CARACAS, Nov 25 (Reuters) - Venezuela and China have amended an oil-for-loans agreement to provide the OPEC nation more prompt payment for its oil shipments without substantially altering the terms of conditions of the bilateral deal.
Late President Hugo Chavez originally created the financing mechanism, under which oil and fuel shipments repaid loans.
The deal was structured such that Venezuela would send more oil than what was needed to service the loan and China would reimburse Venezuela later in the year for the excess.
Venezuela in 2013, for example, shipped 485,000 barrels per day (bpd) of crude and fuel worth $16.6 billion even though service on the loan was only equivalent to around $7.0 billion, according to state oil firm PDVSA’s 2013 financial results.
China reimbursed around $9.6 billion, the results show.
The changes made last month scrap minimum shipments of 330,000 barrels per day and instead say Venezuela will only ship the amount due under the loan, which will allow it to avoid a delayed reimbursement of the remainder.
The two sides have also raised the price per barrel used to calculate the value of the oil, which was set at the market price of $50 per barrel at the time the deals were negotiated, according to two sources briefed on the changes.
The sources did not have access to the new reference price.
A higher reference price for the oil would let PDVSA pay off the loan with fewer shipments, which could have been the motivation for eliminating the 330,000 barrel-per-day minimum.
PDVSA did not answer phone calls seeking clarification.
The amendment to the agreement, published in Venezuela’s Official Gazette, also eliminates a three-year payment term for one of the three tranches of the loan. The other two tranches remain at three years.
The changes could improve Venezuela’s cash flow in 2015, when state spending is likely to increase in the run-up to the parliamentary elections. (Reporting by Brian Ellsworth in Caracas and Marianna Parraga in Houston; Editing by Chris Reese)