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Page added on September 2, 2015
China To Lend Venezuela $5 Billion To Boost Oil Production
China will lend Venezuela’s government $5 billion to help the South American country produce more oil. Venezuela is seeking to ramp up production in coming months to offset steep losses caused by falling prices for crude, the nation’s main export, according to media reports.
Venezuela’s President Nicolas Maduro announced the deal Tuesday in a speech in China that was broadcast on Venezuelan state television, the Associated Press reported. Maduro did not provide details about the loan agreement.
Oil prices are down around 60 percent since their peak in 2014, largely because of a surge in global oil production and waning demand in China. Brent crude, the global benchmark, was trading at $49.06 a barrel Wednesday morning, when the U.S. benchmark was trading at $44.68 a barrel.
Brent Crude Oil Spot Price | FindTheData
The Maduro government has estimated it needs oil prices at more than $100 a barrel to break even on its budget. Venezuela relies on crude sales for roughly 96 percent of its export revenue, and more than one-half the country’s gross domestic product.
The Chinese loan may give some support to bond markets, where Venezuela’s debt securities are rated among the riskiest worldwide, AP reported. The latest support by Beijing will be provided in addition to a separate $5 billion loan to Caracas, which the Maduro government secured in April to stimulate the country’s recession-stricken economy. All told, China has lent Venezuela more than $50 billion since 2005, making it the nation’s largest creditor in recent years.
Maduro is among the leaders of 30 countries in China this week to celebrate the defeat of invading Japanese forces 70 years ago. The Venezuelan president is expected to meet with Russian President Vladimir Putin Thursday to discuss ways to stabilize oil prices, a Kremlin aide said this week. Russia has also been slammed by lower oil prices, as crude and natural gas account for one-half of its federal budget revenue.
23 Comments on "China To Lend Venezuela $5 Billion To Boost Oil Production"
BobInget on Wed, 2nd Sep 2015 4:48 pm
Late 2014
Beijing has so far been happy to oblige Maduro. Since 2007, China has advanced Venezuela about $46 billion in loans repayable in oil, of which about $20 billion has been repaid. The latest loan agreement was in July, when Chinese President Xi Jinping visited the country and pledged $5.69 billion in credits.
Now Maduro needs more. The price of Venezuela’s market basket of crude and petroleum products is now skirting $60 a barrel. Many analysts estimate that the Maduro government needs a price of $120 a barrel to avoid cutting back or postponing spending commitments.
“Maduro would like the Chinese to bail him out,” says Risa Grais-Tarnow, an analyst with the Eurasia Group. “I think the Chinese will have no problems in renewing existing lines of credit. However, they may not be willing to give Venezuela more funds.”snip
China has since borrowed another 38 billion from China and Russia …”To improve production”.
It’s safe to say Venezuela is permanently in China and Russia’s orbit.
This is exactly what i’ve been basing a theory, predictions if you will, that Iraq, Iran,
and Venezuela will vote Saudi Arabia off the island.
Saudis really tripped up bombing Yemen
for religious and or political reasons just because they could.
Bottom line… Unless Venezuela actually
improves production, the US ain’t gettin
much oil outta Venezuela.
If OPEC members call a special meeting WTI and Brent best do a sharp return to profitability or else.
idontknowmyself on Wed, 2nd Sep 2015 5:19 pm
The Venezuelan president is expected to meet with Russian President Vladimir Putin Thursday to discuss ways to stabilize oil prices, a Kremlin aide said this week.
This is the only solution that political leadership have, keep bossiness as usual.
There is no reason to be optimistic and to expect a solution from them.
Expect the immigration issue i Europe to get worst as the poor are fighting for their survival and migrate to the last place with resources: fresh water, heath care, food. Expect tribal war coming out of Europe and US really soon.
Plantagenet on Wed, 2nd Sep 2015 5:48 pm
Falling oil prices due to the oil glut have led Venexuela to borrow 5 billion to boost their oil production —– thereby making the oil glut even worse and driving oil prices even lower
Hahahahaha!!!. Maduro sure is a dope!
Cheers!
BobInget on Wed, 2nd Sep 2015 6:16 pm
Expect the ‘migrant crisis’ to become a world wild phenomenon. Lower oil prices, climate changes, have exacerbated conflicts on
four continents.
