Venezuela will ship 18,600 barrels of crude oil per day to Paraguay starting next March on favorable terms under a renewed agreement signed on Saturday, according to news reports from Asuncion.
The pact was signed by Venezuela's state-owned oil company Petroleos de Venezuela (PVDSA) and Paraguay's state oil company Petropar in Asuncion, Paraguayan media reports said.
Under the renewed deal, the PVDSA will supply 18,600 barrels of crude oil per day to Petropar after the agreement comes into effect, while granting export credit to 25 percent of the oil purchased by Petropar, with a 15-year loan on a fixed interest rate of 2 percent.
The current crude supply pact, signed in 2001 and which expires next March, stipulates that Paraguay should pay for Venezuelan oil with beef and soybean.
Talks between the two companies on renewing the pact had been stalled over repayment. The PVDSA asked Petropar to provide letters of credit or a financial guarantee, which was rejected by the Paraguayan company.
Agreement was reached only with the intervention by the presidents of the two countries.
Venezuelan President Hugo Chavez, after attending a one-day summit of the Common Market of the South (Mercosur) on Friday in Montevideo, Uruguay, made a brief visit to Paraguay, where he discussed the issue and reached agreement with his Paraguayan counterpart Nicanor Duarte Frutos, paving the way for the new pact.
Under the new pact, Venezuela pledged to provide preferential export credit to Paraguay. Chavez also promised to allow Paraguay to repay with goods or labor services in case oil prices keep rising and go beyond Paraguay's paying capacity.
The amount of the total repayment is estimated at 300 million US dollars in two years.
Paraguay does not produce oil and relies on imports to meet its oil needs. The 18,600 barrels of crude oil per day provided by Venezuela could basically satisfy the country's oil needs.