China will lend Venezuela about US$10 billion in coming months, half as part of a bilateral financing deal and the other half for the development of oil fields, a senior official at state oil company PDVSA said. Fresh funds are a boon for financially squeezed Venezuela and will likely increase market confidence over the Opec country's ability to meet major debt payments and arbitration awards. Venezuelan bonds rose following the news on Thursday. However, relief may be tempered as the loans appear largely earmarked and will only go so far in countering the steep tumble in oil prices and Venezuela's severe recession. The first US$5 billion loan, a renewal of the long-standing Joint Chinese-Venezuelan Fund, will be destined for wide-ranging projects, the official said. With a five-year payment term instead of the usual three, the loan will be signed this month and deposited in Venezuela's international reserves next month. The other "special" US$5 billion loan will likely stipulate hiring Chinese companies to boost production in PDVSA's mature oil fields, the source said. That 10-year loan will be signed in June, taken out by Venezuelan state development bank Bandes, and invested this year. "China wants to decisively back investments in areas like mature oil fields so that PDVSA can rapidly increase its production," said the source, who asked not to be identified. Energy-hungry China is keen to have a foothold in Venezuela, which has the world's largest oil reserves, as part of a broader trend in which Beijing provides billions in financing to ensure crude supplies. The loans often hinge on hiring Chinese construction, engineering or oil services companies. The funds would provide welcome investment in Venezuela's oil sector just as PDVSA's pragmatic new leadership seeks to shore up output. China has already loaned Venezuela more than US$45 billion in return for repayment in oil and fuel. The money is typically deposited in funds that focus on infrastructure and economic development. Venezuela's opposition politicians have voiced concerns over what they deem excessive reliance on China and decry a lack of transparency on the terms of the loans. PDVSA is exploring various ways to shore up its coffers, the source said. The effort is seen as essential in a country where 96 per cent of hard currency income stems from oil revenue.