Chevron lends Venezuelan oil venture $2 billion for output boost

Petroleos de Venezuela SA, the country’s state-owned oil producer, signed a $2 billion financing agreement with San Ramon, California-based Chevron Corp. (CVX) to increase output at their Petroboscan oil joint venture.

The loan’s interest rate is the London Interbank Offered Rate plus 4.5 percentage points, Oil Minister Rafael Ramirez told reporters in Caracas Monday. The money will be handled directly by Petroboscan and will help boost daily output to 127,000 barrels from 107,000 barrels, he said.

“The loan has a very low rate because it’s a corporate loan from Chevron to its joint venture and is tied to increased production,” said Ramirez, who signed the credit along with Ali Moshiri, Chevron’s head of Latin America, Middle East and Africa. “That way we obligate ourselves and our partner to focus on increasing production.”

Venezuela, which channels oil earnings into social programs and regional fuel subsidies, is seeking financing from foreign partners to tap more of the world’s largest oil reserves. The state-owned producer reached an agreement with China on terms of a $4 billion loan on May 15 for the Sinovensa joint venture with China National Petroleum Corp. Ramirez said today he’ll sign the financing agreement in Beijing this week.

The minister said May 3 that PDVSA would invest $15.4 billion in exploration and production this year and that its partners must meet production targets or risk having projects disbanded. Ramirez said last month that PDVSA would ask its partners to finance at least $8 billion of a $25 billion investment program.

Venezuela is producing 830,000 barrels a day in western oil fields, Ramirez said.

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