Estimates of displaced, homeless, people
are exceeding 25,000,000 before the Yemen disaster.
Crazy, unexpected weather events are sapping energy from peoples surviving on the sharp edge. Drought in California will bring windfall profits to growers with water. Some farmers will go broke or be forced to buy water at extreme prices. California and it’s 38 million residents will survive because the nation as a whole, 321,000,000, is behind them.
In central Africa or war ravaged Syria or Yemen, Iraq, there’s no help. None.
It won’t be unstable oil prices causing those on the tipping point to fail it will be killer high oil prices that follow.
Mass migration in North America in years yet to come will obviously be away from coasts, inland.
BobInget on Wed, 2nd Sep 2015 6:30 pm
In the wink of one eye a so called glut’ suddenly turns into shortages.
Just look at US consumption, Despite cars getting better mileage we consume about 2.5 % more oil then the previous year.
Maybe its because there are 2.4 million More of us Hamericans then there were when oil was $100.
“The Census Bureau estimated that the U.S. population will be 320,090,857 on Jan. 1, 2015. The figure reflects an increase by 0.73 percent, or 2,334,187, when compared to Jan. 1 2014.Dec 30, 2014”
How about there are 1.23 billion cars?
http://www.greencarreports.com/news/1093560_1-2-billion-vehicles-on-worlds-roads-now-2-billion-by-2035-report
Two billion cars, twice as many as today in 2035.
apneaman on Wed, 2nd Sep 2015 7:26 pm
Bob there are social justice advocates that are saying we in the western world must unite in this time of great global crisis. I say that the citizenry of Europe are already enthusiastically united in their response – you can hear their rally cry…
NIMBY NIMBY NIMBY NIMBY NIMBY NIMBY NIMBY
Makati1 on Wed, 2nd Sep 2015 7:27 pm
With China dumping USTs, by the hundreds of billions, and investing them in resources all over the world, who is the smart one here? Russia is selling theirs also and building up their military to keep Russia sovereign. Meanwhile the Fed is beginning to see the end of it’s rule from the tight corner it is trapped in.
Interesting times.
Davy on Wed, 2nd Sep 2015 8:07 pm
I suspect the entire global system is going to rearrange with China at the end of growth. Without China’s consumption her dynamics on oil and the many other commodities will adapt. It is going to adapt to less consumption and investment that seems reasonable despite growing population. China is disintegrating economically so consumption must pay a price.
China’s whole system is built on a farce of rapid growth. Growth itself is problematic as we see globally but rapid growth is suicidal. Venezuelan oil is not going to be needed to the same degree in this adapted world of a declining China. It is not at all certain if Venezuela can even maintain its current obligations to China. If oil is set for a vicious long term demand and supply destruction it is doubtful Venezuela or China will ever recover.
Boat on Wed, 2nd Sep 2015 8:25 pm
Davy, China is not shrinking, they are the worlds leading oil importer, Their growth is reported anywhere from 2% TO 7%. Depending on the expert. That is still a lot of extra oil they will need every year.
Boat on Wed, 2nd Sep 2015 8:30 pm
Bob,
In the wink of one eye a so called glut’ suddenly turns into shortages.
Oil is still in a glut. Storage tanks around the world are filling.
http://www.reuters.com/article/2015/08/12/us-iea-oil-idUSKCN0QH0VB20150812
Davy on Wed, 2nd Sep 2015 8:48 pm
Boat, I did not say they were shrinking. I said they are at the end of growth. Consumption growth is shrinking. The 7% growth rate is the official version which is a sham. A 2% rate is more like the growth we are observing. If one recognizes the following malinvestments of overcapacity, unneeded infrastructure, and ecological destruction from development is not true growth then this 2% is a sham also. There is a long list is growth ills from China. China as an economic superpower is a sham. China is the last source of optimism for the corns on this board and now it is toast. That has to be a downer for a corn like you Boat.
Plantagenet on Wed, 2nd Sep 2015 9:01 pm
Boat is right — The numbers tell the story
The world is still in an oil glut.
