Japan Signs 15-Year Oil Deal With Venezuela

Japan's largest agreement with South American energy sector.

Japan on Feb. 23 signed a 15-year, $3.5 billion oil deal with Venezuela in a bid to ease its dependence on imports from the Middle East. The state-run Japan Bank for International Cooperation has backed the deal, which marks the country's biggest entry into the South American energy sector.

Japan's Marubeni Corp. and Mitsui and Co. signed the deal with Petroleos de Venezuela S.A (PDVSA), which is fully owned by President Hugo Chavez's government. The 15-year loan will provide funding for the Venezuelan company to develop crude oil reserves and petroleum products for which Japan would have preferential access, the Japanese trading houses said in statements.

Mitsui said the deal would help in "diversifying Japan's energy supply sources and creating and expanding business opportunities for Japanese companies in the oil and gas sector in Venezuela." Japan is almost entirely dependent on Middle Eastern oil.

PDVSA is a pivotal player in Chavez's political ambitions. He has used Venezuela's oil company to subsidize fuel shipments to friendly nations and to poor communities. Despite Chavez's tense relations with Washington, the U.S. is the main importer of Venezuelan oil and Caracas has said it has no intentions of stopping shipments for political reasons.

Venezuela has the world's sixth largest proven oil reserves. It has an output capacity of three million barrels a day, but the figure is expected to rise in the coming years due to development.

Copyright Agence France-Presse, 2007

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