Oil Report

China to loan Bolivia $60 mln for energy investments

LA PAZ, Nov 18 (Reuters) - China will give Bolivia a $60 million loan, part of which will be used to purchase natural gas drilling rigs, the Bolivian government said on Wednesday.

Leftist Bolivian President Evo Morales, a fierce critic of U.S. foreign policy, has deepened ties with China this year.

Last month, Morales announced the acquisition of six Chinese light military aircraft worth nearly $58 million to fight drug traffickers, and in September he unveiled a plan to buy a Chinese telecommunications satellite worth up to $300 million.

Energy Minister Oscar Coca said that roughly half of the loan will be used to buy two rigs to explore for natural gas, and the other half to expand the domestic natural gas distribution network.

“The acquisition of this equipment (drills) will allow (state-run energy company) YPFB to carry out extractive activities,” Coca told reporters in La Paz.

Bolivia’s central bank agreed in September to lend YPFB $1 billion from its foreign reserves for natural gas projects.

Bolivia has the second largest deposits of natural gas in South America after Venezuela, and is the region’s main exporter of the fuel, with all of its exports going to neighbors Brazil and Argentina.

Despite pledges to invest heavily to boost natural gas output, Bolivia’s natural gas production has been steady at around 40 million cubic meters a day since Morales took office in January 2006.

The leftist leader nationalized the Andean country’s key natural gas industry in mid-2006, forcing foreign companies to grant a larger share of their profits and more control over their operations to the Bolivian state.

Oil-hungry China is moving to strengthen ties with energy-rich South American nations, part of a global trend in which the Asian giant is providing billions of dollars in financing to producer nations to guarantee energy supplies.

In September, Venezuela agreed to send nearly all its fuel oil output for three years to China in return for an upfront payment of $16 billion.

Ecuador announced in August it will receive a $1 billion loan from China, in addition to a $1 billion forward payment for an oil supply deal with the huge Asian nation. (Reporting by Carlos Quiroga; Writing by Eduardo Garcia; Editing by Christian Wiessner)