Chinese officials signed $6 billion in new loans to Venezuela on Thursday aiming to boost the South American country's oil industry.
After the loans were signed, Venezuelan President Hugo Chavez defended his country’s growing ties with China as vital to his country's development. He also dismissed criticisms by opponents who question the mounting loans, which are to be paid back in oil shipments.
China has swiftly become Venezuela’s biggest foreign lender in recent years, and had previously agreed to more than $32 billion in loans. Venezuelan Energy Minister Rafael Ramirez had said Wednesday that the new loans would increase oil production involving Chinese and Venezuelan companies from about 100,000 barrels a day to about 330,000 barrels a day.
The new loans include $4 billion to increase oil production, as well as $1.5 billion for refinery projects and $500 million for buying oil drills and other equipment, officials said.
The deals have received strong criticism from some Chavez opponents, who argue that the debt isn't beneficial for Venezuela or for its state oil company Petroleos de Venezuela SA.
“I don’t know how some Venezuelans can criticize this relationship with China,” Chavez said in a televised speech. “I think what they’re doing is following instructions from the Pentagon and the White House.”
Chavez accused opposition politicians of siding with U.S. “imperialism” in criticizing his ties with China. The U.S. government, however, hasn't publicly objected to Venezuela’s growing trade relationship with Beijing.
Chavez has sought to boost oil sales to China in the past several years while trying to diversify Venezuela's oil clientele. The United States remains the top buyer of Venezuelan oil.
Opposition lawmaker Miguel Angel Rodriguez has said the loans effectively “mortgage the country” and has demanded the government provide details of its deals, including the prices at which Venezuela is selling the oil to China. Government officials have said the oil is being sold at market prices.
The infusion of cash from China has provided key support as Chavez looks to boost spending ahead of next year’s presidential election. Chinese companies are helping to build railways as well as public housing projects.
Among other agreements signed Thursday, Chinese companies will help build and upgrade power plants and make other improvements to Venezuela’s electrical system.