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2016-06-16 18:05:00

VENEZUELA - CHINA TALKS

VENEZUELA - CHINA TALKS

 

VENEZUELA  OIL PRODUCTION 2005 - 2016

 

VENEZUELA  OIL MAP

 

Venezuela is in talks with China to obtain a grace period in its oil-for-loans deal that would improve the OPEC nation's capacity to make bond payments amid an economic crisis, sources briefed on the proposal have told Reuters

Venezuela has borrowed over $50 billion from China under the financing arrangement created by late socialist leader Hugo Chavez in 2007, in which a portion of its crude and fuel sales to the world's second-biggest economy are used to pay down loans.

The two-year rout in oil markets has left the government of President Nicolas Maduro struggling to meet the original terms of the agreement, which require that state oil company PDVSA set aside more barrels for debt services when prices fall.

Venezuela is now seeking a one-year grace period in which it would only pay interest on the loans, according to two oil industry sources and one finance industry source who asked not to be identified because they are not authorized to speak about the issue.

The sources said state oil company PDVSA would receive cash payments for shipments that currently go to pay principal. The change would improve PDVSA's 2016 cash flow by $3 billion if it took effect this month, two of the sources estimated.

That would make it easier for PDVSA to meet heavy bond payments this year amid an ongoing collapse in a socialist economy facing Soviet-style scarcity and daily food riots. It could also ease investor concerns of a default that have made its paper the riskiest of any emerging market debt.

Maduro denies his government will default and accuses adversaries of spreading rumors to that effect in order to destabilize his government.

The potential cash-flow benefits of the proposed deal, however, could be offset by Venezuela's falling oil output.

Consulted by Reuters about the proposal, PDVSA President and Oil Minister Eulogio del Pino responded: "We're working on all of this." He added that he planned to travel to China following a trip to Russia, which is expected this week. He declined to provide additional details.

China's foreign ministry did not respond to an email seeking comment.

BETTER TERMS

Economy Vice President Miguel Perez said in an interview last month Venezuela had reached a deal to improve the terms of the arrangement, but declined to provide details.

Under the proposal, the interest-only payment terms would remain in place as long as Venezuelan crude is below $50 per barrel, according to the three sources. If crude prices continue to rise, China would apply a sliding scale under which Venezuela would steadily increase payment on the principal portion of the loans, one of the sources said.

Venezuela's basket of oil and fuels this year has traded at a discount of around 25 percent to the benchmark Brent crude price, which was trading around $49.55 a barrel on Tuesday.

The proposed change in terms of the agreement has not derailed negotiations for the renewal of a $5 billion tranche of the financing deal, according to two of the sources.

The proposal has been slowed in part because China has requested that the change be approved by Venezuela's Congress, according to one of the sources. The legislature has been locked in a power struggle with Maduro since January, when an opposition majority took control of parliament following a sweeping electoral victory in December.

Venezuela in 2014 shipped 630,000 barrels of oil and fuel to China according to PDVSA's 2014 financial results, which are the most recent available. Around 45 percent of the value of those shipments was used to pay down debt, with PDVSA receiving the remainder in cash, according to Reuters calculations based on information released by PDVSA.

Rising oil prices have boosted investor optimism that PDVSA will be able to pay off $3 billion in bonds that come due in October and November, helping fuel a rally in PDVSA and Venezuela bonds in recent months.

Venezuela's debt nonetheless remains the riskiest of any emerging market paper, yielding some 28 percentage points more than comparable U.S. Treasuries, according to the JPMorgan EMBI Diversified Index.

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Earlier: 

VENEZUELAN OIL DOWN 

BRAZIL & VENEZUELA IN SHOCK 

ROSNEFT INCREASES STAKE 

СОТРУДНИЧЕСТВО РОСНЕФТИ И PDVSA 

RUSSIA BUYING UP AMERICA

 

 

 

Tags: VENEZUELA, CHINA, OIL, PRODUCTION, PRICE

Chronicle:

VENEZUELA - CHINA TALKS
November, 20, 09:05:00

INDIA'S GAS WILL UP

REUTERS - India’s natural gas consumption is expected to rise to 70 billion cubic metres (bcm) by 2022 and 100 bcm by 2030, according to a government think tank and the Oxford Institute of Energy Studies, up from 50 bcm now. India burns just 7 percent of what top user the United States consumes in a year with about a quarter of India’s population.

VENEZUELA - CHINA TALKS
November, 20, 09:00:00

NORWAY SELLS OIL & GAS

Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday. The divestment would mark the second major step in scrubbing the world’s biggest wealth fund of climate risk, after it sold most of its coal stocks.

VENEZUELA - CHINA TALKS
November, 20, 08:55:00

OIL PRICES UP

WSJ - Light, sweet crude for December delivery rose $1.41, or 2.6%, to $56.55 a barrel on the New York Mercantile Exchange, snapping a three-session losing streak. Brent, the global benchmark, advanced $1.36, or 2.2%, to $62.72 a barrel.

VENEZUELA - CHINA TALKS
November, 20, 08:50:00

U.S. RIGS UP 8 TO 915

U.S. Rig Count is up 327 rigs from last year's count of 588, with oil rigs up 267, gas rigs up 61, and miscellaneous rigs down 1 to 1. Canada Rig Count is up 24 rigs from last year's count of 184, with oil rigs up 9 and gas rigs up 15.

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