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China signs off on $5billion loan to boost Venezuela oil output

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Venezuela and China have signed a deal for a $5 billion loan designed to increase the OPEC country’s oil production, Venezuelan President Nicolas Maduro said.

Maduro, speaking from China in a program broadcast on Venezuelan state television late on Tuesday, said the loan was destined “to increase oil production in a gradual way in coming months,” without providing further details.

A source at Venezuelan state-run oil company PDVSA told Reuters in March that China was set to extend a “special” $5billion loan that would likely stipulate hiring Chinese companies to boost output in the company’s mature oil fields.

Venezuela has borrowed $50billion from China through an oil-for-loans agreement created by late socialist leader Hugo Chavez in 2007, which has helped Chinese companies expand into Venezuelan markets amid chronic shortages of consumer goods there.

That financing has been especially crucial for Caracas since last year’s oil market rout, which aggravated the country’s severe economic crisis.

Eulogio del Pino, the oil minister and president of PDVSA PDVSA.UL, and Finance Minister Rodolfo Marco Torres were among key Venezuelan figures present at the president’s “In Contact with Maduro” show, which broadcast this week from Beijing.

Speaking in front of a huge portrait of Chavez, Maduro also said that Venezuela currently sends about 700,000 barrels-per-day of oil to the Asian giant.

Chinese Foreign Ministry spokeswoman Hua Chunying would not confirm whether China had indeed agreed to the loan.

“We believe China’s cooperation, including financial cooperation, with countries including Venezuela, is done on the basis of realizing mutually beneficial goals and will contribute to economic and social development in the relevant countries and places,” she told a daily news briefing.

Chinese President Xi Jinping told Maduro that China was willing to look at new areas of financial cooperation, according to the Chinese government’s account of the meeting.

During the show aired in Venezuela, which usually lasts for hours and often includes live music and folk dance, Maduro lauded traditional Chinese medicine and art.

He is visiting China to participate in events marking 70 years since the end of World War Two in Asia, culminating in a military parade in Beijing on Thursday.

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