The Chinese say oil shipments from Venezuela are currently around 210,000 barrels a day, a figure that includes crude oil, fuel oil and other petroleum-derivative products.
Ramirez also said Thursday that state-owned PDVSA was working out a $1.5 billion line of credit with the China Development Bank and Portugal's Banco Espirito Santo (BES.LB). He said another line of credit was also being worked on, but he declined to provide further details.
Ramirez reiterated that PDVSA has no plans to issue bonds this year.
The oil minister also commented on February's Carabobo oil auction for three promising blocks in the eastern Orinoco region. It was Venezuela's biggest bidding round for drilling rights since Chavez took office 11 years ago.
In the auction, a consortium of companies led by U.S.-based Chevron Corp. (CVX), and including Mitsubishi Corp. (8058.TO) and Inpex Corp. of Japan, was awarded the "Carabobo 3" block. A consortium that includes Spain's Repsol YPF SA (REP), India's Oil & Natural Gas Corp. (500312.BY), Malaysia's Petroliam Nasional Bhd. and two other Indian firms was awarded the "Carabobo 1" block.
The final block, known as "Carabobo 2," went unassigned, which most took to mean that no companies made an offer for it.
But Ramirez said Thursday that Venezuela did receive some bids on it, and he said PDVSA is evaluating them.
Ramirez wouldn't say where the bids came from, but one of them might have come from Royal Dutch Shell PLC (RDSB), as Shell officials were in attendance at the February auction but were never named as having placed a bid.
Shell officials have been asked about their possible involvement in the Carabobo bidding, but didn't comment.
-By Dan Molinski, Dow Jones Newswires; 58-414-120-5738; email@example.com