Cheers!
apneaman on Wed, 2nd Sep 2015 10:52 pm
Planty likes stories. Planty needs stories. Especially ones that say no peak oil or serious climate change until after it’s gone. You and boaty should have a slumber party and tell each other reassuring stories all night… with the lights on.
GregT on Wed, 2nd Sep 2015 11:39 pm
“Boat is right — The numbers tell the story
The world is still in an oil glut.”
It’s rather unfortunate with all of that excess energy being produced, that economies are still unable to recover from the global financial crisis, countries are up to their eyeballs in debt, and central banks cannot raise interest rates.
I wonder why that would be lil planter?
MrNoItAll on Thu, 3rd Sep 2015 2:07 am
GregT — Never question The Glut. The Glut is omnipotent, a force of nature, the primary catalyst in world events. All celestial bodies and versions of “reality” orbit The Glut which (in Plant’s warped mind) is the very center of the universe. The Glut is the God that Plant worships, it is the cause and the effect, the essence of all that we experience.
Or, more likely, The Glut is just a cleverly devised propaganda theme that Plant gets paid minimum wage to spread on internet forums. The REAL glut is the excess of stupidity and grotesque humanity that oil has enabled. Plant is exhibit #1.
GregT on Thu, 3rd Sep 2015 2:17 am
Thanks for the late night chuckle NWR. I must admit that I did LOL.
Davy on Thu, 3rd Sep 2015 5:02 am
MR/Greg/Ape Man, do you think planter had a security blanket issue as a kid? Could it be possible it is now at an intellectual level? He wakes up and his carbon whore lifestyle is safe because of the oil glut. He snuggles up to his imaginary carbon whore security blanket to sleep soundly at night. He dreams of all those world travels on cheap oil from the glut. The glut grows ever larger pushing the ugly issue of peak oil and economic descent from his mind.
rockman on Thu, 3rd Sep 2015 6:02 am
About US vehicle mpg’s: new cars have much better stats…but not the US rolling fleet. With so many older cars staying 10+ years on the road the increase in mpg of ALL the vehicles being driven has for years improved just a small fraction of 1% per year. A significant increase in driving will boost consumption significantly.
Kenz300 on Thu, 3rd Sep 2015 9:57 am
Oil producers see falling prices yet add more production………
A business model doomed to failure…..
shortonoil on Thu, 3rd Sep 2015 12:10 pm
Saudi Arabia just cut its price to North America, and Asia. The Chinese are selling US Treasuries to prevent their banking, and stock market from collapsing. Japan’s QE has just run out of gas as they are now buying the country’s entire deficit. The US will be in the same position in a couple of years, and the FED knows it.
BC on Thu, 3rd Sep 2015 1:30 pm
short and all: China’s PBoC is selling Treasuries primarily so that mega-cap US (and Japanese) supranational firms repatriate non-covertible Yuan deposits into US$’s via Fed custodial accounts and primary dealers. This process started with a trickle in 2013 and is now advanced.
IOW, most of the US$-dominated reserves held by the PBoC are effectively against US and Japanese supranational firms’ deposits in Chinese banks that have accumulated from the firms having invested trillions of dollars in China since the 1990s. Because the Yuan/renminbi is not directly convertible, the PBoC must hold US$ reserves against the deposits/custodial accounts.
So, the net of the transaction is effectively a central bank custodial swap using liquidity swaps (US$’s, euros, Yen, pounds, etc.).
Among the many reasons the Chinese were rejected from being a part of the IMF SDR was that the Yuan is not convertible AND the large holdings of reserves that will inevitably be drawn down with repatriation from China, making the Yuan overvalued and likely to depreciate over time.
So, the Chinese selling US Treasuries is largely misunderstood and not well reported, intentionally or otherwise.
penury on Thu, 3rd Sep 2015 1:31 pm
Short, the Fed has been buying most of the issue in t-bills for a couple of years now. Rumor has it that they are currently the buyer of the Ts-that China,Russia and Brazil are selling. It must be comforting to know that the Fed can buy an unlimited amount of our debt. I think I remember the Japanese CB doing this also, was that a success? I forget.
Makati1 on Thu, 3rd Sep 2015 8:24 pm
penury, thanks for the early morning (here) chuckle. Sarcasm in it’s best form. I have seen no indication that your memory is poor. LOL