A senior Venezuelan oil company official told the media that China will give $10 billion in loans to the Latin American country over the next few years.

Reuters reported that half of the $10 billion springs from a recent bilateral financial agreement and the other half will be provided in the form of cooperation on natural gas exploration.

The new Sino-Venezuela loan agreement will help the OPEC country, which is in the midst of an economic crisis, and increase the confidence of the market over the ability of OPEC nations to repay the loan. The price of Venezuelan national debt went up on March 26.

Chinese government departments have not responded to the report as of March 27.

Because of the economic troubles, people in Venezuela have had to wait in lines for hours to buy basic necessities, from food to medicines.

The official from Petroleo De Venezuela S.A. (PDVSA), who was not identified in media reports, revealed that the first $5 billion loan is based on an extension contract of the Joint Chinese-Venezuela Fund, aimed at various projects. The new agreement will reportedly be signed this month and the money deposited into the Venezuelan International Reserve Fund.

In order to obtain the other $5 billion in loans, PDVSA has to invite Chinese companies to take part in the exploits of their mature oil fields. The Venezuelan Economic and Social Development Bank (BANDES) planned to use the money for internal investment.

"China hopes to give Venezuela a full support over the investment of mature oil fields to numerously increase their productivities," said the anonymous official.

The cooperation of China and Venezuela has bright future since the Asian power has tremendous need for energy and the Latin American nation has massive oil reserves.

Venezuelan President Nicolas Maduro visited China this year and announced the two countries had reached an investment agreement of over $20 billion, which included bilateral cooperation on the economy, technology and oil exploits.

With the country facing a shortage of goods and inflation, Maduro has moved to strengthen control of foreign currency and imports. He has also reached out to the government of neighboring Trinidad and Tobago for an oil exchange agreement.

Data from IMF shows that because of the influence of the decline of oil prices, the Venezuela economy will shrink 7 percent by the end of this year. Not to mention the inflation of the country peaked at 69 percent last December, making the country one of those with the worst inflation in the world.

Observers pointed out that the main purpose of Maduro's visit to China was to look for financial support. International markets worried about the possibility of debt default by Venezuela due to the downturn of the country's economy. Although Maduro mentioned several agreements about financing achieved with Chinese banks，he said nothing about new loans from China, and new loans is exactly what the country need most.

Since 2007, Venezuela borrowed almost $51 billion from China, and some Venezuelan economists said $23 billion was still at large.

As the concern about the risk of Venezuela's default raised, the ambassador of Venezuela to China Ivan Zerpa Guerrero said the circumstances of default to China would never happen despite some unstable of internal political situation.

renqi@chinadaily.com.cn