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They signed a 10-year US$10 billion loan agreement. Meanwhile, Petrobras signed a 10-year crude oil export agreement with Sinopec and PetroChina, exporting 150,000 barrels of crude oil to China daily in 2009 and 300,000 barrels daily starting from 2010.
This typifies China's new strategy of employing its gigantic foreign exchange reserve.
This is not the first deal of its kind. On February 17, China and Russia signed a US$25 billion loan granting agreement, and a 300,000-barrel per day crude oil supply agreement for 20 years. China also signed similar agreements with Venezuela and Kazakhstan.
Analysts with Anbound, an information analysis and service company in China, said the "loans for oil" strategy is wise since it feeds China's energy demand and spreads the risk of the depreciation of forex reserve.
Actually, the strategy will help transform forex reserves into oil reserve at relatively preferential conditions, and it is good for China's energy security by locking in long-term crude oil supplies.
(XIC)
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