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What is the debt owed by Venezuela to China and why does oil play a role?

The U.S. took over Venezuela's oil imports and redirected crude barrels which were used to pay off debts owed to China.

What is the debt owed by Venezuela to China and why was it paid after Venezuela defaulted?

HOW MUCH DO VENEZUELA OWES CHINA? The data on Venezuela's debt are sketchy, especially since 2017, when U.S. sanctioned triggered a default.

AidData, a?research laboratory at the U.S. University William & Mary that tracks lending, estimated official sector Chinese lenders extended loan commitments of $106 billion to Venezuela from 2000 to 2018. Separately they calculated that $44 billion was outstanding in 2017.

Current estimates vary. Brad Parks, from AidData, said that the estimate by Societe Generale of Venezuela's outstanding Chinese debt was $10 billion. JP Morgan estimates that total obligations?of $13 to $15 billion.

Parks stated that it was unclear if Venezuela had repaid the principal or only made interest payments since the default in 2017. PDVSA sources said that China had granted Venezuela a grace for capital payments for 2019. This allowed debt service payments to compensate for crude cargoes.

PDVSA internal documents estimate crude oil and fuel oils exports to China to be 642,000 barrels a day. Only a fraction of this amount is used to service debt.

Why is the data so patchy?

Venezuela hasn't produced reliable, comprehensive debt statistics in decades. Venezuela's central bank released the last figures in 2019. It is difficult to know what debts the country owes and if it has added more.

Since 2004, the International Monetary Fund (IMF), which tracks economies and debt, hasn't produced an "Article IV report" on Venezuela.

Outside observers are left to piece together information using public statements by Venezuelan officials, sourced data, and the movements of crude exports, which is Venezuela's primary source of revenue.

How was China still getting paid after default?

Venezuela's main allies after U.S. sanctions had been imposed were Russia and China.

AidData's Parks stated that most of Venezuela's debts to China are contracted through oil-backed loans with China Development Bank.

Parks stated that the cash proceeds from some of the oil shipped to China went to a Beijing controlled account, and then on to service debts, even though sanctions?and default prevented many other creditors from being paid.

IS THERE ANOTHER WAY TO REPAIR CHINA? The United States said that it would funnel the proceeds from Venezuelan oil sales to a 'Qatar account, which it controls. Washington will then have to send money to China to 'keep servicing the debt.

This is not likely, as the Trump administration has stated.

CNPC is China's largest oil company and it also has assets in Venezuela. Sinovensa, its largest joint venture with PDVSA, pumps around 110,000 barrels of oil per day. Uncertain is how the U.S. plans to handle these cargoes. Bondholders and other creditors are also pushing their cases in the auction for Venezuela's most valuable asset abroad - the U.S. refinery company Citgo. China will not be involved in the auction due to Citgo's location within the United States.

(source: Reuters)