Venezuela Seeks Japanese Support for PDVSA

Via Robert Amsterdam, an interesting look at Venezuela’s continuing efforts to reach out to global firms to help finance its oil sector.  As the article notes, the most recent initiative involved Japan:

“…Hugo Chavez and Japan’s Prime Minister Taro Aso today agreed to cooperate on oil and gas developments in the Latin American nation, according to a Japanese statement regarding a number of accords signed between the two nations. Chavez is attempting to secure funds for energy projects after a 65 per cent decline in oil prices forced him to cut government spending in March. Last week, it was through a meeting with Iranian President Mahmoud Ahmadinejad. That trip resulted in a Venezuelan initiative to develop Iran’s oil fields. Today, he will travel to China after concluding the two-day visit to Japan.

Venezuelan state oil company Petroleos de Venezuela SA is in discussions with Mitsubishi Corp. and Itochu Corp. regarding loans of $750 million each to upgrade its Puerto la Cruz and El Palito refineries, Venezuela’s Information Ministry added in an e-mailed statement. Japan Bank for International Cooperation (JBIC) however today denied it had approved a $1.5 billion credit line for Venezuela to finance the expansion of two refineries. “The loan framework has not been set,” an official at JBIC told Reuters, declining to be identified. The official said JBIC had no plans to meet the Venezuelan delegation, including President Hugo Chavez and Venezuelan energy minister Rafael Ramirez. Japan will invest in the South American country’s Junin 11 oil block, Chavez stated yesterday, according to another statement from the Venezuelan Information Ministry. It was added that PDVSA, as the Venezuelan state oil company is known, signed a memoranda of understanding with Mitsubishi, Itochu, Marubeni Corp. and Mitsui & Co. regarding their possible participation in the Mariscal Sucre natural-gas project.

PDVSA is struggling to make payments to providers and partners following a tumble in oil prices over the last six months, and may need to seek financing this year for new projects in the Orinoco belt. PDVSA has relied heavily on such financing arrangements because its heavy spending on social programmes that keep Chavez popular have left it with cash flow constraints. Officials at the state oil corporation are reported to be planning to set up a special fund as a “guarantee” for buyers of the bonds it issues on international money markets.

The plan, as a report on the Latin American Herald Tribune states, is in response to the sharp decline in the value at which PDVSA bonds are being traded compared with the days before world oil export demand and prices nosedived in the wake of the global financial crisis.”

This entry was posted on Friday, April 10th, 2009 at 5:52 am and is filed under Petróleos de Venezuela, Venezuela.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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