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UPDATE 2-Venezuela oil sector gets $1.5 bln loan from Japan

* Money destined for refinery expansions

* Cash-short PDVSA is seeking more inflows (Recasts, adds quotes, details, background)

CARACAS, June 28 (Reuters) - Japan will loan Venezuela $1.5 billion to help fund expansion of two large oil refineries, the South American OPEC member announced on Tuesday.

Energy Minister Rafael Ramirez said Venezuela would repay the loan over 15 years in cash or oil at a rate of Libor plus 3.8 points.

“Japan is helping us very much in the transfer of technology and us as a power are helping Japan diversify its sources of energy.” Ramirez told reporters at the signing ceremony.

Venezuela state oil company PDVSA, financial motor of President Hugo Chavez’s socialist “revolution”, faces falling production and needs funds for several development projects to tap the country’s vast Orinoco extra heavy crude belt.

Ramirez said PDVSA posted revenue of $94.9 billion last year while making a net profit of $3.2 billion.

Venezuela will use the loan, from the Japan Bank for International Cooperation (JBIC), eight other banks and two companies, to boost capacity at PDVSA’s El Palito refinery more than 90 percent to 280,000 barrels per day, and increase output at the Puerto La Cruz refinery by about a quarter to 210,000 bpd.

Ramirez said both projects were due to start this year and be completed by 2015, adding the El Palito project would allow that refinery to export low-sulphur diesel fuel.

Venezuela also signed two supply contracts on Tuesday with Japanese companies Mitsubishi and Itochu 8001.T to ship some 4 million barrels of crude a year, Ramirez said.

The new agreements increase Venezuela’s oil shipments to Japan to around 11,000 bpd, from about 1,000 bpd in 2009.

Ramirez also confirmed PDVSA would reopen its 2022 bond in a private operation with the central bank.

He reiterated Venezuela’s position that there was no need for OPEC to increase production. (Writing by Daniel Wallis; Editing by David Gregorio)