Chinese oil firms in deal to exploit Venezuela's Orinco oil belt

China National Offshore Oil Corporation (CNOOC), the country's largest offshore oil producer, has signed a deal to help exploit Venezuela's Orinoco petroleum belt, which in turn would increase the country's exports to China from the current 400,000 barrels per day to 1 million barrels per day.

Venezuela also signed an agreement with China National Petroleum Corp (CNPC), parent of the state-run oil and natural gas giant PetroChina, regarding a plan to set up a refinery in China to process the oil from Junin 8 Block in Orinoco Belt.

CNPC plans to buy the oil company Carabobo, which France's Total co will sell in an auction in early 2010. Carabobo is thought to be the most important ten-year-old project in Venezuela.

There were earlier reports that China and Venezuela have set aside $12 billion for infrastructure construction in Venezuela, and China is ready to invest $800 million in the oil trade with Venezuela.

In September, CNPC received a low-interest $30 billion state loan to fund overseas acquisitions, as China thought to make the most out of the asset price fall during the global economic downturn. (See: China arms CNPC with $30-billion loan for overseas acquisitions).

Analysts said China should further diversify its oil import sources to ensure sustainable supplies. At present, the Middle East, Africa and the Asia-Pacific are the three main regions from which China imports oil.