China, Venezuela ink pacts on energy cooperation

BEIJING: Energy-starved China has made a foray into the Latin American market, inking a series of pacts with oil-rich Venezuela to help it develop its fuel and electricity sectors.

Under the agreements, the two countries will set up a joint venture for oil exploration and processing in Venezuela's Orinoco reserves belt, China's official Xinhua news agency reported today.

China will provide technology to Venezuela and help it build its own thermo-electric power plant to ease the oil-exporting country's energy crisis.

It will also provide soft loans worth USD 20 billion to Venezuela's energy sector through the China Development Bank, according to the pacts signed in Caracas between the officials of the two sides.

Venezuela has become China's fifth biggest trading partner in Latin America, with bilateral trade reaching USD 7.15 billion last year.

The agreements were to be signed earlier during Chinese President Hu Jintao's tour of Caracas, which he cancelled in the wake of the massive 7.1 magnitude earthquake that hit China killing over 1,700 people.

Hu was in Brazil recently for the BRIC summit, on the sidelines of which the two countries signed several trade agreements aimed at boosting energy cooperation between them.

The agreements included a pact to build a Chinese steel plant in Brazil.

"It will be the biggest Chinese investment in Brazil and the biggest by China abroad in this (steel) sector," Brazilian President Luiz Inacio Lula da Silva said.

The deal involves Brazilian company LLX, a subsidiary of the EBX group controlled by billionaire Eike Batista and Chinese firm Wuhan Iron and Steel.

Lula said China had also expressed interest in constructing a high-speed train line between Rio de Janeiro and Sao Paulo.