Chavez gets first installment on Chinese loan. Brace yourselves!

September 19, 2010

So, for the seventh or eight time this year, the Government made headlines with the US$ 20 billion loan from China to Venezuela, as Chavez said the first US$ 4 billion had been deposited. This is the same agreement reached in April, which is still a little murky, and which was announced again in August.

Funny thing is, the money already arrived according to Chavez, but it was only this week that the Venezuelan National Assembly approved the deal.These Chinese guys are great, they send the money ahead of time, that’s how much they trust Hugo!

Half of the money of the loan will be in Yuan and half in US$ and Venezuela will send 200,000 barrels of oil a day to China. That is, until the money gets paid some time after 2020 with current oil prices, you have to forget about any future cash flow from 200,000 barrels of oil a day.

Whether you believe Venezuela produces 2.5 or 3 million barrels of oil a day, this may not seem like much, except that we are using some 800,000 barrels of oil a day locally, so the real “exports” of the country are 1.7 to 2.2 million barrels of oil a day, from which you have to subract like 160,000 barrels for which the country gets no cash flow (Cuba, Argentina, Petrocaribe) and now an additional 200,000 barrels less of cash flow a day.

Not pretty…

And then, Reuters is saying (Thanks Setty) that the recent fire in Bonaire, will limit what Venezuela can send to China.

If oil doesn’t go into a bubble we will be in trouble. And right now it actually looks like it may do exactly the opposite in the short and medium term, as it seems to be breaking down (Thanks PR!):

Brace Yourselves!

10 Responses to “Chavez gets first installment on Chinese loan. Brace yourselves!”

  1. Kevin Says:

    Kepler wrote:

    “It is a real pity the post is in Dutch because that kind of information is what Venezuelans should be reading – in Spanish.”

    Heck man! Haven’t you ever heard of Google translate? It’s not perfect, but it works. If you really have trouble, load Google Chrome.

  2. DAJ Says:

    Great article

    A Change of Course in Cuba and Venezuela? is republished with permission of STRATFOR.

  3. Gringo Says:

    Hell, why don’t journalists get their act together and do some investigation about that? Do the maths?

    Expecting that of journalists is the equivalent of expecting a dog to play a trumpet.

  4. Kepler Says:


    Alpha wrote a long article about the Chinese deal. It is a real pity the post is in Dutch because that kind of information is what Venezuelans should be reading – in Spanish. I told him I will try to put some of the stuff he did in charts for Venezuelans, but I won’t be able to do that for two weeks.

    Hell, why don’t journalists get their act together and do some investigation about that? Do the maths? They at most interview some economists from time to time and else just publish some of the raw data, something the
    vast majority of Venezuelans can do nothing with.

    The Chávez honchos are pawning Venezuela for years and years.

  5. Bill Simpson in Slidell Says:

    The Chinese are no dummies. Thomas Petrie, a vice president of the Bank of America/Merrill Lynch said on Bloomberg TV Monday, that he expects world oil production to peak between 2012 and 2015. Once that happens, the oil price will go through the roof. The Chinese will either get a lot less oil than they think, or Venezuela will forfeit a fortune in potential oil revenue. With the Pacific being as big as it is, and Venezuela not having a Pacific coast, I would bet on the less oil than they think outcome.
    Visit and read the interview with Robert Hirsch about the coming energy mess. That is why I didn’t move out into the country, where I could enjoy the dark sky with my telescopes, after Katrina flooded my house. Gasoline rationing.

  6. moctavio Says:

    Funny, a major Wall Street firm quotes this post in its morning comments and only four comments, thus, I am testing to see if they work.

  7. sid Says:

    well, am not economist, but Ven will be surprised. The Turkmen gaz was sold for 190 $ for 1000m3 FCO Russian border. The Russians sold it for 250 $ if Bielorussia was “friend” but on Polish border the lot was for 450 $ this winter. (All “socialist” ctries paid in the past the building of all lines from central Russia to Wienna in Austria -Schwechat refinery or Slovnaft Bratislava in SK- and to Germany (East). Turkmens some time ago decided to deal with Chinese, together with Kazakhs, and let China invest into gas+oil fields on loan basis. Thus, China pay at about 120 $ for 1000m3 of LNG, now. That means, that Turkmens have a shortage in incomes (as was announced, that 90 $ for 1000m3 is enough by Chinese). So, if Chavez got loan, the Ven oil will go to China on never-never basis. Forget 70 $ for barrel….35-40 $ maybe.

  8. jhondoe Says:

    It seems that shit already hit the fan….

  9. HalfEmpty Says:

    Hell of a catch Kepler….. from the above…

    Sales of whisky have fallen by 85%.
    The end times are nigh.

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