Venezuela PdVSA Confirms Plans For $2 Billion Credit Line With Chevron

CARACAS – Venezuelan state oil monopoly Petroleos de Venezuela, or PdVSA, is in the finishing stages of preparing a $2 billion credit line deal with U.S. oil major Chevron Corp. (CVX) which will be used to raise output at one of the companies' joint ventures in the South American country, a PdVSA spokesman confirmed Wednesday.

The funds, which will be deployed by Chevron, will go toward raising production at the Petroboscan venture, which operates the Boscan Field in Venezuela's western state of Zulia. PdVSA, which owns 60% of Petroboscan, has previously said that the facility's output is near 115,000 barrels of oil per day.

A Chevron spokeswoman declined comment when reached by telephone Wednesday. PdVSA is also still in negotiations over a possible listing on the Hong Kong stock exchange, said the spokesman, but declined to give more information.

Some media reports have suggested that the energy giant could list bonds on the Asian exchange, while some speculate that the company may try to list minority stakes of joint projects between Venezuelan and Chinese state firms.

Last month, Venezuela signed to give Chinese conglomerate Citic Group a 10% stake of its Petropiar oil upgrader, which will lower PdVSA's ownership to 60%. The rest of the project is controlled by Chevron.

PdVSA Finance Director Victor Aular said Feb. 27 that the Hong Kong operation could involve some form of shares listing but added that talks were still ongoing with advisors from China's Citic Securities Co. (6030.HK). Aular said he could not provide a time frame for any potential listing.

Speaking to reporters during a tour of operations in Venezuela's vast Orinoco heavy oil belt last week, Oil Minister Rafael Ramirez said that the country was looking at the Asian exchange due to its scale.

"China is now the second largest economy in the world and the Hong Kong exchange draws hundreds of billions of dollars," Ramirez said at the time, without specifying the type of listing the company is evaluating.

The news comes as the government of President Hugo Chavez looks to meet ambitious plans to increase oil output to 3.5 million barrels a day this year from their current production of 3 million barrels a day, a figure which agencies like the Organization of Petroleum Exporting Countries and the International Energy Agency estimate is much lower.

PdVSA is used as a financing wing for the Chavez administration, which has tapped its revenues to pay for large scale social programs. That, critics say, has led to the company facing cash flow problems and an increasing debt load that has weighed on operations.

PdVSA's debt level rose to $31.2 billion at the end of the first six months of 2011, according to the company's latest financial results. That's a more-than ten-fold increase from the $2.9 billion debt level recorded at the end of 2006. The company is expected to release full-year financial results for 2011 soon.