OREANDA-NEWS. July 31, 2012. Equatorial Guinea, the third-largest crude-oil producer in sub-Saharan Africa, and China's state-owned Sinochem Group signed a preliminary agreement Friday that would involve shipping crude to China in exchange for credit that would be used to pay for infrastructure projects.

Under the agreement, Equatorial Guinea will ship around 11,000 barrels a day through Sinochem in exchange for credit with the Export-Import Bank of China, Gabriel M. Obiang Lima, the country's minister of mines, industry and energy, told Dow Jones Newswires. He didn't mention the duration of the contract.

Mr. Obiang said the credit would be used to electrify more cities and to complete the second construction phase of an industrial port.

Equatorial Guinea signed a similar agreement with Sinochem in 2005, he said, adding that proceeds from that agreement were used to pay for the construction of a hydropower plant and the electrification of several cities, among other projects.

When Exim Bank funds infrastructure projects in the developing world, it typically involves the use of Chinese contractors.

Equatorial Guinea exported 1.76 million metric tons, or 35,000 barrels a day, of crude to China in 2011, up 114.3%, according to China's General Administration of Customs.

China is Equatorial Guinea's top crude buyer, importing about 70% of the country's output, Mr. Obiang said. Chinese imports are expected to rise due to weaker demand in Europe amid debt issues.

"The second-biggest buyer used to be Spain...but with the financial crisis, they haven't been able to buy a lot of the crude, so a lot of it is going to China," he said. Equatorial Guinea, the third-largest crude-oil producer in sub-Saharan Africa, and China's state-owned Sinochem Group signed a preliminary agreement Friday that would involve shipping crude to China in exchange for credit that would be used to pay for infrastructure projects.

Under the agreement, Equatorial Guinea will ship around 11,000 barrels a day through Sinochem in exchange for credit with the Export-Import Bank of China, Gabriel M. Obiang Lima, the country's minister of mines, industry and energy, told Dow Jones Newswires. He didn't mention the duration of the contract.

Mr. Obiang said the credit would be used to electrify more cities and to complete the second construction phase of an industrial port.

Equatorial Guinea signed a similar agreement with Sinochem in 2005, he said, adding that proceeds from that agreement were used to pay for the construction of a hydropower plant and the electrification of several cities, among other projects.

When Exim Bank funds infrastructure projects in the developing world, it typically involves the use of Chinese contractors.

Equatorial Guinea exported 1.76 million metric tons, or 35,000 barrels a day, of crude to China in 2011, up 114.3%, according to China's General Administration of Customs.

China is Equatorial Guinea's top crude buyer, importing about 70% of the country's output, Mr. Obiang said. Chinese imports are expected to rise due to weaker demand in Europe amid debt issues.

"The second-biggest buyer used to be Spain...but with the financial crisis, they haven't been able to buy a lot of the crude, so a lot of it is going to China," he said.