Synopsis China Development Bank proceeds with a dual loan facility with a combined value of US$20bn to Venezuela
Firm
Client
Role
International counsel
International counsel
Hogan Lovells and White & Case have recently profited from China’s continued interest in Latin America’s oil sector. Both firms have been engaged to advise on the China Development Bank (CDB) dual loan facility (combined value US$20bn) to Venezuela, marking the largest credit line that CDB has extended to any country.
China agreed to lend Venezuela US$4bn to finance development projects in return for future oil supplies. The US$4bn will go toward financing 19 development projects involving electricity, agriculture, mining, technology and oil.
Petroleos de Venezuela (PDVSA), the state-owned oil company, and China National Petroleum Corp (CNPC), also signed a separate US$16.3bn JV agreement for a project that will pump one million barrels a day of oil for Chinese refineries.
“The financing required negotiations involving three systems of law, and also included oil sales contracts from PDVSA to China National United Oil. The first US$10bn facility was governed by English law, the second RMB70bn facility was governed by Chinese law, while the oil contract between PDSVA and SINOIL was governed by Venezuelan law,” said Hogan’s lead partner Bruno Ciuffetelli.
According to Venezuelan state bank Bancoex, trade between China and Venezuela surged to US$8.9bn in 2008 from US$85m in 1999.
White & Case is one of CDB’s long term legal advisors; the firm previously advised the bank on in a US$8.4bn two-phase financing of the Taishan Project.
2005 – 2010: Chinese investments in Latin America’s energy and commodities sector
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When
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Where
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Deal
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March 2010
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Argentina
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· CNOOC purchased a 50% stake in Argentina’s Bridas Holdings for US$3.1 bn
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October 2009
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Brazil
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· Baosteel proposed to pay US$1.6bn for a 30% stake in Anglo American’s huge Minas Rio iron ore mine in Brazil
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September 2009
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Venezuela
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· Venezuela signed a US$16n investment deal with China over three years to raise oil output by several hundred thousand barrels per day in the OPEC member’s Orinoco belt
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July 2009
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Ecuador
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· China forged a US$1bn loan-for-oil deal with South American OPEC member Ecuador
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May 2009
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Brazil
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· China Development Bank announced that it will lend US$10bn to Petrobras in exchange for a guaranteed supply of oil over the next decade
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June 2007
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Peru
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· Peru Copper agreed to be bought by SOE Aluminium Corp. of China in a friendly deal worth US$792m in cash
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September 2005
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Ecuador
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· Andes Petroleum, which includes China National Petroleum and Sinopec, bought Canada-based Encana’s oil and pipeline assets in Ecuador for US$1.42bn
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September 2005
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Bolivia
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· Shengli International Petroleum Development signed a framework pact with SOE Yacimientos Petroliferos Fiscales Bolovianos to invest US$1.5bn over 40 years in Bolivia’s onshore oil and gas sector
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February 2005
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Chile
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· Minmetals signed an agreement to invest an initial US$550m, which could eventually rise to $2bn, to set up a JV with Chilean SOE Codelco
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January 2005
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Cuba
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· Sinopec and SOE Cubapetroleo signed an agreement to jointly produce oil on the Caribbean island
· Minmetals inveted US$500m in a JV to produce 68,000 tonnes a year of ferro-nickel in eastern Cuba
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*Source: International Viewpoint – June 2010
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