Venezuela’s Chinese Debt Claims Face Uncertain Path Under US Oil Overhaul

Chinese state lenders still hold billions of dollars in claims against Venezuela as the Trump administration backs a new wave of oil development in the country.

U.S. Energy Secretary Chris Wright said in Caracas on Sept. 2 that China would not have debt claims on revenue generated by new Venezuelan oil production as the country addresses its historical debts.

“Venezuela’s got a lot of historical debt,” Wright told Bloomberg Television.

The U.S.–China Economic and Security Review Commission said in January that Chinese policy banks had lent more to Venezuela than to any other Latin American country and that at least $10 billion in Chinese bank loans remained outstanding.

How those claims will be treated as Venezuela restructures its debts has not been publicly detailed. The Energy and Treasury departments had not responded to The Epoch Times’ request for comment by publication time.

New US-Backed Oil Projects

U.S.-backed investment is expected to sharply increase Venezuela’s oil output following the January capture of Venezuelan leader Nicolás Maduro by U.S. forces and the installation of his vice president, Delcy Rodríguez, as interim president.

The Energy Department said Wright traveled to Venezuela on Sept. 2 for agreements involving Chevron, Italy’s Eni, and GE Vernova that it said would double Venezuelan oil production in less than five years.

A day earlier, Wright said the new agreements alone could more than double production over the next several years.

The projects follow a broader agreement announced by U.S. President Donald Trump on Aug. 28.

Venezuela granted North American Blue Energy Partners (NABEP) 100-year concessions covering 17 oil fields with about 65 billion barrels of proven reserves, according to the White House.

NABEP granted the Pentagon’s Office of Strategic Capital a 35 percent stake in its corporate parent. The State Department received rights to purchase part of the production at cost, along with other purchasing and governance rights.

Those projects are separate from the oil arrangements that supported much of Venezuela’s earlier borrowing from China.

China’s Oil-Backed Loans

China became Venezuela’s largest foreign lender during the Chávez years.

AidData, a research lab at William & Mary that tracks Chinese overseas lending, has records of 106 Chinese loan commitments to Venezuela totaling $105.59 billion between 2000 and 2018. About $95 billion was structured with oil-backed repayment.

Under a number of those arrangements, Venezuela’s state oil company, PDVSA, sold crude to Chinese buyers and proceeds were deposited into accounts at China Development Bank to service Venezuelan debt.

Some agreements required minimum balances in those accounts and called for additional oil deliveries or cash transfers when funds fell short.

The lending relationship was already under strain years before the current U.S. involvement. China Development Bank granted Venezuela debt-relief and restructuring arrangements after repayment problems, and AidData has no record of new Chinese loan commitments to Venezuela after 2018.

Public records do not make clear how much of Venezuela’s outstanding Chinese debt remains subject to the earlier oil-linked repayment arrangements. AidData did not respond to The Epoch Times’ request for more information by publication time.

US Restrictions on China-Linked Activity

The new U.S. framework also restricts some China-linked participation in Venezuela’s oil sector.

The Treasury’s Office of Foreign Assets Control said in February that General License 46 does not authorize transactions with a Venezuelan or U.S. entity owned or controlled by, or operating a joint venture with, a person or entity from China.

The license does not prevent an established U.S. company from reselling Venezuelan crude to China.

The Treasury amended the license and several other Venezuela-related authorizations on Aug. 27.

In May it authorized certain professional services connected with a potential restructuring of Venezuelan government debt.

Chinese Foreign Ministry spokesman Guo Jiakun said on Sept. 3 that China–Venezuela cooperation was protected by international law and the laws of both countries and that China’s “lawful rights and interests in Venezuela must be protected.”

Guo did not say how much Venezuela currently owes Chinese lenders or how Beijing expects the claims to be repaid.